SAS Group signs agreement with Singapore Technologies Engineering to sell a 67% stake in SAS Component

The SAS Group has signed an agreement to sell an equity stake of 67% in SAS Component Group A/S to Singapore based Singapore Technologies Engineering Ltd for 80,4 MEUR (approximately MSEK 750). SAS Group will retain a 33% holding in the company. 

The SAS Group will release capital from its component inventories (rotable components and spares) so that the total value of the transaction is MEUR 260 or MSEK 2500.

The positive effect on cash and net debt is approx 2000 MSEK. The transaction has been approved by the SAS Board of Directors and is part of SAS Group's plan to release capital. The transaction is also subject to regulatory approval and expected to close early 2006.

"This cooperation is a perfect industrial fit, says Mr. Jørgen Lindegaard, President and CEO of the SAS Group. "We welcome ST Aerospace as our partner. This transaction enables SAS Component to expand as part of a global MRO group and is good for our employees as well as our customers. It provides the SAS Group with assurance of continued quality and cost efficient support for our aircraft fleet."

With about 1,100 employees, Scandinavia-based SAS Component (including BTS Component) provides repair services and material supply to SAS and other airline operators. It manages stocks of aircraft components, enabling them to function with a minimum of unscheduled maintenance and repair stops. For the six months ending 30 June 2005, SAS Component's revenue was MEUR 105 and Operating result before depreciation (EBITDA) was MEUR18.6.

SAS Component has signed a multi-year material supply agreement with the SAS group to provide material support, component repair and overhaul and logistics support for the SAS Group fleet of aircraft. The completion of this strategic agreement enables SAS the benefits of immediate savings in its maintenance costs. SAS Group and ST Aerospace have also signed a letter of intent for a joint cooperation in other areas of SAS Technical Services such as maintenance, repair and overhaul.

The SAS Group has put option on the remaining 33% of the shares to Singapore Technologies Engineering as from year three.

SAS and ST Aerospace also have agreed in-principle for SAS Component to acquire ST Aerospace's European components and material services operations, namely Airline Rotables Limited (ARL), a global aircraft components supplier, at a price to be determined later.

"SAS Component is an established aerospace name in Europe. The investment in SAS Component presents an excellent opportunity to enlarge our product and services offerings on the continent. Together with ARL and STA Systems, we now have expanded global coverage, additional breadth and depth to our capabilities and SAS as a major airline customer" said Wee Siew Kim Deputy CEO, Aerospace & Marine, ST Engineering.

 Tan Pheng Hock, President & CEO, ST Engineering, said,"SAS Component is an important milestone in the ST Engineering Group's investment drive into the European market. We look to be even bigger in Europe in the years to come."

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