SIA Engineering recalibrates JV with Rolls-Royce and HAECO

It will receive $201.9m in cash.

Looking to gain more elbow room to operate globally in the aerospace MRO industry, SIA Engineering has announced that it will restructure its engine joint ventures with Rolls-Royce Overseas Holdings and Hong Kong Aircraft Engineering Company.

According to a report by OCBC, currently, SIAEC and HAECO have JVs with Rolls-Royce, which are SAESL (50% SIAEC, 30% RROH, 20% HAESL) and HAESL (45% HAECO, 45% RROH, 10% SIAEC), and both JVs perform maintenance, repair, and overhaul (MRO) of Rolls-Royce civil aero engines and components out of Singapore and Hong Kong, respectively.

OCBC says the restructuring will see SIAEC divest its 10% stake in HAESL in equal proportion to RROH and HAECO while HAECO to divest its 20% stake in SAESL to RROH.

The divestments are expected to bring SIAEC a net gain of $186.8m, which are made up of $148.7m from the divestment, and the $38.1m dividend from HAESL.

“Beyond the considerations, the restructuring will result in termination of territory based rights of SAESL and HAESL, which in our view, will allow SIAEC group to compete more effectively globally in aerospace MRO industry,” OCBC said.