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SMRT will not use proceeds from asset sale to pay shareholder dividends

SINGAPORE — Transport operator SMRT does not intend to use the estimated S$1 billion proceeds from the sale of its assets to the Land Transport Authority (LTA) to pay any special dividend to its shareholders, the company said in a statement on Friday (July 15).

SMRT says it will use part of the proceeds from its asset sale to LTA to retire some of its existing debt. TODAY file photo

SMRT says it will use part of the proceeds from its asset sale to LTA to retire some of its existing debt. TODAY file photo

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SINGAPORE — Transport operator SMRT does not intend to use the estimated S$1 billion proceeds from the sale of its assets to the Land Transport Authority (LTA) to pay any special dividend to its shareholders, the company said in a statement on Friday (July 15).

Instead, with SMRT group’s total debt expected to be at S$762 million on Sept 30, a part of the net proceeds from the proposed sale will be used to retire some of its existing debt, said the operator. A portion of this debt was used to fund investments in its rail operating assets.

SMRT will also pay the Inland Revenue Authority of Singapore (IRAS) about S$159 million as a tax payable on the difference between the sale proceeds and the residual capital allowances relating to the operating assets.

The proceeds from the asset sale will also be used to invest in strengthening and further developing SMRT’s rail engineering competencies for service reliability, the statement added.

The sale agreement was announced on Friday, after years of negotiations with the LTA, under the New Rail Financing Framework. The LTA is paying for SMRT’s rail assets, such as the trains and signalling system.

SMRT Trains will be licensed to operate the North-South, East-West Lines, the Circle Line and the Bukit Panjang LRT Line. The licence will expire on Sept 30, 2031.

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