Singapore Airlines *Official* (SGX:C6L)

[arcan3]

But have clause that after 10 years (if not redeemed prior), the MCB bonds based on accumulated principal and interest worth ~$1.81 each is converted to share at $4.84 a piece.

So if SIA is delisted, then there is no longer any share price guidance and eventually zero ownership of shares (since no longer listed on SGX).

So any attempt to delist SIA will have to answer to the outcome of the bonds, which will probably have to be redeemed or some other fair and just solution provided to its status.

This is not rocket science and whomsoever designed these unfairly designed MCB ought to have considered the SIA delisting scenario since that is a very important and possible outcome in the next 10 years of the intended lifetime of the bond.

SIA if delisted, can still be sold off by minority shareholder. Just that it is much harder. The MCB are meant to be unfair because Temasek want to ensure that SIA survives and most probably wants the minority shareholder to share the burden of this equity injection. That is the purpose of keeping SIA listed. To maintain control of the company without taking the full risk by only having 55% ownership.

I dont know why you keep worrying about SIA being taken private. This is possibly the worst time to take airline private. Keeping it listed will enable majority shareholder to share the load of equity injection with minority shareholder.

And if time are good, SIA will likely to redeem the bond before they get delisted by Temasek so that there is no share dilution for Temasek. Temasek is not stupid to share the good stuff with minority shareholder. So you dont have to worry about this delisting issue

 

[chopra]

Airlines is now a very tough business. No airlines for me.

i also had my fair share (no pun) of bankruptcy experience in airline stock ==== in American airline. lost 2k sgd +.


no to cherry picking for long term investment for bulk of my warchest.

quick punt with spare cash @ bank stocks etc, yes. who dont?


knowing shiny things n iwda was god-sent.

 

[Sinkie]

SIA if delisted, can still be sold off by minority shareholder. Just that it is much harder. The MCB are meant to be unfair because Temasek want to ensure that SIA survives and most probably wants the minority shareholder to share the burden of this equity injection. That is the purpose of keeping SIA listed. To maintain control of the company without taking the full risk by only having 55% ownership.

I dont know why you keep worrying about SIA being taken private. This is possibly the worst time to take airline private. Keeping it listed will enable majority shareholder to share the load of equity injection with minority shareholder.

How come you all didn’t discuss SIA can issue even more MCB after this exercise finished? And also discuss they got one bond expiring in 2024 too?

All discussion seems to be how and when to exercise the right for the shares?

 

[yiron]

It's like a warrant and a bond with fixed interest in the same breath, but not a traditional warrant or a bond. This one grows with fixed interest and automatic conversion only at end of 10th year at fixed price of $4.84. Of course, holders face equity downside only if price of mother share goes down around time of conversion. But in 10 years it's unlikely to be stale. Otherwise, for long term holders, the current rights share would be a failure and it's better to sell off CR and invest elsewhere.

Logically SIA should redeem the MCB if the share price is above conversion price. But that would spook holders and so far in market practice, it's unlikely and TH would be the biggest beneficiary. It will let holders ride the benefit at no cost to the issuer, unless it has billions lying idle.

Vested.

I'm vested as well. But I disagree with the point that it would spook the MCB holders for SIA to redeem the bonds when their share prices are traded above the conversion price. That is simply how the financial instrument is supposed to work. It's no different from how issuers would call the bonds (given the option) in a falling interest rate environment to reissue at lower rates.

As a shareholder, it would spook me if SIA does not redeem the MCBs when they are financially able to, and instead choose to continue accruing the higher-than-market interest on the MCB, or choosing to convert the MCBs when the prevailing share price is higher than the strike price which would be detrimental to existing shareholders as their holdings are diluted.

In any case, whether one would subscribe to the MCBs is a function of the investment's stand-alone merit and one's own risk portfolio. I don't think it's a good fit for me, but I could see why some people may still subscribe for it.

 

[henrylbh]

How come you all didn’t discuss SIA can issue even more MCB after this exercise finished? And also discuss they got one bond expiring in 2024 too?

All discussion seems to be how and when to exercise the right for the shares?

What is there to discuss? SIA has put forward it's thoughts. If there is a need and if the market perceives value, SIA would go ahead and all shareholders will be offered the same?

 

[henrylbh]

Airlines is now a very tough business. No airlines for me.

Some airlines will fold in crisis like this. Good for those that survive. Our government is all out to ensure SIA survives.

 

[Sinkie]

What is there to discuss? SIA has put forward it's thoughts. If there is a need and if the market perceives value, SIA would go ahead and all shareholders will be offered the same?

