SINGAPORE – In-flight and cargo services firm Sats said on Wednesday that it will issue 363 million new shares at $2.20 each to help fund the $1.82 billion acquisition of air cargo handler Worldwide Flight Services (WFS).
Sats said in an exchange filing that it will undertake a renounceable, underwritten rights issue to raise approximately $798.8 million for the partial funding of WFS.
Eligible shareholders will be allotted rights to subscribe for 323 rights shares for every 1,000 existing shares held as at 5pm on March 2 at the price of $2.20 per rights share.
This represents a discount of 20 per cent to Sats’ share price of $2.75 at the close on Monday, a day before the company called for a trading halt pending Wednesday’s announcement.
The rights shares are also priced at a 16 per cent discount to the theoretical ex-rights price of $2.62 per Sats share.
This is the theoretical market price of each Sats share assuming the completion of the rights issue, which will be dilutive to its shares.
The rights issue will commence when an offer information statement is lodged with the Monetary Authority of Singapore on or around March 2.
Temasek, Sats’ largest shareholder, has committed to taking up its full entitlement of 39.68 per cent of the rights issue.
The remaining 60.3 per cent will be underwritten by banks involved in the issue: DBS, Bank of America, Citi, OCBC and UOB.
Sats directors who are also its shareholders intend to subscribe for their entitlements, the company said.
Shares of Sats resumed trading on Wednesday afternoon and closed at $2.72, down by more than 1 per cent.
The rights issue launch comes as Sats also announced on Wednesday that it has received the necessary approvals from all jurisdictions for the WFS acquisition.
Sats shareholders overwhelmingly approved the acquisition last month.
On top of the proceeds raised in the rights issue, the acquisition will be financed via $320 million in internal funds and some $700 million in euro-denominated term loans.
If completed as scheduled on April 3, the move will allow Sats to gain a stronger foothold in hubs connecting key trade lanes across North America and Europe, as well as complement its operations in the Asia-Pacific.
Acquiring WFS will also enable Sats to expand its capabilities in the transport of higher-value goods, including pharmaceutical products, vaccines and specialised cargo, on a global scale, the company said.
Sats president and chief executive Kerry Mok said the WFS acquisition will help secure Sats earnings power in the future.
He added that “the renounceable rights issue allows all shareholders the opportunity to participate in Sats’ long-term growth”.
On Feb 13, Sats reported a net profit of $500,000 for its third quarter ended December 2022, reversing two consecutive quarters of losses.
DBS is the lead financial adviser for the rights issue, and together with Bank of America and Citi, is the joint financial adviser and underwriter.
OCBC and UOB, meanwhile, are its co-lead managers.
