IN-FLIGHT caterer and ground handler Sats intends to divest 49 per cent of its interest in its Saudi Arabia cargo-handling subsidiary for S$52.6 million to a private limited company incorporated in the kingdom.
Mainboard-listed Sats and its wholly owned subsidiary Sats Airport Services (SAS) on Monday (Nov 25) entered into a share purchase agreement with Avilog Logistics Services – owned by a consortium of shareholders Albawardi Holding Group and Abdulkadir Al Muhaidib and Sons.
After the restructuring, Sats will continue to hold 51 per cent of the issued share capital of its Saudi Arabia unit, with the remaining 49 per cent acquired by Avilog. SAS will no longer be a shareholder of the Saudi Arabian subsidiary.
Describing the transaction as “a strategic move (to) capitalise on market opportunities in Saudi Arabia and present favourable market conditions ”, Sats said the local expertise will help the unit improve its market effectiveness and expand logistics services.
“The combined resources will accelerate growth, starting with a new Jeddah facility, while enhancing air cargo and multimodal operations,” it added.
The group noted that Saudi Arabia expects substantial growth in passenger traffic and cargo handling by 2030, and that its local unit’s growth aligns with Vision 2030 – a government programme that aims to turn the kingdom into a global logistics hub.
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Sats and SAS may also receive an additional cash payment of up to S$70.2 million, said the bourse filing.
But the contracting parties must reach an agreement on the Saudi Arabia subsidiary’s earnings before interest, taxes, depreciation and amortisation for the fiscal year ending Mar 31, 2027.
The Saudi Arabia unit must also achieve its agreed performance objectives as per the terms specified in the agreement.
The book and net tangible asset values of the sale shares are about S$21.1 million and S$20.8 million, respectively, based on the unaudited consolidated financial statements of the group for the financial period ended Sep 30.
Sats shares closed on Monday at S$3.86 before the announcement, up S$0.02 or 0.5 per cent.
