SIA shareholders vote in favour of S$15b cash call

SINGAPORE Airlines' (SIA) shareholders on Thursday gave the green light for the carrier to raise up to S$15 billion as the Covid-19 pandemic thrusts the airline industry into an unprecedented crisis.

At the virtual extraordinary general meeting (EGM), 99.79 per cent of the votes were in favour of resolution one, which will see S$8.8 billion raised through a 3-for-2 rights issue of shares and a convertible bond issue. The airline will carry out a renounceable rights issue of up to 1.77 billion new shares at S$3 per share, on the basis of three rights shares for every two existing shares held by shareholders, to raise S$5.3 billion. The issue price represents a discount of about 53.8 per cent to the last transacted price of S$6.50 on March 25, while the theoretical ex-rights price will be S$4.40.

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

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

Majority shareholder Temasek - which holds a stake of about 55.4 per cent - had already said it would vote in favour of the rights issues and had committed to subscribe for its full entitlement and any balances of both issuances not taken up. 

Of the S$8.8 billion under the rights issue, the flag carrier will use S$3.7 billion to fund operating cashflow such as fixed costs and other operating expenses, while S$3.3 billion will go towards aircraft purchases and aircraft-related payments. S$1.8 billion will be used for debt servicing and other contractual payments.

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With countries shutting their borders and no domestic market for SIA to fall back on, the group has made sweeping capacity cuts of 96 per cent to its network, grounding the vast majority of its fleet. Earlier this week, The Business Times reported that SIA has stored four Airbus A380s and two Boeing 777-200 aircraft at Alice Springs in Australia, while its budget unit Scoot has parked at least two Airbus A320 ceos at the same facility.

SIA shares were trading 0.16 per cent or S$0.01 higher at S$6.10 as at 1.05pm on Thursday.