Martin Lee @ Sg
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Tiger Airways Rights 2013

The last time Tiger Airways did a rights issue in 2011, they raised around $158 million.

Less than two years later, Tiger Airways are in the process of another rights cum and perpetual securities issue to raise almost $300 million. Ouch.

Under the terms of the rights issue, every 5 existing shares will be entitled to 1 rights share at a price of $0.47.

For the Perpetual Convertible Capital Securities (PCCS), every 4 existing share will be entitled to 1 PCCS at a price of $1.07.

The PCCS is something like a convertible bond. It gives an ordinary distribution of 2.0% per annum for the first 5 years and a special distribution (equivalent to cash dividends on underlying ordinary shares). The payment of ordinary distribution can be deferred at sole discretion of company and there will be no ordinary distribution after 5 years.

As the PCCS is perpetual in nature, therefore there is no maturity date. However, Tiger has the right to redeem them anytime from seven years onwards.

The PCCS can be converted into Tiger Aiway shares at any time from the 41st day after the issue date. The conversion price will be set at a premium of 15% to the Reference Price, being the 5-day Volume Weighted Average Price from 4-10 April 2013, to the nearest 0.5 cents, subject to a minimum of 0.65 and maximum of 0.90.

Last date and time for application and payment for Convertible Securities : Friday, 12 April 2013 (5:00 p.m. by form and 9:30 p.m. for Electronic Applications through ATMs of Participating Banks)

Last date and time for acceptance of and payment for Rights and Excess Rights : Thursday, 18 April 2013 (5:00 p.m. by form and 9:30 p.m. for Electronic Applications through ATMs of Participating Banks)

Leave a Comment:

Calvin says 8 years ago

Hi Martin,

I do a calculation. Please correct me if I am wrong

5 years 2% per annum = 10% of $1.07 = $0.11
A special distribution = roughly $0.30 ?

The cost of getting a PCCS = $0.66

in order to convert to Tiger airways shares, need to pay $0.65

means the cost of buying a tiger airways share is $1.31?

What is the benefit of subscribing a PCCS compare to buy a share from stock market?

    Martin Lee says 8 years ago

    Dear Calvin,

    you got the conversion formula wrong. The distribution is independent from the conversion.

    If the conversion price is set at $0.66, you will be given 1070/0.66 = 1621 shares when you convert the PCCS into shares.

    Also, I don’t think the special distribution will be anywhere near $0.30. That is too optimistic a figure.

GS says 8 years ago

Is the PCCS worth 1.07? Do you think we should subcribe?

    Martin Lee says 8 years ago

    Dear GS,

    the 2% dividend is not much. The question is whether you think there is upside to Tiger shares, then the convertibility might be useful.

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