ST Engineering 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.
ST Engineering is a global technology, defence and engineering group specialising in the aerospace, electronics, land systems and marine sectors. The Group employs about 22,000 people across offices in Asia, the Americas, Europe and the Middle East, serving customers in the defence, government and commercial segments in more than 100 countries. With more than 700 smart city projects across 130 cities in its track record, the Group continues to help transform cities through its suite of Smart Mobility, Smart Security and Smart Environment solutions. Headquartered in Singapore, ST Engineering reported revenue of $6.7b in FY2018 and it ranks among the largest companies listed on the Singapore Exchange. It is a component stock of the FTSE Straits Times Index, MSCI Singapore, SGX ESG Transparency Index and SGX ESG Leaders Index.
The Aerospace sector provides integrated aerospace services and solutions through a global network of facilities and affiliates in the Americas, Asia Pacific and Europe, supporting a broad customer base that comprises leading airlines, airfreight operators and armed forces. Its wide spectrum of maintenance and engineering solutions include airframe, engine and component maintenance, repair and overhaul; engineering design and technical services; as well as aviation materials and asset management services. The sector also has original equipment manufacturing businesses and holds proprietary designs in products such as aircraft seats. For more information, please visit www.stengg.com.