See how Tiger Airways will spend its latest $297m fund raising

New fleet acquisitions eyed.

In a release, Tiger Airways Holdings Limited announced plans to raise an aggregate of approximately $297 million through a renounceable rights issue and a non-renounceable preferential offering of perpetual convertible capital securities (“convertible securities”) to fund future expansion in Asia and strengthen its balance sheet.

Koay Peng Yen, Group CEO of Tiger Airways, said, “The Tiger Group has nearly doubled its capacity in the past four years, and is now flying about 6.5 million passengers annually. We have a strong leadership position in Singapore and have invested in two fast-growing markets, namely Indonesia and the Philippines. The proceeds from the fund raising exercise will allow us to fortify our balance sheet and be well-positioned to grow the Tiger franchise in Asia.” 

Shareholders are entitled to subscribe for one rights share for every five existing ordinary shares they own in the Company. Through the rights issue, Tiger Airways will issue 164.3 million new ordinary shares at $0.47 for each rights share, representing a discount of about 34% to the last traded price of $0.715 per share on 4 March 2013.

The preferential offering will entitle shareholders to subscribe for one convertible security with a denomination of $1.07 for every four ordinary shares that they hold. Each convertible security confers a right to receive ordinary distributions at the rate of 2% per annum for the first five years (which are deferrable at the Company's option) and can be converted at the prevailing conversion price. The initial conversion price will be set at a 15% conversion premium to the average price of Tiger Airways’ shares over the five trading days up to and including the price fixing date, which is two business days before the date of the close of the preferential offering.

The estimated gross proceeds from the rights issue and preferential offering will be $77.2 million and $219.8 million respectively, with the aggregate net proceeds to be about $293.5 million. This will mainly be used to fund Tiger Airways’ growing operations in Singapore and joint ventures in Indonesia and the Philippines, repay existing debt, and strengthen its financial position. By September 2015, the Group will take delivery of an additional 25 aircraft, representing more than half of its existing fleet of 43 operated by its subsidiary and associated airlines.

Major shareholder Singapore Airlines, which currently has a stake of 32.7%, has undertaken to subscribe for its respective pro-rata entitlement to the rights shares and convertible securities. It will also subscribe for excess rights shares and convertible securities not subscribed for by other shareholders provided that its resultant shareholding following the completion of the transaction will not exceed 49.9%. 

Temasek-owned Dahlia Investments Pte. Ltd., which holds a direct stake of 7.3% in Tiger Airways, has undertaken to subscribe for its pro-rata entitlement to the rights shares. The fund-raising exercise is expected to be completed by May 2013 and will be subject to shareholders’ approval at an extraordinary general meeting to be convened on 22 March 2013.

Morgan Stanley Asia (Singapore) Pte. is the sole financial advisor, lead manager and lead arranger of the rights issue and the preferential offering. DBS Bank Ltd., Morgan Stanley Asia (Singapore) Pte, and Standard Chartered Securities (Singapore) Pte. Limited are the joint underwriters of the rights issue.