Ah well, airlines always suck a lot of money. Last rights issue was in late-2011. That's about 18 months or so.
The Straits Times
www.straitstimes.com
Published on Mar 06, 2013
Tiger seeks $294m from shareholders
Proceeds will pay off debts, expand budget carrier's presence in Asia
By Karamjit Kaur Aviation Correspondent
BUDGET carrier Tiger Airways plans to raise $293.5 million in net proceeds from shareholders to pay its debts and fund expansion.
The money will be used to buy aircraft and parts, among other expenses, to support its Asian operations, the airline said yesterday.
Singapore-based Tiger Airways Holdings owns two carriers, one in Singapore and the other in Australia. It also has stakes in Indonesia's Mandala Airlines and South East Asian Airlines in the Philippines.
In the last four years, Tiger Airways has nearly doubled its capacity and now flies about 6.5 million passengers annually, said group chief executive Koay Peng Yen.
He said: "The proceeds from the fund-raising exercise will allow us to fortify our balance sheet and be well-positioned to grow the Tiger franchise in Asia."
To raise the money it needs, Tiger will give existing shareholders an opportunity to take up more stock at a discounted price.
They can buy one rights share for every five shares held.
The offer is 47 cents for each share - a discount of about 34 per cent from the last traded price on Monday.
In a fairly rare move, the group is also offering stakeholders the option to take up convertible securities - $1.07 each for every four ordinary shares that they hold.
These can be converted to shares in future. In the meantime, owners will earn a 2 per cent return a year for five years.
The rights issue is expected to raise $77.2 million while the convertible bond issue is set to raise $219.8 million in net proceeds.
Mr Hugh Young, managing director of Aberdeen Asset Management Asia, said offering convertible securities allows Tiger to raise cash at a lower cost, than taking up a loan, for example.
He said: "If the share price goes up and people convert their securities to shares, it also immediately becomes equity rather than debt."
Issuing shares and convertible securities also means less dilution for existing stakeholders, analysts said.
The last time Tiger Airways sought cash from the market was in August 2011 when it announced a rights issue to raise $159 million.
Its current fund-raising plans will be put to shareholders for their approval later this month.
The airline, about a third owned by Singapore Airlines, currently operates a fleet of 43 single-aisle Airbus aircraft. By September 2015, the group will take delivery of another 25 jets.
With the demand for low-cost travel in the Asia-Pacific outpacing growth in the full-service sector, carriers like Tiger Airways, Jetstar and AirAsia are ramping up capacity. But with yields under pressure from high oil prices and competition, profits are being hit.
In the three months to Dec 31, Tiger Airways made a small $2 million profit. While this reversed a $17.4 million loss in the same quarter in 2011, the outlook remains challenging, analysts said.
karam@sph.com.sg
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