Sats is tapping shareholders for to raise $798.8 million via a rights issue to help fund the $1.82 billion acquisition of Worldwide Flight Services.
Entitled shareholders will be allotted rights to subscribe for 323 rights shares for every 1,000 existing shares held as at March 2.
The rights shares, offered $2.20 each, is a discount of 16% to the TERP, or theoretical ex-rights price.
Temasek Holdings, Sats’ largest shareholder, has committed to taking up its full share of 39.68%.
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 BofA and Citi, are the joint financial advisers and underwriters. OCBC and UOB, meanwhile, are co-lead managers for the rights issue.
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In addition, Sats directors who are also shareholders will be taking up their entitlements.
Sats believes that by having a rights issue as part of the overall funding plan, provides a “prudent and balanced mix of sources”, and gives its shareholders “an optimal value proposition” for the deal, first announced last September.
Besides the rights issue, Sats will fund the deal via a three-year Euro denominated term loan equivalent to $700 million from its bankers. The company will also draw from its existing cash balance to fund the remainder of the total acquisition cost.
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Sats says it will be able to deleverage and meet its debt commitments with the potential free cash flows that will be generated from the combined business.
“WFS will provide SATS with an industry-leading platform from which we can drive future growth and secure greater earnings resilience,” says Sats CEO Kerry Mok.
“The renounceable rights issue allows all shareholders the opportunity to participate in Sats’ long-term growth.”
In a separate announcement, Sats says that it has received all regulatory approvals for the deal to go ahead. The company expects to close this transaction by April 3.
