SATS

[greengiraffe]

PUBLISHED MAY 23, 2014
SATS: Why it pulled out of SCC deal
BYNISHA RAMCHANDANI
nishar@sph.com.sg @Nisha_BT

SATS' decision against going ahead with the $110 million acquisition of the Singapore Cruise Centre (SCC) - a decision it made jointly with Temasek Holdings - was based on developments in the Asian cruise market, its chief executive Alex Hungate has said. SATS had last year unveiled plans to buy SCC from Temasek, but announced last week that it was pulling out of the deal.
"It was based on developments in the Asian cruise market and subsequently, we talked about the growth in the large technical cruise ships coming to Asia," Mr Hungate said, in a reference to the recent announcement that Royal Caribbean would offer year-round sailings from Marina Bay Cruise Centre (MBCC). SATS owns MBCC.
The global cruise operator, which has its Mariner of the Seas vessel at MBCC during the northern hemisphere's winter months, now plans to move its Legend of the Seas ship to Singapore during the summer months too, in a nod to Singapore's status as a year-round cruise centre.
Mr Hungate said: "This way, we can start to make money - hopefully, all the way through the year." He noted that previously, losses in the summer months would drag down the stronger performance from the winter months.
In a report dated May 14, Phillip Capital's analyst Richard Leow wrote that with the industry going for larger ships, SATS would likely be unable to realise the returns it previously envisaged through the investment in SCC.
This is because the existing HarbourFront Terminal, which SCC owns, is unable to accommodate larger ships because of the height restrictions imposed by the Sentosa cable car line.