Singapore low cost carrier Tiger Airways plans to raise approximately S$158.6 million ($131 million) through a rights issue, with Singapore Airlines and Dahlia Holdings to obtain 90% of the rights due to them as shareholders.
Tiger will use the proceeds to fund pre-delivery and final delivery payments for aircraft that it expects to be delivered by the end of 2015.
The rights shares will be issued at S$0.58 each, a 39% discount to Tiger shares' last traded price on the Singapore Stock Exchange, said Tiger. One rights share will be issued for every two shares outstanding.
The rights issue requires regulatory approval a shareholder vote, which will be undertaken at an extraordinary general meeting. At the time of the announcement, SIA and Dahlia's stake in Tiger was 40.2%. Dahlia Investments is a wholly-owned unit of Singapore sovereign wealth fund Temasek Holdings.
Tiger hopes to complete the rights issue by mid November 2011.
The joint managers and underwriters for the issue, DBS Bank and Standard Chartered Securities, will take the remaining 10% of the rights shares available for SIA and Dahlia.
"The board of Tiger Airways reviews the capital structure of the company and its funding needs on a regular basis," said Chin Yau Seng, acting CEO of Tiger Airways. "The board sees this rights issue as an appropriate method of raising equity capital. The proceeds from the rights issue will enable the company to strengthen its balance sheets and provide the company with the financial flexibility to fund its expansion plans."
On 5 August Tiger Airways posted a net loss of S$20.6 million in its fiscal first quarter of 2011, compared with a net profit of S$1.9 million for the same quarter a year ago.
The Singapore-based carrier said the net loss was worsened by a higher tax expense.
Its revenues grew by 23.2% to S$179 million from S$145 million posted in the corresponding quarter a year ago. Total expenses for the airline were up by 32.6% from S$144 million to S$191 million.