SHARES in Sats : S58 -1.09% fell as much as 4.4 per cent on Wednesday (Feb 22) after the inflight caterer and ground handler said it will issue 363.1 million new shares at S$2.20 apiece to raise around S$798.8 million via a renounceable underwritten rights issue.

 

The number of new shares to be issued represents around 32.3 per cent of all existing issued shares.

 

The counter tumbled to a low of S$2.63 &ndash down S$0.12 from its previous close of S$2.75 &ndash after Sats called for the trading halt to be lifted around noon.

 

It regained some composure to close at S$2.72 on Wednesday, down 1.1 per cent or S$0.03, after 10 million shares changed hands.

 

There were no married deals recorded, according to ShareInvestor data.

 

Gross proceeds from the rights issue will be used to partially fund its acquisition of Paris-based Worldwide Flight Services (WFS).

 

The rights issue price of S$2.20 represents a 20 per cent discount to Sats&rsquo last transacted price of S$2.75 on Feb 20 and a 16 per cent discount to its theoretical ex-rights price of S$2.62 per share.

 

Entitled shareholders will be allotted rights to subscribe for 323 rights shares for every 1,000 existing shares they hold as at the record date, Mar 2.

 

The group&rsquo s largest shareholder, Temasek, will subscribe for its pro rata entitlement of 39.68 per cent to the rights issue, through its indirect wholly-owned subsidiary Venezio Investments. Sats directors who are also shareholders intend to subscribe for their pro rata entitlements, the group said.

 

The remaining 60.32 per cent of the rights issue will be underwritten by DBS, BOA, Citi, OCBC and UOB. DBS is the lead financial adviser for the rights issue, and together with BOA and Citi, are the joint financial advisers and underwriters. OCBC and UOB, meanwhile, are co-lead managers for the issue.

 

The WFS acquisition is expected to cost the group S$1.8 billion. The transaction will be funded by gross proceeds from the rights issue and a S$700 million three-year euro-denominated term loan, with the remaining to come from Sats&rsquo existing cash balance.

 

&ldquo The group believes that 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,&rdquo Sats said.

 

Initially, Sats illustrated a potential raise of S$1.7 billion through a rights issue of 609 million new shares at S$2.79 apiece. It later switched strategies after its share price plunged more than 20 per cent.

 

The group said that it received all necessary approvals from all jurisdictions for the acquisition.

 

The deal was first announced in September. In January, shareholders green-lit the deal, with 96.8 per cent voting in favour. No shareholder approval will be required for the rights issue, the group said.

 

It now expects the deal to close on Apr 3.