Shareholders in Tiger Airways have approved a Singapore dollars (S$) 297 million ($238 million) rights and securities issue aimed at strengthening the low-cost carrier's balance sheet and funding its expansion.
A motion to approve the issue of new renounceable rights and non-renounceable preferential perpetual convertible capital securities (PCCS) was approved by 98% of shareholders at an extraordinary general meeting held in Singapore on 22 March.
The rights issue is expected to raise S$77 million, while the PCCS will raise S$220 million for the carrier.
Shareholders also approved a "whitewash" motion that would allow major shareholder Singapore Airlines to subscribe for excess rights and convertible securities, provided its total shareholding in Tiger does not exceed 49.9%.
Tiger says that the rights and PCCS issues will help to boost its balance sheet, by allowing the carrier to reduce its net gearing level from 1.8 times to 0.19 times.
This will be achieved by using S$90-100 million to retire debt, while a minimum of S$27 million will be allocated to working capital. Tiger also intends to invest S$70-90million into its Seair and Mandala Air affiliates with S$60-80 million allocated to financing deliveries of the 25 Airbus A320s it has on order.
Tiger recorded a net profit of S$2.02 million during the quarter ended 31 December 2012, with its loss for the nine months to that date narrowing to S$30 million from S$88 million in the previous corresponding period.