Singapore Airlines (SIA) has raised S$850 million (US$631 million) through a convertible bond issue, exceeding its original target of S$750 million owing to “strong investor interest”.
The five-year bonds will carry a coupon of 1.625 per cent, and can be converted into ordinary shares at a price of S$5.743. This represents a premium of 45.8 per cent over the closing price of S$3.94 last Thursday.
The Hong Kong and Shanghai Banking Corporation is the sole bookrunner and lead manager of the issue.
SIA said in a statement that this issuance further strengthens its liquidity position, and bolsters its ability to navigate the challenges posed by the impact of the Covid-19 pandemic on the business.
Proceeds from the bonds will be used to fund operating and capital expenditure, and debt servicing, it added.
SIA CEO Goh Choon Phong said in the statement: “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.”
The national airline said that positive discussions have also taken place on aircraft sale-and-leaseback transactions, and that it will continue to explore other means to further strengthen its liquidity as necessary.
Since the start of its 2020/2021 financial year, including Friday’s issuance, SIA has raised approximately S$12.2 billion. Including the new lines of credit, the carrier will continue to have access to more than S$2.1 billion in committed credit lines.
According to the airline, for the period up to July 2021, it retains the option to raise up to S$6.2 billion in additional mandatory convertible bonds that would provide further liquidity if necessary.