ingapore, 21 February 2020 – ST Engineering today announced that Total Engine Asset Management Pte. Ltd. (TEAM), an engine leasing joint venture of its Aerospace arm, has entered into agreements for the sale of 30 aircraft engines using a securitisation structure. This sale will enable the Group to free up capital for future investments including aircraft engines and reduce TEAM’s capital employed.
The transaction comprises a diversified portfolio of 30 aircraft engines that power primarily narrowbody aircraft leased to 13 airlines across 11 countries, with a weighted average remaining lease term of about 6 years. The structure includes about US$257m (approximately S$358m) of fixed rate notes offered in three tranches, and the placement of equity notes. It is anticipated that TEAM will retain 10% of the equity notes while an affiliate of Marubeni Corporation and one or more other investors will purchase the balance, subject to the satisfaction of customary closing and settlement conditions.
Mr Lim Serh Ghee, President of ST Engineering’s Aerospace sector said, “This sale will represent a major milestone for our engine leasing business. It will allow us to lower our capital requirements for continued engine investments, while retaining TEAM’s asset manager role to create value for lessors through our innovative asset management solutions.”
This is ST Engineering’s first securitisation transaction and the first engine-backed securitisation originated by a lessor headquartered in Asia Pacific. The Group will continue to scale up its engine leasing business, one of the growth areas for its Aerospace sector.
This transaction is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.
The secured notes to be issued by TEAM in the transaction have not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and are being offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and outside the United States to non-U.S. persons in accordance with Regulation S under the Securities Act. The secured notes may not be sold in the United States absent registration under the Securities Act or pursuant to an applicable exemption from registration requirements under the Securities Act.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.