The stock opened at $4.235 on Wednesday (May 6), $1.675 or 28.3 per cent lower than the previous day when it traded cum rights.
It then rose to $4.77 by the midday break, after some 21.3 million shares changed hands, making SIA the most active counter by value as well as one of the most heavily traded by volume on the Singapore bourse..
On Tuesday, the last day of cum-rights trading for the counter, SIA shares had fallen 0.7 per cent or $0.04 to close at $5.91.
The record date for the airline’s rights issue is on Friday at 5pm. This is when the register of members and share transfer books of the company will be closed to determine the provisional allotments of the entitled shareholders under the rights issue.
Back in March when SIA proposed the cash call, the theoretical ex-rights price (TERP) was $4.40 per share – assuming the completion of the rights issue at that time and calculated based on the last transacted price of the shares of $6.50 on March 25, 2020, which was the last trading day prior to the announcement.
The TERP is now $4.164, calculated based on the stock’s closing price on Tuesday of $5.91.
SIA will raise $8.8 billion in gross proceeds through a three-for-two rights issue of shares and a 10-year mandatory convertible bond (MCB) issue.
This includes up to 1.78 billion new shares to be issued at S$3 apiece to raise S$5.3 billion. The issue price represents a discount of about 53.8 per cent to the last transacted price of $6.50 on March 25, the last trading day before the carrier announced the cash call.
Under the bond issue, on the basis of 295 rights MCBs for every 100 existing shares owned, SIA will raise up to $3.5 billion. The zero-coupon bonds will be priced at $1 each.
On April 30, SIA shareholders voted in favour of the cash call at a virtual extraordinary general meeting (EGM). They also approved a further issue of up to $6.2 billion of additional MCBs which may be issued within a 15-month period after the EGM to shore up liquidity if the Covid-19 pandemic drags on.