SIA share volume soars after adjusting for rights issue

SIA shares, adjusted for a planned rights issue, rose on heavy trading yesterday on bets that ongoing fund raising will help the carrier survive, as lockdown restrictions ease worldwide. The shares surged the most since October 1987 in the morning, soaring 21% to $5.04. The stock pared its advance to close up 5.7% at $4.40. Some 48.79m SIA shares changed hands, making it the second-most traded counter on the Singapore bourse Wednesday. SIA unveiled in March plans to raise about $8.8b by rights issue and convertible bonds to contend with the devastating impact of the coronavirus pandemic. Investors had until Tuesday to buy the stock to be entitled to any rights. Back in March, when SIA proposed the fund raising, the theoretical ex-rights price (Terp) was $4.40 per share - assuming the completion of the rights issue at that time and calculated based on the last transacted price of the shares of $6.50 on March 25, the last trading day prior to the announcement. The Terp is now $4.164, calculated based on the stock's closing price on Tuesday of $5.91. "The reopening of economies, coupled with the billions of dollars Singapore Air has raised, will help it recover some of the lost ground," said Justin Tang, head of Asian Research at United First Partners. "The fact that investors, including Temasek, are subscribing rights and other instruments of the company shows it is not a lost cause."<br/>