Singapore Airlines (SIA) will be offering all shareholders SGD5.3 billion in new equity and up to a further SGD 9.7 billion through a 10-year Mandatory Convertible Bonds (MCB).
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 said in a press statement.
The airline intends to use the proceeds from the rights issues to fund capital and operational expenditure requirements. Both rights issuances are subject to shareholder approval at an extraordinary general meeting (EGM) that will be held in due course.
Meanwhile, SIA has also arranged a SGD 4 billion bridge loan facility with DBS Bank, supporting the Company’s near-term liquidity requirements.
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.
“This is an exceptional time for the SIA Group. Since the onset of the Covid-19 outbreak, passenger demand has fallen precipitously amid an unprecedented closure of borders worldwide," said SIA Chairman Peter Seah.
The airline has since moved quickly to cut capacity and implement cost-cutting measures.
“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,” he added
Temasek International CEO, Dilhan Pillay Sandrasegara, commented, “The impact of Covid-19 on the global travel industry is unprecedented, especially for airlines and the related sector players. This transaction will not only tide SIA over a short term financial liquidity challenge, but will position it for growth beyond the pandemic.
The aviation sector is a key pillar of Singapore’s economy, supporting more than 12 per cent of the country’s GDP and 375,000 jobs. SIA Group is at the heart of the aviation ecosystem in the country, with SIA, SilkAir and Scoot accounting for more than half of the passengers flying in and out of Changi Airport.