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Is SATS Playing a Dangerous Game?

Is SATS Playing a Dangerous Game?

This is bad. I mean, the SATS/WFS buyout was just poor communication to shareholders.

This post was originally posted here. The writer, Willie Keng is a veteran community member and blogger on InvestingNote, with a username known as @Willie and has close to 120 followers.

SATS’ shares plunged 20% in a day after announcing that the WFS deal was an “all-equity financing” deal in Sep.

This meant SATS shareholders would have to fork out the entire S$1.7 billion sum.

Well, it turned out that wasn’t the case. Later on, SATS clarified the buyout would be a mix of equity, debt and cash.

The funny thing is though, why hasn’t SATS shares recovered?

Disclaimer — I’m no longer a shareholder of SATS as shared in Diligence.

At first glance, I thought SATS made a good acquisition. But I realized there’s something more about the deal.

Anyway, let’s find out what exactly happened.

SATS/WFS deal timeline — What happened?

  • 28 September: SATS announced to buy Worldwide Flight Services (WFS) for an “all-equity” funding of S$1.7 billion. Later, shares plunged 20% in a day.
  • 6 October: SATS clarified how it plans to fund the deal – mix of rights issue, debt and using its own cash.
  • 7 November: The Competition and Consumer Commission of Singapore (CCCS) accepted the SATS/WFS deal application. Now assessing if the buyout would breach anti-competition laws.
  • 9 November: SATS said rights issue will not exceed S$800 million.

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