Singapore Airlines: Recapitalization Exercise

Timothy Ang  |   27 Mar 2020  |    81 views

Singapore Airline’s rescue plan is revealed in a recapitalization exercise. Temasek, which owns 55.5% of the national carrier, is the underwriter of the program. Below are some highlights:

A S$8.8bn Fundraising exercise

 

S$5.3bn equity rights issue. Shareholders will receive 3 Rights shares for every 2 existing shares at an issue price of S$3 (c.53.8% discount to the last traded price). This amounts up to 1,777,692,487 new Rights shares to be issued.

 

S$3.5bn Mandatory Convertible Bond Issue. Shareholders will receive 295 Rights Mandatory Convertible Bonds (MCB) for every 100 existing shares, with the option to subscribe at $1 per MCB. The Convertible Bonds are proposed to have a 10-year maturity with zero coupon and an initial conversion price of S$4.84. At the maturity date, every S$1,000 worth of MCB will be worth S$1,806.11, and will be converted to shares at the conversion price of S$4.84 per share.

 

SIA may issue up to S$6.2 billion in additional MCBs to a total of S$9.7 billion depending on shareholder approval. The funds raised will be used to weather the downturn. This means covering costs such as operating expenses (S$3.7bn), aircraft expenses (S$3.3bn), and debt servicing and other contractual payments (S$1.8bn).

 

Temasek has pledged to support both the equity rights and MCB issues by subscribing for or procuring any unsubscribed Rights shares, and excess/additional Rights Mandatory Convertible Bonds now and in future plans.

 

A S$4bn Bridge Loan Facility

SIA has established a bridging loan with DBS Bank to assist with cash flow requirements in the near-term.

 

Bottom Line

This fundraising exercise is expected to carry SIA over the crisis. With Temasek’s backing, SIA will have access to a total of S$12.8bn of liquidity to tide through this period. Add this to the support from the enhanced Job Support Scheme and enhanced Aviation Support Package, things look better for SIA and its bondholders.

 

 

Related Articles

Key points for September FOMC Meeting

The U.S. Federal Open Market Committee (FOMC) concluded its two-day meeting on the 20th of September 2023.

Shawn Sng  |   21 Sep 2023

AIA 5.1% NC5.5 Perpetual Tier 2 SGD

AIA Group Limited recently announced the issuance of its NC5.5 Tier 2 perpetual SGD bonds with a final price guidance of 5.1%.

Shawn Sng  |   05 Sep 2023

CapitaLand Ascott Reit 4.2% 5 year Senior Unsecured SGD

CapitaLand Ascott Trust, or CLAS, recently announced the issuance of its 5-year senior unsecured bonds with a final price guidance of 4.2%.

Shawn Sng  |   30 Aug 2023

Disclaimers


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

?>