Singapore Airlines (SIA) announced Friday (13 November) that it has successfully raised S$850 million (US$630 million) via a convertible bond issue placed with a variety of institutional investors. The offer was more than four times oversubscribed with strong investor interest. As a result, the issuance was upsized from the initial S$750 million to S$850 million with more attractive terms for SIA, the airline said.
The five-year bonds will carry a coupon of 1.625 percent, and can be converted into ordinary shares at a price of S$5.743 – a significant premium of 45.8 percent over the 12 November 2020 closing price of S$3.94. The company appointed The Hong Kong and Shanghai Banking Corporation (HSBC) as the sole book-runner and lead manager of the issue.
“This issuance further strengthens the company’s liquidity position, and bolsters its ability to navigate the challenges posed by the impact of the COVID-19 pandemic on the business,” SIA said in a statement. Proceeds from the bonds will be used to fund operating and capital expenditure, and debt servicing.
“We would like to thank investors for the strong support. The placement was successfully executed with a highly competitive coupon and substantial conversion premium. Such attractive terms for the company underscore the strong confidence that investors have in Singapore Airlines, as well as our ability to successfully overcome the near-term challenges and emerge as a leader in the airline industry,” said Goh Choon Phong, CEO of Singapore Airlines.
The airline also said “positive discussions have also taken place on aircraft sale-and-leaseback transactions and the company will continue to explore other means to further strengthen our liquidity as necessary. Since the start of the 2020/2021 financial year, including (Friday’s) issuance, Singapore Airlines has raised approximately S$12.2 billion. This includes S$8.8 billion from SIA’s successful rights issue, S$2 billion from secured financing, and more than $500 million through new committed lines of credit and a short-term unsecured loan. Including the new lines of credit, SIA will continue to have access to more than S$2.1 billion in committed credit lines. For the period up to July 2021, the company also retains the option to raise up to S$6.2 billion in additional mandatory convertible bonds that would provide further liquidity if necessary.