Singapore Airlines strengthens position, raises $632M

Singapore Airlines (SIA1) (SINGY) (SIA) raised $632 million after placing a convertible bond issue for institutional investors. The airline called the result “successful” as it managed to exceed the initial target of $558 million owing to a “strong investor interest”.

The flag-carrier of Singapore announced that the measure was taken in order to strengthen the company’s liquidity position and should give a helping hand to deal with financial challenges imposed by the COVID-19 pandemic. SIA stated that the proceeds from the bonds would be used for servicing the airline’s debt and further funding the operating and capital expenditure.

SIA expected that the five-year bonds should carry “a competitive coupon” of 1.6% that might be converted into ordinary shares for $4.27 for each. Goh Choon Phong, the CEO of SIA, outlined that the placement was “successfully executed“ with a „substantial conversion premium“. The airline counted that when the convertible bond offer was placed on November 12, 2020, the share price significantly jumped up by almost 46% from the original target of $2.93 per share.

“We would like to thank investors for strong support. Such attractive terms for the Company underscore the strong confidence that investors have in Singapore Airlines (SIA1) (SINGY), as well as our ability to successfully overcome the near-term challenges and emerge as a leader in the airline industry,” said Phong.

The financial results of the first half of 2020 showed that despite a net loss of $2.6 million, SIA raised up to $9 billion of which almost $6.5 billion was raised from the rights issue and the other part of $1.5 billion was gained from secured financing. An additional $500 million was raised through new committed credit lines and short-term unsecured loans, the report showed.

According to the recent SIA’s announcement released on November 12, 2020, the airline plans to continue to look for any other options to further strengthen its liquidity. For instance, the carrier stated that it had stepped into discussions on aircraft sale-and-leaseback transactions. 

SIA also announced its plans to raise to $4.6 billion in additional mandatory convertible bonds with an aim to consolidate the liquidity for the period up to July 2021.

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