SIAEC WELCOMES HONG KONG AIRLINES AS NEW SHAREHOLDER IN HONG KONG LINE MAINTENANCE JOINT VENTURE
Mainboard-listed SIA Engineering Company (“SIAEC”) announced that it has, together with its joint venture partners Malaysia Airlines Berhad (“MAB”), PT Garuda Indonesia (Persero) TBK (“GA”) and Royal Brunei Airlines Sdn Bhd (“RBA”), collectively the “Existing Shareholders”, entered into an agreement with Hong Kong Airlines Ltd (“HKA”) for HKA to subscribe for new shares in Pan Asia Pacific Aviation Services Limited (“PAPAS”).
HKA is a full-service carrier based in Hong Kong and currently operates a fleet of 35 aircraft. HKA is a major customer of PAPAS and its entry as a shareholder will further strengthen PAPAS’ growth.
PAPAS is a Hong Kong-based joint venture between SIAEC (47.06%), MAB (23.53%), GA (17.65%) and RBA (11.76%), which provides a full suite of line maintenance, ramp handling and other ancillary services at Hong Kong International Airport.
Pursuant to the agreement between HKA and the Existing Shareholders, HKA will become a 15% shareholder of PAPAS through a subscription of new shares (“First Tranche”). SIAEC’s stake in PAPAS will be 40% upon completion of the First Tranche. Subject to the fulfilment of certain conditions, HKA has the right to further increase its stake in PAPAS to 30% (“Second Tranche”).
The consideration payable in cash by HKA for the First Tranche shares is HK$21.7 million (about S$3.7 million) and the consideration payable in cash by HKA for the Second Tranche shares will be in the range of HK$23.5 million to HK$33.5 million (about S$4.0 million to S$5.7 million). The consideration was determined on an arm’s length basis, validated by an independent valuer appointed by PAPAS, which was based on discounted cash flow methodology. Completion of the First Tranche and the Second Tranche is further subject to the satisfaction (or waiver) of the conditions precedent contained in the agreement with HKA.
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