Singapore Airlines

The company requested for trading halt this morning. Pending an announcement. Right issue? Waiting for the detail of COVID-19 supplementary budget to be announced by DPM this afternoon.

https://links.sgx.com/1.0.0/corporate-an...1e65ce508e

DPM Heng already said got corp action with Temasek. Rights issue lai liao....

Maybe just place shares to Temasek....all the shareholders sure approved.

Or issue CB also can.....issue bonds would be unfair to taxpayers....

https://links.sgx.com/FileOpen/Rights%20...eID=602566

a 15 bil equity injection and a new 4 bil loan facility.

SIA's market cap is only 7.8 Billion.

That's a lot of money retailers have to fork out!! However Temasek has given an undertaking to subscribe for any unsubscribed

Why does the convertible bonds classified and is called 'mandatory'? And in turn of seniority, will the 3.03% retail bonds ranked higher in priority in event of payout due to default?

Add on to their existing around 6 billion debt, coupled with quarterly cash burn rate of around 1.5billion,total debt would balloon to well above 24billion,

They should really need look at their costs closely
The ultimate strategic asset remains to be Boeing, which entice airlines to keep upgrade newer of planes frequently

Rights to Mandatory Convertible Bond (MCB)

For those valuebuddies who wanted to read the actual announcement:
(click to read details)


Summary:
1. SIA shareholders is given a chance to buy/subscribe to rights to MCB.
2. For every 2 SIA shares, you're entitle to 3 rights (FOC).
3. You can use your rights to buy MCB.
4. You'll need to pay $3 for each MCB (if you choose to buy)
5. The C in MCB means convertible - meaning you can convert the MCB into SIA shares by paying a conversion fees.
6. The M in MCB means mandatory aka there is a 10 years waiting period. 
7. At end of 10 years, then MCB can and will be converted to SIA shares.
8. To convert, you will need to pay $4.84 for each shares (initially set and subject to changes).

So, assuming you pay $6.50 to buy a SIA shares just before it's suspended.
You are given free rights to buy MCB.
To buy MCB, you pay $3 each MCB.
With your MCB, at end of 10 years, you pay $4.84 to convert into 1 SIA shares.

In the announcement, there is another terminology which is important.
This is an estimation of SIA shares price after ex-rights:
TERP
The theoretical ex-rights price is the theoretical market price of each Share assuming the completion of the Rights Issue, 
and is calculated based on the last transacted price of the Shares on the Official List of the SGX-ST of S$6.50 on 25 March 2020, 
being the last trading day on which trades were done on the Shares prior to this announcement, 
and the number of Shares following the completion of the Rights Issue.

$4.40$

(27-03-2020, 06:15 AM)pianist Wrote: Why does the convertible bonds classified and is called 'mandatory'? And in turn of seniority, will the 3.03% retail bonds ranked higher in priority in event of payout due to default?

Straight bonds usually more senior than CB. 

In a default, salary, debtors, bank loan all rank higher than bonds...

BTW you guys think there will be rights issue for SATS and SIA Engr???

That is a lot of money for the retailer to spit out! They will not like this.

SATS & SIAEC has plenty of room for more bank loans, and SATS just did a bond issue at super low rates. Maybe SIAEC will have a bond issue too. But probably no rights, unless they want to get adventurous and look for acquisitions.

But I guess it might still be early to say. Especially if US cases continues to explode.

(27-03-2020, 07:46 AM)¯|_(ツ)_/¯ Wrote: Rights to Mandatory Convertible Bond (MCB)

For those valuebuddies who wanted to read the actual announcement:
(click to read details)

Summary:

I'm not very familiar with the mechanism of a Rights MCBs but your summary don't seem quite right to me.

My understanding is that the Rights and Rights MCBs are 2 separate components of the entire right issue exercise.

• Right Shares at $3.00 on the basis of three (3) Rights Shares for every two (2) existing ordinary shares to raise approximately S$5.3 billion
  
• Rights MCBs at $1.00 on the basis of 295 Rights MCBs for every 100 existing ordinary Share to raise approximately S$3.5 billion
  

I think a lot of retail investors will need help with the Rights MCB. I have been active in shares for many years but this is the first time I am exposed to this. I read through the announcement but I confessed that I am still not very clear about the mechanism of the MCBs so hopefully, some knowledgeable VB/financial blogger will digest the information and distil the information into an easier digestible form.