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COVID-19: SIA Plans To Raise Up To S$15B From Existing Investors To Regain Its Wings

Troubled by deepening impacts of the Covid-19 outbreak, Singapore Airlines (SIA) is just at the beginning of a heavy blow.

The national carrier has suffered a 95 per cent reduction in capacity so far, which severely puts a dent in revenue, while it still has to continue incurring fixed costs like manpower and parking charges.

On Monday, SIA CEO Goh Choon Pong increased the company’s cost-cutting measures, including implementing no-pay leave for staff and larger pay-cuts for management, affecting about 10,000 employees in total.

Tapping On A Possible S$15B Lifeline

Today, the airline said it will be raising up to S$15 billion from existing investors through the sale of shares and convertible bonds, to tide through the shock from the coronavirus.

This comes as SIA’s shares fell to their lowest in 22 years. The firm, on Thursday morning, halted trading before revealing this announcement.

SIA will issue up to 1.77 billion new shares to existing shareholders at S$3 per share. On the basis of three rights shares for every two existing shares held by shareholders, it expects to raise S$5.3 billion.

This is about a 54 per cent discount from SIA’s last traded share price of S$6.50.

Another S$9.7 billion will come from issuing mandatory 10-year convertible bonds at $1 each, on the basis of 295 bonds for every 100 existing shares owned.

In the meantime, SIA has also arranged for a S$4 billion bridge loan facility with DBS.

This fundraising is being underwritten by Temasek Holdings, SIA’s largest investor which owns about 55 per cent of its shares.

In the country’s Resilience Budget delivered yesterday, Finance Minister Heng Swee Keat welcomed Temasek’s decision to come to SIA’s aid.

He also threw SIA and the aviation industry a lifeline, with a S$350 million enhanced Aviation Support Package to provide rebates on landing and parking charges, rental relief for airlines, ground handlers and cargo agents.

In addition to that, the Government will co-fund 75 per cent of wages up to S$4,600 per month in the aviation and tourism sectors, until the end of 2020.

Featured Image Credit: Head Topics

 

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