Tiger Airways Holdings Limited announced a few days ago that it was proposing to undertake a renounceable rights issue to raise gross proceeds of approximately S$158.6 million.
Up to 273,423,9302 new ordinary shares in the capital of the Company will be issued at an issue price of S$0.58 for each Rights Share on the basis of one Rights Share for every two existing ordinary shares in the capital of the Company held by shareholders of the Company.
The Issue Price represents a discount of approximately 39% to the last traded price of S$0.955 per Share on 25 August 2011, being the date of the announcement, and a discount of approximately 30% to the theoretical ex-rights price of S$0.83 per Share.
The time and date of the Rights Issue will be determined by the directors of the Company and is subject to approval from shareholders.
I have never liked stocks of airline companies as many of them struggle to remain profitable. Even more so an airline which has received more than its fair share of complaints from its customers as far as I can remember.
Long term shareholders who invested into Tiger Airways during IPO and held on will not be too happy with its current price as well as the news of the rights issue.
Incidentally, the current CEO of Tiger Mr Tony Davies, has resigned to take on a position in another company. Mr Chin Yau Seng will be taking over as the CEO with effect from 1st November 2011. Mr Chin is currently the Company’s Acting CEO and was formerly the CEO of Silk Air.