SIA to redeem half of convertible bonds issued in 2021 for $3.4 billion

SIA said the redemption will be carried out on a pro-rata basis. ST PHOTO: LIM YAOHUI

SINGAPORE - Singapore Airlines (SIA) is redeeming half of its mandatory convertible bonds (MCBs) that were issued in June 2021.

This comes barely six months after the airline group announced the full redemption of its 2020 MCBs.

These bonds were issued to support the company’s balance sheet amid an almost total shutdown of air travel during the pandemic.

The latest redemption will see SIA meet the accreted principal amount payable of 108.243 per cent of the principal amount of the MCBs, which will be approximately $3.4 billion.

SIA said this redemption will be carried out on a pro-rata basis, with the redemption amount to be paid to eligible bond holders on June 26.

“This will be fully funded by the SIA Group’s existing cash reserves, which stood at $15.4 billion as at Dec 31, 2022,” the company said on Wednesday.

Following the post-pandemic reopening, the airline has seen a strong pickup in air travel, which has boosted its liquidity position and strengthened its balance sheet.

The company said the latest 50 per cent partial redemption of the second tranche of MCBs was part of its post-pandemic review of its long-term liquidity strategy and ongoing recalibration of its balance sheet, as it progressively brings its liquidity down to “business-as-usual level”.

“In addition, the full redemption of the 2020 MCBs and partial redemption of the 2021 MCBs will reduce the risk of potential dilution of shareholders,” it added.

The 2020 and 2021 MCBs were part of the $15 billion rights issue that was approved by SIA’s shareholders in April 2020. It comprised $5.3 billion in the 2020 rights shares, $3.5 billion through the 2020 rights MCBs, and $6.2 billion through the 2021 rights MCBs.

SIA will be announcing its full-year results on May 16.

It unveiled a record operating profit of $755 million for October-December 2022, and reported an increase of 8 per cent in revenue to $4.846 billion for the quarter, as compared with the quarter before.

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