Tiger Airways Faces Rough Headwinds As IPO Approaches
Singapore. Singapore’s Tiger Airways plans to raise up to 273 million Singapore dollars ($195.3 million) in an IPO this month, according to a term sheet, braving a still struggling air market in the first listing of an Asian airline in five years.
Tiger, whose owners include Singapore Airlines and state investor Temasek, is selling about 165 million shares, or about 30 percent of its share capital, to raise funds for aircraft purchases.
The money raised will be used to set up a new operating base for Tiger as well as pay off some existing debt, the term sheet said.
Tiger’s IPO, downsized from an earlier estimated figure of around 300 million Singapore dollars to 350 million Singapore dollars, comes amid concerns about the health of the global airline industry, which has been battered by falling travel and cargo demand and a rally in fuel prices.
The tough environment has pushed some traditional airlines, including Japan Airlines, to the brink of bankruptcy. Even low-cost carriers such as Tiger have been affected.
Tiger set an indicative price of 1.35 Singapore dollars to 1.65 Singapore dollars a share for its offer, valuing the shares at 11.4 to 13.9 times forecast 2011 earnings.
Its IPO is the first by an airline in Asia since India’s Jet Airways in February 2005.
About 94.2 percent of the Tiger IPO comprises new shares, while the balance are vendor shares held by Indigo Partners.
RyanAsia, a company controlled by the founding family of Irish budget airline RyanAir, will divest some of its stake in Tiger if an over-allotment option is exercised. Singapore Airlines, which currently owns 49 percent of Tiger, and Temasek will remain invested, although their stakes will be diluted after the IPO.
Tiger has 17 Airbus A-320 aircraft in service with orders for another 55 A-320s that will be delivered between now and 2016.
Tiger’s investment road show began on Wednesday and the pricing of its share offer is scheduled to take place on Jan 16.
Reuters
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