What does this mean for Singapore Airlines, which has just experienced its "toughest year in its history"?
I'm going light on the narration, because I think the numbers really speak for themselves. I've also shared my thoughts back last year in May 2020 [1] [2] about the 2020 rights issue.
Singapore Airlines pre-covid market cap in July 2019, when travel market was booming: $11.5 bil
Just before the 2020 rights issue, market cap of around $7 bil, on 1.185 billion shares outstanding.
After 2020 rights issue, increase to 2.963 billion shares outstanding. At a low of $3.20, this meant a market cap of around $9 bil. Based on today's closing share price of $4.70, market cap of around $13.9 bil. (Yes, more than pre-covid! But don't forget, SIA raised $5.3 bil cash from the rights issue alone)
If the 2020 MCBs are converted in 2030: 1.3 billion more shares (total 4.26 bil shares)
If the 2021 MCBs are converted in 2031: 2.3 billion more shares (total 6.56 bil shares)
If we assume in 2031 that SIA market cap reaches $20 bil + no early redemption of either tranches of MCB, we are looking at $3.05 per share.
If, on the other hand, we are think that SIA will be able to redeem the first ($3.5b) and second ($6.2b) tranches of MCB before maturity, we are looking at the airline somehow being able to raise a massive sum of money to redeem these bonds. We're talking in the range of $12.4b (if redeemed at the 5th year) to $16.5b (if redeemed at the 9th year).
The numbers well and truly speak for themselves.
