So shortly after I shared some of my thoughts on SBS Transit, SBS announces tonight that they will be selling the North East Line and Seng Kang, Punggol LRT to LTA.
SBS will also be transiting to the New Rail Financing Framework. NRFF.
The sale consideration is $28 mil, which is a small amount in the grand scheme of things. With the sale, SBS can be truly asset light.
The NEL concession was a 30 year operating contract with a possible 30 year extension. This will be changed to a 15 year concession starting in April 2018 with the option to extend for 5 more years. This is similar to the SMRT NRFF.
SBS have to pay a licensing charge to LTA for the use of the assets.
SBS’s future income will be based on its operating income or EBIT margin. If the margin is lower than 3.5%, …