ST Aerospace Finalises Agreements With Airbus, EADS & EADS EFW On A330P2F Conversion Development Programme

Singapore Technologies Engineering Ltd’s (ST Engineering) aerospace arm, Singapore Technologies Aerospace Ltd (ST Aerospace) today announced that further to the announcement dated 15 February 2012, it has signed agreements with Airbus S.A.S. (Airbus), EADS Deutschland GmbH (EADS) and Elbe Flugzeugwerke GmbH (EADS EFW) for a collaboration to launch the A330 Passenger-to-Freighter (P2F) conversion programme.

Under the agreements, ST Aerospace will subscribe to new shares in EADS EFW, representing 35% of the enlarged share capital of EADS EFW, for a total consideration of €110.5m (S$186.6m) comprising A330P2F engineering development work and cash injection. This will be funded internally by ST Aerospace. EADS will hold a 65% shareholding in EADS EFW. The agreements include a call option, which EADS has over ST Aerospace’s 35% shareholding in EADS EFW, during the engineering development phase of the A330P2F conversion programme. The right to exercise the call option will be triggered under certain conditions and at various purchase considerations. The call option will automatically lapse when the A330P2F work is successfully delivered to EADS EFW.

The total consideration was arrived at, after negotiations between the parties, taking into account market demand for the A330P2F, EADS EFW’s past financial performance and future growth prospects.

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ST Aerospace will be the programme and technical lead during the A330P2F development phase. EADS EFW will drive sales and marketing activities, and lead the industrialisation phase. Entry-into-service of the first A330P2F is scheduled for 2016. The conversions will be undertaken in accordance with an agreed allotment schedule, mainly at EADS EFW’s facility in Dresden, Germany, with the remainder at a dedicated facility of ST Aerospace. EADS EFW will also serve as ST Aerospace’s European maintenance, repair and overhaul (MRO) centre, which fills the gap in ST Aerospace’s global airframe MRO footprint.

The A330P2F programme includes two versions – the A330-200P2F and the larger A330-300P2F. Of the two models, the larger A330-300P2F will be particularly suitable for integrators and express carriers thanks to its high volumetric payload capability with lower-density cargo. Complementing this will be the A330-200P2F which will be optimised for higher-density freight and longer range performance.

Subject to regulatory approvals and customary closing conditions for the investment, the A330P2F engineering development phase is anticipated to commence by the end of 2012.

The investment is not expected to have any material impact on the earnings per share of ST Engineering for the current financial year. The acquisition will reduce ST Engineering’s audited consolidated net tangible assets by S$148m.

Source: Singapore Technologies Engineering Ltd (SGX: ST Engg)
Date: May 20, 2012