Singapore Airlines to Issue S$5.3 Billion in New Equity and Raise Up To S$9.7 Billion via MCB

Singapore Airlines is to offer all shareholders S$5.3 billion in new equity and up to a further S$9.7 billion through 10-year Mandatory Convertible Bonds (MCB), with S$3.5 billion of that raised through MCB and the remaining S$6.2 billion raised over subsequent months.

Both will be offered on a pro-rata basis via a rights issue, and both issuances will be treated as equity in the company’s balance sheet.

SIA has also arranged a S$4 billion bridge loan facility with DBS Bank to support the company’s near-term liquidity requirements.

Singapore Airlines intends to use the proceeds from the rights issues to fund capital and operational expenditure requirements.

SIA Chairman Peter Seah said, “This is an exceptional time for the SIA Group. Since the onset of the COVID19 outbreak, passenger demand has fallen precipitously amid an unprecedented closure of borders worldwide. We moved quickly to cut capacity and implement cost-cutting measures. The strong commitment and support from our staff and our unions as we work together on measures to tackle this crisis have been remarkable. I am heartened that our people are doing everything they can, in these most difficult of times, to support our customers and sustain our operations. We have also worked closely with the Singapore government to bring Singaporeans home safely during this time. At the same time, we are also working with various parties to enable our staff on no-pay leave to have other income opportunities. We are especially grateful for Temasek’s strong vote of confidence. The Board is confident that this package of new funding will ensure that SIA is equipped with the resources to overcome the current challenges, and be in a position of strength to grow and reinforce our leadership in the aviation sector.”

Both rights issuances are subject to shareholder approval at an extraordinary general meeting (EGM) that will be held in due course.

SIA’s largest shareholder Temasek Holdings will vote in favour of the resolutions and procure a subscription for its full entitlement and the remaining balance of both issuances.

Temasek International CEO, Dilhan Pillay Sandrasegara, said, “The impact of COVID19 on the global travel industry is unprecedented, especially for airlines and the related sector players. SIA has been seeing strong growth before the hit from the pandemic. It has also committed to fleet renewal as part of its transformation journey. This transaction will not only tide SIA over a short term financial liquidity challenge, but will position it for growth beyond the pandemic. We fully support SIA’s plans to transform itself. This includes the modernisation of its fleet. The delivery of a new generation aircraft over the next few years will provide better fuel efficiencies as well as meet its capacity expansion strategy.”

The aviation sector is a key pillar of Singapore’s economy and creates more than 12% of the country’s GDP and supports 375,000 jobs. SIA, SilkAir and Scoot account for more than half of the passengers flying in and out of Changi Airport.

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