SINGAPORE (THE BUSINESS TIMES) - The Securities Investors Association (Singapore) or Sias has asked mainboard-listed Singapore Airlines (SIA) if it has considered privatisation or has such an intention.

The investor watchdog has written a letter to the flag-carrier airline, posing a string of questions triggered by the airline's recent announcement that it would issue mandatory convertible bonds (MCBs) to raise a further $6.2 billion.

Sias chief executive David Gerald, who penned the letter yesterday, asked SIA if the route of privatisation, such as the one taken by land transport operator SMRT, had occurred to the board. He also asked whether SIA has such a plan in mind.

The airline group was quizzed about how it would align its business interests and those of its shareholders, whom Mr Gerald said are questioning the bond issuance and what response they should take to it.

They "are not sure what they should do about it", Sias said in the letter.

It also asked SIA why it decided to issue the MCBs despite the tepid response to its first tranche. That issue was almost entirely mopped up by majority shareholder Temasek, leading to a take-up rate of about 96 per cent.

Another question centred on how long the $6.2 billion would last: "Would there be a need for further fund raising?"

It also asked SIA about the merits of the MCB issuance, why shareholders should subscribe for the bonds - given that most investors and directors had let the earlier MCBs lapse - and whether the two tranches differ in their technical aspects.

"What were the lessons learnt from the previous MCB exercise and what is being done differently this time round?" it asked.

Sias also wants clarity on how the bond proceeds will be deployed.

SIA shares closed up 2 per cent at $4.96 on Thursday.