SIA subsidiaries in public offering

By YOKE HAR LEE

Singapore Airlines said it will be going ahead with the public share listing of two of its main subsidiaries -- Singapore Airport Terminal Services (SATS) and SIA Engineering Company (SIAEC) - on the Singapore Stock Exchange.

But its deputy chairman and chief executive officer, Dr Cheong Choong Kong, said the move was not a fund-raising exercise but meant to help the two companies chart their own growth potential.

"The object of the listings is to allow SATS and SIAEC to be more independent and grow faster than if they remained fully-owned by SIA. There will be greater incentive for them to secure more third-party work and enter into more business ventures internationally."

SATS provides airport terminal services including catering services. SIAEC is an engineering services company providing maintenance and overhaul work among other services. The two subsidiaries are among SIA's most profitable subsidiaries. Between the two, the turnover exceeds $S1.4 billion ($1.6 billion) while their combined earnings was about $200 million in the 1998-99 period.

SIA said the decision to proceed with the listing was based on the conclusions of a three-month study by two major investment banks, Development Bank of Singapore (DBS) and Merrill Lynch on the merits of such a move. SIA will remain a majority shareholder of the two.

DBS and Merrill Lynch will manage the initial public offers of each subsidiary. The shares will be offered in the United States only to qualified institutional buyers. SIA said it expected both public offers to take place in the second quarter of 2000.