Temasek and Other Shareholders Gives SATS a Boost to Acquire Worldwide Flight Services
Posted on 03/04/2023
On February 22, 2023, Singapore-based SATS Ltd. announced it has received the necessary approvals from all jurisdictions for the acquisition of Worldwide Flight Services (WFS), and that it will undertake a renounceable, underwritten rights issue to raise gross proceeds of approximately S$ 798.8 million to partially fund the acquisition. Entitled shareholders will be allotted rights to subscribe for 323 rights shares for every 1,000 existing shares held as at the record date at the price of S$2.20 per rights share, representing a discount of 16% to TERP. SATS’ proposed acquisition of WFS is expected to close on April 3, 2023.
On September 28, 2022, SATS announced that it had signed a sale and purchase agreement to acquire the air cargo company WFS for a total cost of approximately S$ 1,820 million from an affiliate of Cerberus Capital Management. The approval of SATS’ shareholders for the acquisition was sought and obtained at the SATS’ extraordinary general meeting held on 18 January 2023. The acquisition received 96.8% approval from voting shareholders during the extraordinary general meeting.
SATS will fund the estimated total cost of the acquisition of approximately equivalent to S$ 1,820 million through a number of ways. The first way of funding is through net proceeds from the rights issue. The second avenue is a three-year Euro denominated term loan equivalent to approximately S$ 700 million from SATS’ principal bankers. The third way is cash from SATS’ existing cash balance to fund the remainder of the total acquisition cost.
Venezio Investments Pte. Ltd, an indirect wholly-owned subsidiary of Temasek Holdings, has given an irrevocable undertaking to subscribe for its pro rata 39.68% entitlement to the rights issue. No commission or fee will be paid to Temasek or Venezio in connection with the irrevocable undertaking. Temasek Holdings is SATS’ largest shareholder.
The remaining 60.32% of the rights issue will be underwritten by the banks. DBS is the lead financial adviser for the rights issue, and together with Bank of America and Citi (Citigroup), are the joint financial advisers and underwriters. OCBC and UOB are co-lead managers for the rights issue. In addition, SATS directors who are also SATS shareholders intend to subscribe for their pro rata entitlements.