The news
SATS provided more details on its funding plan for the proposed acquisition of WFS.
The $700mn in term loan will comprise a 3-year Euro-denominated term loan with an all-in cost of 4-4.5% per annum based on prevailing Euribor.
The proposed rights issue is expected to be launched in 1Q23, subject to shareholders’ approval of the proposed acquisition at an EGM.
The Positives
+ Less concerned on discount of rights. With access to an acquisition bridge facility and the rights issue underwritten, we do not expect the discount for the rights to be steep. SATS had previously obtained an acquisition bridge facility of up to €1,200 million (approximately S$1,657mn) to fund and complete the proposed acquisition.
+ $700mn Euro term loan at 4-4.5% lower than our 5.5% forecast. We view the term loan positively, as it provides a natural currency hedge, and is also lower than we previously modelled. We tweaked our model slightly, taking the mid-point of the Euro term loan at 4.25% to lower our FY24e interest cost by approximately ~$7mn. The interest rates are also lower than the average 8-9% cost of debt currently borne by WFS.
Terence specialises in the consumer, conglomerate and industrials sector. He has over five years of experience as an analyst in the buy- and sell-side. As an institutional fund management analyst, he sat on the China-Hong Kong desk. Terence was ranked top 3 for Best Analyst under the small caps and energy category in the Asia Money poll 2018.
He graduated from the Singapore Management University with a major in Finance (Honours), and is the honoured recipient of the CFA scholarship.
