SMRT - to transfer ownership of train assets to LTA

SMRT Corp will transfer the ownership of its rail assets, including trains and signalling systems, to the Land Transport Authority (LTA) for S$991 million.

New Rail Financing Framework (NRFF) link


This news is expected to be good for SMRT as its burden on heavy capital expenditure will be taken away.

Update (Monday 18 July 2016, 11.00 am)

SMRT is still halted from trading this morning.   It goes ex-dividend today for 2.5 cents.

At the previous closing price of $1.545, the ex-dividend price should be $1.53.

Current queue price is $1.50 (ie. minus 3 cents)

At this price, the news appears to be taken mildly negatively by shareholders and investors.   This could be due to 2 reasons:

     i.  Disappointed that there is no special dividend despite the huge cash bonanza.
     ii. The lower profitability as margins will be capped under new framework.


Update (Monday 18 July 2016, 3.00 pm) - SMRT Still Halted

DJ Singapore

Temasek Considers Taking Subway Operator SMRT Private

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By P.R. Venkat

SINGAPORE--State investment firm Temasek Holdings Pte. Ltd. is considering an offer to buy the remaining shares that it doesn't already own in Singapore-listed transport firm SMRT Corp., people familiar with the situation said Monday.

Temasek, which has a 54% stake in SMRT, plans to delist the company, which currently has a market capitalization of 2.4 billion Singapore dollars (US$1.78 billion), these people said.

Temasek's buyout plan comes days after the government announced a deal to take ownership of SMRT's train assets, leaving SMRT to focus on the operations and maintenance of the network. That deal is valued at S$1.1 billion, most of which would be used to repay SMRT's debt. SMRT said it doesn't intend to pay any dividends to its shareholders after the sale of the train assets.

SMRT's reputation took a major hit in December 2011 when its subway lines suffered two major breakdowns that left more than 210,000 commuters stranded.

The disruptions were the worst in the network's history, prompting public outrage, criticism of the company's wide-ranging interests, as well as a rare government inquiry--a reflection of how seriously Singapore takes its record of orderliness and efficiency.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

July 18, 2016 00:58 ET (04:58 GMT)

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