SMRT shareholders vote in favour of NRFF sale, Temasek's privatisation offer

SHAREHOLDERS of transport operator SMRT Corporation have voted on Thursday - after struggling with a frustrating 40-minute delay caused by technical glitches - to allow state investor Temasek Holdings to take it private, after they agreed to transfer SMRT rail assets to the government.

The vote on Temasek's buyout via a scheme of arrangement took place on Thursday afternoon, following an extraordinary general meeting (EGM) on the proposed sale of assets. More than 4,000 shareholders have gathered at Star Theatre.

At S$1.68 per share, Temasek's buyout will value its purchase at about S$1.2 billion. Temasek, a majority shareholder of 54 per cent, did not vote.

About 84.93 per cent of the estimated 4,417 present at the meeting voted in favour of the buyout. Together, they hold 92.89 per cent of the scheme shares.

The buyout proposal now awaits the High Court's approval in about two weeks' time, before the payout is expected on Nov 1.

Before this happens, the operator will first transfer its rail assets to the government for S$991 million before taxes on Oct 1.

The sale of SMRT's train and other rail assets to the government will be part of the New Rail Financing Framework (NRFF) deal struck between the Land Transport Authority (LTA) and SMRT in July. This was agreed by shareholders at Thursday's EGM held before the buyout proposal. Temasek had voted on the proposal.

The NRFF proposal received 98.8 per cent of the votes of shareholders represented at the EGM. Those who voted no accounted for the remaining 1.2 per cent. A total of 934.7 million shares voted.

Technical glitches hampered the electronic voting on the transfer of assets.

With the nod, SMRT will transfer the ownership of the North-South and East-West Lines, the Circle Line and the Bukit Panjang LRT; the operating assets include the trains, signalling system and maintenance equipment.

Under SMRT Trains' new NRFF licence, SMRT will transfer its rail assets to the government. In return, it will pay an annual licence fee to LTA for the right to operate the lines for 15 years from Oct 1, 2016 with the possibility of a five-year extension -- much shorter than the original 30 to 40 years.

The NRFF will see all future captal-expenditure obligations transfered from SMRT to LTA, resulting in improved free cash flow.

Trading of SMRT shares has been halted. It was last traded at S$1.655 apiece.