Singapore Airlines is raising S$15bn (US$10.5bn), almost double its current S$7.7bn market value, to ensure it can survive the current collapse in air travel, with the entire deal underwritten by largest shareholder and sovereign wealth fund Temasek Holdings.
The fundraising comprises two rights issues, with S$5.3bn to be raised in equity and S$9.7bn through 10-year mandatory convertible bonds that are subject to shareholder approval at an EGM. Initially S$3.5bn of MCBs will be issued, with the remaining S$6.2bn to be raised over subsequent months.
Temasek, which has a 55.46% shareholding in SIA, is underwriting the whole transaction. Temasek will vote in favour of the fundraising and subscribe for its full entitlement as well as any unsubscribed shares or MCBs.
SIA has also arranged a S$4bn bridge loan facility with DBS Bank.
"This is an exceptional time for the SIA Group," said chairman Peter Seah. "Since the onset of the Covid-19 outbreak, passenger demand has fallen precipitously amid an unprecedented closure of borders worldwide."
Seah thanked Temasek's "strong vote of confidence" and said the funding package will provide the resources to deal with the current situation.