It’s true, there is no need to discuss.

Let’s read SIA chairman thought again

 

[kage]

United Airlines Holdings Inc. expects to shrink its management and administrative ranks by at least 30% starting in October, according to a memo sent to employees Monday, as the coronavirus pandemic wreaks havoc on the airline industry.

No wonder oracle of omaha faster sell all airlines shares, good luck to people here.

In before Airlines in Singapore is different from US .....

 

[sfugel]

United Airlines Holdings Inc. expects to shrink its management and administrative ranks by at least 30% starting in October, according to a memo sent to employees Monday, as the coronavirus pandemic wreaks havoc on the airline industry.

No wonder oracle of omaha faster sell all airlines shares, good luck to people here.

In before Airlines in Singapore is different from US .....

But isn’t SIA different from US carriers?

 

[cherry6]

You know what you saying?

Think I do. And if u cannot even be bothered to read or quote in entirety, of what I just said, then how can u understand anything of it?

Main point is that if SIA board allowed conversion of MCB to shares at $4.84 where share price was significantly higher, would be a very bad deal for existing share holders, thus, SIA board will have to redeem the MCB before maturity to prevent dilutional effect of MCB conversion on the book value per share etc.

I won't comment on your last sentence cos I only want to discuss MCB technicalities in this post.

Think u r mistaken to think SIA board will allow u to convert to SIA share at $4.84 if share price is $10 because they can redeem the MCB at 4-6% compound, accumulated interest prior to maturity.

Shareholder (especially those not holding significant MCB) will demand that to safeguard their share value.

So these MCB, head u lose, tails u lose also.

And if SIA share price is $10, then they probably are very cash rich and will not hesitate to redeem the bonds at whatever the accumulated interest and principal is at that point in time, maybe paid for by issuing new bonds at lower interest of say 2% coupon.

So I think that the bonds are a 'con job' (unfair T&C) because the buyer gets the shorter end of the stick.

 

[cherry6]

SIA if delisted, can still be sold off by minority shareholder. Just that it is much harder. The MCB are meant to be unfair because Temasek want to ensure that SIA survives and most probably wants the minority shareholder to share the burden of this equity injection. That is the purpose of keeping SIA listed. To maintain control of the company without taking the full risk by only having 55% ownership.

I dont know why you keep worrying about SIA being taken private. This is possibly the worst time to take airline private. Keeping it listed will enable majority shareholder to share the load of equity injection with minority shareholder.

And if time are good, SIA will likely to redeem the bond before they get delisted by Temasek so that there is no share dilution for Temasek. Temasek is not stupid to share the good stuff with minority shareholder. So you dont have to worry about this delisting issue

Thanks for being clear that the minority shareholder is just the ATM machine for SG government and Temasek, to be used to milk money from and help pay for SIA ICU life support treatment.

Those MCB just affirms the fact that Temasek has no intention to take SIA private and will continue to milk the minority share holder of more $$$, possibly with further rights issues, possible as far down as shre price is possible to go (even into penny stock worth territory).

These MCB make it even more expensive for a Temasek buyout because then they will have to immediately redeem the MCB in cash and also pay up in cash the accrued interest in cash (4-6% compounded p.a. depending on age of the MCB then), without the benifit of evading significant liability to repay if the share price was lower than the MCB conversion price at 2030.

So Temasek maybe has a long term horizon to let SIA flounder. They may well privatise SIA in 2030 when the share price is ~$2/piece, having obtained much 'free $' from MCB holders whose MCB are converted at a big loss from the $4.84 conversion price predetermined at issuance now.

 

[cherry6]

SIA is airline. Airport is airport.

Which is why PAP GAHMEN will just give them free gifts in kind to keep them afloat, such as civil servants charter SIA planes, SG Airport group give SIA Airport use benifits, FOC or big discounts etc.

PAP gahmen will basically do everything they can to use government budget and national reserves to do funds transfers etc to keep SIA a float whilst air travel is ravaged by covid-19 and beyond.

 

[kage]

Thanks for being clear that the minority shareholder is just the ATM machine for SG government and Temasek, to be used to milk money from and help pay for SIA ICU life support treatment.

Those MCB just affirms the fact that Temasek has no intention to take SIA private and will continue to milk the minority share holder of more $$$, possibly with further rights issues, possible as far down as shre price is possible to go (even into penny stock worth territory).

