Singapore, Feb. 16 -- SATS Ltd. (SATS) is pleased to announce that it has today entered into a new joint venture (JV) agreement with China Eastern Airlines Corporation Limited, China Southern Airlines Company Limited and Capital Airports Holding Company for Beijing Aviation Ground Services Co., Ltd (BGS).
Separately, SATS has also inked another new JV venture agreement with Eastern Air Catering Investment Co. Limited, China Southern Airlines Company Limited and Capital Airports Holding Company for Beijing Airport Inflight Kitchen Limited (BAIK). Established in 1994 and 1993 respectively, BGS provides ground handling services while BAIK offers inflight meals to airlines operating out of Beijing Capital International Airport.
Both JV companies have a 20-year operating term which will expire in 2014 and 2013 respectively. SATS currently holds a 40 percent equity stake in both JV companies while Capital Airports Holding Company owned the remaining 60 percent stake. Subject to the approval of the Chinese regulatory authority, the new JV agreements will serve to renew the respective tenures of BGS and BAIK as well as introduce new joint venture partners, namely China Eastern Airlines Corporation Limited and China Southern Airlines Company Limited. As a result, the new shareholders will each own 30 percent of BGS and BAIK while SATS' shareholding will be diluted to 28 percent, with the balance 12 percent being held by Capital Airports Holding Company.
Commenting on the proposed new shareholding structure, Mr Tan Chuan Lye, SATS' Acting CEO said: "We are very pleased that China Eastern and China Southern will be coming onboard as new shareholders of BGS and BAIK. Both airlines are our existing customers at Changi and are leading carriers in the Chinese aviation market. With SATS' continued presence in Beijing, we hope to leverage on our strong relationship with both airlines to deepen our presence in China." Neither transaction is expected to have any material impact on SATS' net tangible assets and consolidated earnings per share for the current financial year. None of the Directors or controlling shareholders of SATS has any interest, direct or indirect, in the above transactions, other than through their respective interests (if any) in SATS.
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