SINGAPORE Airlines (SIA) share price saw strong activity on the counter’s first day of ex-rights trade. SIA share price goes ahead of S$8.8 billion fundraising by the flag carrier. The stock opened on Wednesday at S$4.235, down 28.3 per cent or S$1.675 from the closing of the previous day.
After some 21.3 million shares changed hands, it then rose to S$4.77 by midday break. It was making SIA the most successful counter by value. it is as well as one of the most actively traded by volume on the Singapore bourse. SIA shares had dropped 0.7 per cent or S$0.04 to close at S$5.91 on Tuesday, the last day of cum-rights trading for the counter.
Set Up the Deadline
The deadline date for the rights issue for the airline is at 5 pm on Friday. This is when the company’s membership register and share transfer books are closed to determine the eligible shareholders’ provisional allocations under the rights issue.
Back in March, when SIA introduced a cash call, the estimated ex-rights price (TERP) was S$4.40 per share. According to this case, the issue of rights was resolved at that time. And then, it determined on the basis of the last traded price of S$6.50 on March 25, 2020, the last trading day before the announcement.
The TERP is now S$4.164, measured on Tuesday from S$5.91 based on the closing price for the stock.
The SIA would collect gross proceeds of S$8.8 billion through a three-for-two share rights issue. In addition, a 10-year compulsory convertible bond (MCB) transaction.
This requires up to 1.78 billion new shares to collect S$5.3 billion to be sold at S$3 apiece. The problem price reflects a discount of around 53.8 per cent on March 25. The last trading day before the carrier revealed the cash call. The last transacted price was S$6.50.
At a virtual extraordinary general meeting (EGM) on April 30 SIA shareholders voted in favor of the cash call. They also approved an additional issue of up to S$6.2 billion of additional MCBs. It could be released within a 15-month span following the EGM to shore up liquidity if the Covid-19 pandemic is going on.
