Singapore Airlines seeks US$10.5b from investors amid coronavirus threat
Singapore Airlines (SIA) is approaching existing investors for up to SGD 15 billion (USD 10.48 billion) by selling shares and convertible bonds to offset the impact of the coronavirus outbreak to its business.
The fundraising is underwritten by Temasek Holdings, the airline’s biggest investor, which holds about 55 per cent of the company.
“This is an extraordinary moment for the SIA Group,” Peter Seah, Chairman of SIA, said in a statement late on Thursday.
Earlier in the day after plunging to their lowest in 22 years, SIA’s shares went into an unprecedented trading halt as investors worried the pandemic would have a significant effect on the company.
Many governments around the world have already stepped in to help airlines battered by the virus-induced flight crisis, with the United States offering USD 58 billion in aid while global travel restrictions cause many carriers to ground their fleets and send thousands of workers on leave without pay to stay afloat.
SIA announced it would slash capacity by 96 per cent, ground almost its entire fleet and force cost cuts affecting about 10,000 workers in what it termed the “greatest challenge” it ever faced.
The airline said it would issue up to SGD 5.3 billion in new shares to existing shareholders and also offer 10-year bonds to raise up to a further SGD 9.7 billion.
It has also organised an SGD 4 billion bridge loan facility with DBS Bank to meet the near-term liquidity requirements for the company.
The rights issue will be offered at S$3 per share, a 53.8 per cent discount to SIA’s last traded price of S$6.5.
“This deal will not only tide SIA over a short term financial liquidity challenge but will prepare it for growth beyond the pandemic,” said CEO of Temasek International, Dilhan Pillay Sandrasegara.
SIA said it would use the financing from the rights issues to strengthen its capital and operational expenditure needs.
The Singapore government unveiled on Thursday more than USD 30 billion in new steps to help businesses and households combat the pandemic that threatens to drive the bellwether economy into a deep recession.
Singapore’s Deputy Prime Minister Heng Swee Keat said earlier on Thursday that SIA will announce support from Temasek and that he welcomed Temasek’s commitment to back the airline.
This week, Qantas Airways also secured AUD 1.05 billion (USD 636.1 million) against its fleet of aircraft to help it deal with the coronavirus crisis, sending its shares soaring.