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ST Engineering divests 5% stake in ST Aerospace Guangzhou for US$7m

SINGAPORE Technologies Engineering (ST Engineering) announced after trading hours on Thursday that it is divesting its 5 per cent stake in ST Aerospace (Guangzhou) Aviation Services Company, a joint venture with Guangdong Airport Authority, to Japan Airlines for a consideration of US$7 million.

The consideration was arrived at taking into account STA Guangzhou's current performance, net asset value and growth potential in Guangzhou's Baiyun International Airport, according to a filing by ST Engineering.

Upon completion of the deal - which is subject to customary closing conditions - ST Aerospace and Guangdong Airport Authority will each own 44 per cent and 51 per cent stake respectively in STA Guangzhou, while Japan Airlines will become a strategic partner of the joint venture with a 5 per cent stake.

STA Guangzhou, set up in 2014, is an aircraft maintenance, repair and overhaul (MRO) station located within Guangzhou Baiyun International Airport in China.

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"Given Japan Airlines' strong reputation in quality and standards for both its services and demands placed on MRO providers, the new partnership will facilitate cross-learning and enable STA Guangzhou to enhance its own standing in safety and quality, and be better positioned for greater growth," said ST Engineering in a statement.

The divestment is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.