SIA Engineering Company (SIAEC) S59 has announced that it has entered into an agreement with Pratt and Whitney to exit from the PW1500G engine risk-revenue sharing programme (RRSP) that was held through SIAEC’s wholly-owned subsidiary NexGen Network (2) Holding (NGN2).
Upon exiting the RRSP, SIAEC will write off $25.1 million of net assets associated with the programme, which was previously known as the CSeries aircraft engine programme.
NGN2 invested in the RRSP in 2010 and had a 1% share of the programme prior to its exit.
Participants of the RRSP are required to share the costs, risks and revenues of the PW1500G geared-turbofan engine, from its design and development to its production, post-certification engineering support, marketing and sales. This also included the provision of aftermarket services including maintenance, repair and overhaul (MRO) services.
The investment came with derived benefits for Eagle Services Asia Private Limited (ESA), a joint venture (JV) in Singapore between Pratt and Whitney and SIAEC, who held 51% and 49% stakes in the JV respectively.
This included new engine capability and MRO work for ESA, and relevant investment support grants related to the development of new engine capability.
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SIAEC says that as the RRSP requires further capital injection, after careful deliberation and with Pratt and Whitney’s agreement, a decision was taken to exit from the RRSP.
This will allow the company to deploy capital which would otherwise have been used to support the funding of the RRSP to other areas that are better aligned with its growth strategy.
Shares in SIAEC closed unchanged at $2.26 on March 28.
