Singapore Airlines Group has announced its intention to partially redeem half of the zero-coupon mandatory convertible bonds (MCBs) it issued in June 2021, as recovering air travel improves its liquidity and bolsters its balance sheet.
The Singapore Airlines (SQ, Singapore Changi) parent company said in a stock exchange filing on May 10 that the partial redemption will start on June 24 June on a pro-rata basis and at the relevant accreted principal amount, being at 108.243% of the principal of the MCBs. This will be around SGD3.4 billion Singapore dollars (USD2.55 billion), The Straits Times calculated.
However, as June 24 is a Saturday and not a working day, the redemption funds will be paid out on June 26.
“The issuer shall make, or cause to be made, payment of the redemption moneys in respect of the Rights MCBs in Singapore dollars to the depository for the account of the holders of the Rights MCBs,” the statement pledged. “This will be fully funded by SIA Group’s existing cash reserves, which stood at SGD15.4 billion [USD11.57 billion] as at December 31, 2022.”
The bonds were issued to support the state-owned company’s finances during the almost total shutdown of air travel in and out of Singapore Changi during the pandemic. Singapore Airlines announced the MCBs in May 2021, which it said would raise SGD6.2 billion (USD4.66 billion) from its shareholders. The measure followed the carrier reporting the biggest net loss in its history. Of the sum, SGD1.35 billion (USD1 billion), or 22%, was used to fund aircraft and aircraft-related payments as well as investments in digital capabilities.
The latest repayment announcement comes five months after Singapore Airlines Group conducted a full redemption of MCBs it issued in 2020.
