Singapore-based budget carrier Tiger Airways has completed the purchase of a 40-percent stake in a Philippine aviation firm, Southeast Asian Airlines, for $2.5 million.
In a disclosure statement filed on Tuesday morning at the Singapore Exchange, Tiger Airways Holdings Ltd. said it would also lend $40 million in working capital to Seair over a five-year term.
On Monday night Seair officials and their lawyers from the Romulo Mabanta Buenaventura Sayoc & de los Angeles Law Offices hammered out the final details of the Tiger Air investment with the latter’s lawyers from the Angara Abello Concepcion Regala & Cruz Law Offices.
The meeting took place at the AccraLaw’s board room in its building at The Fort, Taguig City, and started at 5 p.m., ending past 10 p.m., according to sources.
At the meeting, elected chairman of the board of Seair was Koay Peng Yen, chief executive officer of the Tiger Group. Other members of the board are Patrick Tan, Chris Ward, Tomas B. Lopez, Geraldine Olivares and Olma Inocentes. The sources said the board seats “may be expanded to nine.”
Appointed new president and chief executive officer was Patrick Tan, Seair former vice president for marketing, and chief operating officer, vice Avelino Zapanta.
“This deal represents a significant step forward for Seair and will allow the airline to continue its tremendous growth and job-creation drive for Filipinos, bringing increased prosperity, highly-skilled jobs and tourism to the country,” newly appointed CEO Patrick Tan said in a separate statement.
He added that Zapanta, who was “instrumental in helping Seair grow into the airline that it has become today, will continue to share his expertise and wealth of experience in his new position as senior adviser to Seair.”
Zapanta has contributed over six years of his career to bring this transaction to a close and secure a proper succession with the appointment Tan as Seair’s new chief.
According to Tiger Air’s disclosure statement to the SGX, “The purchase price of $7 million, which was agreed with the sellers, has been reduced by the liabilities determined in a due diligence review. The investment will be held through Tiger’s wholly owned subsidiary Roar Aviation II Pte. Ltd.”
The BusinessMirror sources said shares of co-founders Iren Dornier, a German pilot, businessman and scion of the historic Dornier aviation family; and Greek-American Nikos Gitsis were the ones purchased by Tiger Air. The rest of the Filipino shareholders led by Lopez will continue to hold their investments in Seair, representing a 60-percent stake.
Seair is helping promote the Philippines as a key tourism destination in Asia by painting two of its Airbus A320-232s with the Department of Tourism’s new campaign slogan “It’s More Fun in the Philippines.” (See “Seair takes ‘more fun’ to the skies” in the BusinessMirror, August 13, 2012.)
In its disclosure to SGX, Tiger Air said it “is committed to supporting the working capital needs of Seair, including pre-existing liabilities, with shareholder loans of up to $40 million. The loan tenure will be five years.”
Koay Peng Yen, chief executive officer of the Tiger Group said, “Together with our Philippine business partners, our immediate focus will be on scaling up the business through network expansion, building a strong customer base and establishing the airline’s brand presence.”
He added, “The Philippines has tremendous growth potential and we welcome the opportunity to be at the heart of it.”
Tiger said its investment in Seair is the Singapore firm’s second joint venture. In January 2012 Tiger bought 33 percent of Mandala Airlines of Indonesia. “The acquisitions are in line with Tiger’s strategy to expand and develop its business in the region.”
Seair will be adopting Tiger’s LCC (low-cost carrier) business model that includes “offering value fares to domestic and international destinations within a five-hour flying radius of the Philippines.”
Established in 1995 in Clark, Pampanga, Seair was one of the pioneers in the local aviation industry flying to Caticlan, Aklan, the gateway to Boracay Island and picking up a few of the missionary routes, which flag-carrier Philippine Airlines was forced to abandon when it underwent financial rehabilitation.