Singapore Airlines

[money]

i thought the MCBs should be listed and made tradable to make them more attractive. Otherwise with so much dilution, very hard to make money on the MCBs. Just let Temasek buy up all the rights la, this is as good as nationalising the airlines. But i think this is the right thing to do, otherwise so many people will lose their jobs, and it's not their fault that this virus erupted

[Squirrel]

i thought the MCBs should be listed and made tradable to make them more attractive. Otherwise with so much dilution, very hard to make money on the MCBs. Just let Temasek buy up all the rights la, this is as good as nationalising the airlines. But i think this is the right thing to do, otherwise so many people will lose their jobs, and it's not their fault that this virus erupted

Page 14 of announcement.

Application will be made for the listing of the Rights MCBs on the SGX-ST. The Rights MCBs will be traded on the Main Board of the SGX-ST in board lot sizes of S$1,000.

[Shiyi]

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.

$4.40$

[john]

i thought the MCBs should be listed and made tradable to make them more attractive. Otherwise with so much dilution, very hard to make money on the MCBs. Just let Temasek buy up all the rights la, this is as good as nationalising the airlines. But i think this is the right thing to do, otherwise so many people will lose their jobs, and it's not their fault that this virus erupted

Page 14 of announcement.

Application will be made for the listing of the Rights MCBs on the SGX-ST. The Rights MCBs will be traded on the Main Board of the SGX-ST in board lot sizes of S$1,000.

[john]

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.

$4.40$

[john]

SIA
I was trying to say that we can just go for the Rights Shares on the basis of three (3) Rights Shares for every two (2) existing ordinary shares at $3 each.  Re the MCB's at $1 plus $4.84 think I will pass.

[pianist]

Ya the mcb sounds a sophisticated losingbet in the casino knowing how it has been bleeding so badly, let the banker temasek & tax payers monies shore up sia

[ACTIVIST SPEAKS]

At the end of the 10 years, SQ will recognized the conversion value of the 1000 MCB at $1806.11 to be used to determine the number of equity shares the MCB holder is entitled to.

But as other VBs pointed out earlier, the equity kicker (if the share is significantly above the conversion price of $4,84) may be non-existent if the company redeems it before the mandatory conversion date.

So.... just value this as a straight bond with the right amount of discount attached for the possibility of "cannot win but can lose" situations whereby : (1) the company redeems the MCB when the price is significantly above $4.84 or (2) the company does not redeem when the price is significantly below $4.84.

Personal Opinion …. this instrument sucks.

[davidoh]

This SIA saga gave me a dejavu feeling.

It reminded me of Noble.

It was doing nicely with many stockbrokerage analyst giving BUYs signal with accompanying favorable target price.

I bought a sizeable number of Noble stock since it was one the stocks that Bloomberg report on their TV program sing about the company and their attractive dividend yield.

I figured out, how can I a simpleton without any investment knowledge and without any "insider information very much unlike the stock analysts, be of any better than them and so I believed in their analysis and bought.

Not to long later, a damning report came out from short seller. Denial flew to and fro.

I began to feel something fishy because the CEO do something "funny" which I can't remember. Something about paying their senior management exorbitant remunerations.

SGX and the authorities did not put them on any watchlist as such when these were going on.

Then from no where after some meeting with the investors, asking retail investors to trust them, they came out with rights issue.

I was caught in a dilemma. If don't buy the rights - it is dilution but if buy will I be throwing good money after bad.

Then sometime later, all hell broke loose. Now it is delisted and the stock is placed somewhere where it is not tradeable.

I keep asking myself, because I notice our authorities keep pledging in the newspaper after Lehman saga, they had been very aggressive and I wondered what went wrong. Surely the combine lost a lot from retail investors must runs into millions. Knowing the company is in bad shaped on hindsight, why did the authorities allow them do go ahead with the rights issue.

Then it happened to Hyflux.

A National Asset was also not spared when simpleton like who think that NOL a National Asset and is partly or largely owned by our Temasek or GLC. Those who bought early and held till it got delisted, lost much money.

Now SIA seems to be moving towards that direction. I am vested and I bought along the way down to average. Now after doing due diligence I am every more worried. With their aggressive fuel hedging up to 5 or 6 years ahead at very high price when compared today's price of oil per barrel, it was estimated that their lost on oil hedging alone would amount to $2.5 billion dollars. Their current cap is about $7.5 billion. SIA can only make money or breakeven when they are open for business but as long as they are not it is burning cash everyday and in huge amounts.

This complicated rights issue and MCB is really in my humble opinion, make investors who have faith in them paying for the mistakes of the few senior management who called for the fuel hedging. There is no accountability as such which meant that these same individuals would still be managing the company moving ahead from here. Does this worry anybody?

Like some say, SIA glorious days are over. Today SIA is just another good or above average airline. It is not that SIA does not have any standard it is because her competitors have caught up and racing past her.

Thinking back sometime ago, when SIA was in trouble, they thought they had the magic bullet and brought Pillay back on board but that nothing of significant materialized.

I am very afraid that SIA may end up tragically like Noble.

I am also worried about Keppel Corp and Singtel.

There appears to be trend among these MNCs.


Just sharing and hope nobody is as silly as me making all these mistakes and washing my laundry in public.


Thank you.

[¯|_(ツ)_/¯]

Apologies for the incorrect interpretation of the rights and MCB.

When I read the announcement, I did not realised that it's actually 2 issues and I thought it's only one.

There is no intention to mis-lead anyone.

Sorry, if I cause anyone to lose $$$.