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Cebu Pacific and SIA Engineering Co. Ltd. (SIAEC) dismantling JVs in two aircraft maintenance companies
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Cebu Pacific is divesting 35% share in one of the JVs, its share to be acquired by SIAEC
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SIAEC will divest 51% share, which Cebu Pacific will acquire
Low-cost Philippine carrier Cebu Pacific and Singapore-based SIA Engineering Co. Ltd. (SIAEC) are dismantling their joint ventures in two aircraft maintenance companies.
In a regulatory disclosure, Cebu Pacific said it signed on October 26 a share sale and purchase agreement (SPA) with SIAEC in which the carrier will divest its 35% shareholding in SIA Engineering (Philippines) Corp. (SIAEP). The share will be acquired by SIAEC in consideration of the amount of $7.740 million in cash.
Established in 2008, SIAEP is a joint venture between SIAEC, which currently has a 65% share, and Cebu Pacific, which has a 35% shareholding.
Clark, Pampanga-based SIAEP provides airframe maintenance, repair, de-lease checks, cabin retrofits and overhaul services for 737, A320 and A330 aircraft, as well as line maintenance services.
SIAEC, in a separate disclosure, said it is divesting its entire 51% shareholding in Aviation Partnership (Philippines) Corp. (APPC) to Cebu Pacific for $5.61 million in cash.
APPC is a joint venture between SIAEC and Cebu Pacific established in 2005. It is a key player in the maintenance, repair and overhaul business in the aviation industry, providing line maintenance, light aircraft checks, technical ramp handling and other MRO services to carriers. APPC is positioned in Manila, Cebu, Davao and Clark, as well as other secondary airports in the Philippines.
Cebu Pacific said the transactions are in line with its strategy to streamline its fleet management and rationalize its aircraft base maintenance, repair and overhaul offerings to strengthen its operational efficiency and core competencies.
SIAEC, for its part, said acquiring the 35% share in SIAEP supports its strategy to “strengthen its core competencies and enhance SIAEP’s status as ‘the group’s centre of excellence for narrow-body aircraft maintenance, repair and overhaul (MRO) offerings’.”
On the other hand, divesting APPC is in line with SIAEC’s overall strategy to streamline and rationalize its international line maintenance operations. It is also a way to optimize resources for areas of high growth potential and competitive advantage to ensure the long-term sustainability of its portfolio.
The two companies said the consideration amounts for the two transactions were arrived at “after arm’s length negotiations on a willing-buyer, willing-seller basis and took into account, inter alia, the net asset value and financial performance” of APPC and SIAEP.
The considerations will be paid via a one-time cash receipt upon closing of the transaction, subject to the satisfaction (or waiver) of the conditions precedent, such as all necessary approvals from relevant government bodies, statutory bodies, authorities, commissions, tribunals, agencies or entities, and those set out in the SPAs.
Following these, both companies will cease to have any equity interest in the joint ventures they divested from.
