An in-principle approval has been received by Singapore Airlines (SIA) from the Singapore Exchange (SGX) with regards to its proposed rights issued during the COVID-19 pandemic.
The listing and quotation of over 1.77 billion rights shares has been allowed by the SGX. According to a regulatory update on Monday (13 April), this include up to 1.3 billion new shares to be issued under rights mandatory convertible bonds (MCBs) conversion as well as up to S$3.5 billion in rights MCBs.
In-principle approval has also been given by SGX for any further rights MCB conversion shares issued in the event that any adjustments are made to the rights MCBs’ conversion price.
At S$3 per share, over 1.77 billion rights shares will be issued on the premise that for every two existing ordinary shares, three rights will be held by shareholders.
A discount of around 53.8 per cent to the last transacted price of S$6.50 on 25 March represents the issue price. The last transacted price is the final trading day prior to the announcement.
Also, for each rights MCB, over S$3.5 billion worth of rights MCBS will be issued at S$1 on the premise that for each 100 existing ordinary shares held by shareholders, there will be 295 rights MCBs.
At the conversion price of S$4.84, the rights of MCBs can be converted into fully paid-up new shares. This conversion price represents a 10 per cent premium to the theoretical ex-rights price of S$4.40 for each share.
On 26 March, SIA had stated that it was going to raise S$3.5 billion via 10-year MCBs and S$8.8 billion through S$5.3 billion in new equity.
This is amid the support given by SIA’s biggest shareholder, Temasek Holdings (Temasek) who said that it would commit to subscribing for its full entitlement and the remaining balance of both issuances as well as vote in favour of the resolutions.
The S$3.3 billion of the proceeds will be used by Temasek to purchase aircraft and air-craft related payment whereas the S$3.7 billion will go towards operating cashflow. The remaining funds will be used for debt servicing and other payments.
To further issue over S$6.2 billion of additional MCBs on similar terms, SIA will get approval for the issuance. These additional MCBs will go to shareholders via one or more rights issues in the future. According to SIA, this offering could happen within 15 months of being approved by shareholders.
On Thursday (9 April), SIA shares rose 2.5 per cent or S$0.15, as it closed at S$6.13.
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