These MCB make it even more expensive for a Temasek buyout because then they will have to immediately redeem the MCB in cash and also pay up in cash the accrued interest in cash (4-6% compounded p.a. depending on age of the MCB then), without the benifit of evading significant liability to repay if the share price was lower than the MCB conversion price at 2030.

So Temasek maybe has a long term horizon to let SIA flounder. They may well privatise SIA in 2030 when the share price is ~$2/piece, having obtained much 'free $' from MCB holders whose MCB are converted at a big loss from the $4.84 conversion price predetermined at issuance now.

I am also worried about further rights issue if the pandemic is not recovering and grounding of aircraft extends longer .... dun think shareholders will subscribe if there is 2nd round of rights issue ...

 

[arcan3]

Thanks for being clear that the minority shareholder is just the ATM machine for SG government and Temasek, to be used to milk money from and help pay for SIA ICU life support treatment.

Those MCB just affirms the fact that Temasek has no intention to take SIA private and will continue to milk the minority share holder of more $$$, possibly with further rights issues, possible as far down as shre price is possible to go (even into penny stock worth territory).

These MCB make it even more expensive for a Temasek buyout because then they will have to immediately redeem the MCB in cash and also pay up in cash the accrued interest in cash (4-6% compounded p.a. depending on age of the MCB then), without the benifit of evading significant liability to repay if the share price was lower than the MCB conversion price at 2030.

So Temasek maybe has a long term horizon to let SIA flounder. They may well privatise SIA in 2030 when the share price is ~$2/piece, having obtained much 'free $' from MCB holders whose MCB are converted at a big loss from the $4.84 conversion price predetermined at issuance now.

Obviously you are biased against the govt. But clearly you don't understand the stock market. Temasek is a profit driven entity and the stock market is not charity organization. The majority shareholder will always take advantage of the minority shareholder. That how the stock market works and there is nothing wrong with that. If you don't like or understand this, then don't invest in the stock market.

No one is putting a gun on your head, forcing you to buy SIA or their MCB or right.

 

[Sinkie]

Obviously you are biased against the govt. But clearly you don't understand the stock market. Temasek is a profit driven entity and the stock market is not charity organization. The majority shareholder will always take advantage of the minority shareholder. That how the stock market works and there is nothing wrong with that. If you don't like or understand this, then don't invest in the stock market.

No one is putting a gun on your head, forcing you to buy SIA or their MCB or right.

Temasek is doing national service, and not doing for profit la.

 

[kage]

Which is why PAP GAHMEN will just give them free gifts in kind to keep them afloat, such as civil servants charter SIA planes, SG Airport group give SIA Airport use benifits, FOC or big discounts etc.

PAP gahmen will basically do everything they can to use government budget and national reserves to do funds transfers etc to keep SIA a float whilst air travel is ravaged by covid-19 and beyond.

Afloat is one thing, share price drop is another, just like those investors that bought at more than $10 .... now is $6 .... its still surviving, but investors lost 40% ....

How bout those that bought over the years at $18, $16 etc .... dividends collected over the years are eroded with capital loss ....

Oracle of Obama might be wrong though ....

 

[edwinttt1978]

But isn’t SIA different from US carriers?

Yes. And one main difference: SIA does not fly domestically.

 

[edwinttt1978]

It’s true, there is no need to discuss.

Let’s read SIA chairman thought again

It’s true. If he didn’t blow his own trumpet, nobody else would have blown it for him.

 

[henrylbh]

I'm vested as well. But I disagree with the point that it would spook the MCB holders for SIA to redeem the bonds when their share prices are traded above the conversion price. That is simply how the financial instrument is supposed to work. It's no different from how issuers would call the bonds (given the option) in a falling interest rate environment to reissue at lower rates.

As a shareholder, it would spook me if SIA does not redeem the MCBs when they are financially able to, and instead choose to continue accruing the higher-than-market interest on the MCB, or choosing to convert the MCBs when the prevailing share price is higher than the strike price which would be detrimental to existing shareholders as their holdings are diluted.

In any case, whether one would subscribe to the MCBs is a function of the investment's stand-alone merit and one's own risk portfolio. I don't think it's a good fit for me, but I could see why some people may still subscribe for it.

The rights issue (rights share and rights mcb and additional mcb) will be treated as equity in the company's balance sheet. It also provide shareholders with opportunity to maintain their equity participation in the company.

 

[edwinttt1978]

Some airlines will fold in crisis like this. Good for those that survive. Our government is all out to ensure SIA survives.

Yes, and we must believe in “the Magic of Temasek”.

SIA must and will survive. Whether SIA continues to be profitable and pays dividends is another thing.