SIA shareholders give nod to $15b fundraising at virtual EGM

Singapore Airlines (SIA) shareholders yesterday gave the green light for the carrier to raise up to $15 billion as the coronavirus pandemic thrusts the travel industry into an unprecedented crisis.

The virtual extraordinary general meeting (EGM) saw 99.79 per cent of the votes in favour of resolution one - to raise $8.8 billion through a 3-for-2 rights issue of shares and a convertible bond issue.

The rights issue will comprise up to 1.77 billion new shares at $3 each, on the basis of three rights shares for every two existing shares.

The aim is to raise $5.3 billion. The issue price represents a discount of about 53.8 per cent to the last transacted price of $6.50 on March 25, while the theoretical ex-rights price will be $4.40.

SIA will also raise up to $3.5 billion via a 10-year mandatory convertible bond (MCB) issue on the basis of 295 rights MCBs for every 100 existing shares. The bonds, which have zero coupon, will be priced at $1 each. If not redeemed before the maturity date in 10 years, the MCBs will be converted into new shares based on a $4.84 conversion price, which is a 10 per cent premium to the ex-rights theoretical price.

Meanwhile, 99.66 per cent of the votes approved resolution two, allowing SIA to issue up to $6.2 billion of additional MCBs on similar terms and to be offered via one or more rights issues down the line.

Majority investor Temasek, which holds 55.4 per cent, had said it would back the rights issues, and had committed to subscribe for its full entitlement and any balances of both issuances not taken up.

SIA will use $3.7 billion of the $8.8 billion from the rights issue to fund operating cash flow such as fixed costs and other expenses, while $3.3 billion will go towards aircraft purchases and aircraft-related payments. About $1.8 billion will be used for debt servicing and other contractual payments.

The group has made sweeping capacity cuts of 96 per cent to its network, grounding the vast majority of its fleet amid the pandemic.

It was earlier reported that SIA has stored four Airbus A-380s and two Boeing 777-200 planes in Alice Springs in Australia, while its budget unit Scoot has parked at least two Airbus A-320s there.

SIA shares closed up 0.33 per cent at $6.11 yesterday.

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