STEng – BT

ST Engg lines up US$1.2b medium-term note funding

Rated AAA by S&P, it will allow ST Engg to ‘pursue opportunities’

SINGAPORE Technologies Engineering (ST Engg) has set up a US$1.2 billion multi-currency medium term note programme ‘as a pre-emptive measure’ to diversify its funding options.

‘The programme provides us with the agility to quickly raise funds to pursue opportunities, should the need arise,’ said president and chief executive officer Tan Pheng Hock.

The medium-term notes programme was set up through a wholly owned subsidiary. The notes will be ‘irrevocably and unconditionally guaranteed’ by ST Engg and the programme has been rated triple-A by Standard & Poor’s Rating Services, which also has a triple-A rating on the company’s corporate credit.

‘The ‘AAA’ rating on ST Engg reflects our opinion that there is an extremely high likelihood that the government of Singapore would provide timely and sufficient extraordinary support to ST Engg in the event of financial distress,’ said Standard & Poor’s credit analyst Wee Khim Loy, noting that Singapore’s Ministry of Defence is the company’s largest customer. ‘We assess the stand-alone credit profile of ST Engg to be ‘AA’.’

Moody’s is expected to release its rating soon, ST Engg said. Deutsche Bank and Morgan Stanley are the joint lead arrangers.

The company said money raised from the issue of notes will be used to fund new capital expenditures, acquisitions, for general corporate services and refinancing of existing borrowings.

As at March 31, the latest period for which data is available, ST Engg had short-term borrowings of S$249.5 million, down from S$586.7 million at Dec 31, 2008. However, total borrowings was S$912.7 million, up from S$881.4 million in December.

Separately, ST Engg said yesterday that it had won a S$26.5 million contract from the Land Transport Authority to maintain electrical and mechanical systems in the Kallang Paya Lebar Expressway. The contract was awarded to ST Synthesis, a wholly owned subsidiary.

ST Engg closed at S$2.41 yesterday, down 3 cents or 1.2 per cent on volume of 1.45 million units.

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