Singapore Airlines (SIA) will offer all shareholders S$5.3 billion (Singapore dollars) in new equity and up to a further S$9.7 billion through 10-year Mandatory Convertible Bonds (MCB), an announcement on Wednesday said.
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, supporting the company’s near-term liquidity requirements.
The company 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 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.
“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. This transaction will not only tide SIA over a short term financial liquidity challenge, but will position it for growth beyond the pandemic,” said Temasek International CEO Dilhan Pillay Sandrasegara.
Temasek ‘s CEO also said the delivery of new generation aircraft over the next few years would provide better fuel efficiencies and meet SIA’s capacity expansion strategy.
The aviation sector is a key pillar of Singapore’s economy, supporting more than 12 percent of the country’s GDP and 375,000 jobs. The Group is at the heart of the aviation ecosystem, with SIA, SilkAir and Scoot accounting for more than half of the passengers flying in and out of Changi Airport.
Asian Aviation is the official representative of Singapore Airlines in Greece, Cyprus and Albania.