Some Tigerair minority shareholders say SIA offer ‘not reasonable’

SINGAPORE — Some minority shareholders of Tiger Airways have raised concerns over the offer by Singapore Airlines (SIA) to buy out their stake in the budget carrier, calling the ­offer price “not reasonable”, the Securities Investors Association Singapore (SIAS) said today (Nov 24).

SIA, which owns 55.8 per cent of Tiger, said earlier this month it will pay S$0.41 a share in cash to buy out the other shareholders of its subsidiary.

SIAS, an association representing retail investors, called on Tiger’s board to “carefully review” SIA’s offer to ensure that minority shareholders are given a fair deal.  

SIAS president and chief executive David Gerald noted that shareholders who bought Tiger’s shares during its initial public offering (IPO) in 2010 at S$1.50 a share, and subscribed to all three rights issues since then, would have paid an average of S$0.67 a share. 

That makes SIA’s offer 39 per cent lower than what these long-term ­minority shareholders paid, he said, even though it represented a 32 per cent premium to Tiger’s closing price the day before the Nov 6 announcement.

“While SIAS understands that the current market conditions are different, nevertheless the minority shareholders’ interest must be taken into account. Therefore, SIAS calls upon the board of Tiger to carefully review the SIA offer to ensure that the minority is dealt with fairly,” said Mr Gerald.

SIA’s offer also comes with an ­option to subscribe to SIA shares at S$11.1043 per share. 

The voluntary offer is conditional upon SIA and parties acting in concert with it owning more than 90 per cent of Tiger. SIA will de-list Tiger from the Singapore Exchange if the buyout is successful.

In response to TODAY’s request for a response to SIAS’ statement, an SIA spokesperson said the airline does not have “further comment ­beyond what was in the offer ­announcement and press release on the morning of Nov 6”.

SIA chief executive Goh Choon Phong had said then that the full ­integration of Tiger into the SIA Group “will result in enhanced ­operational and commercial synergies, ­ensuring its long-term success”.

“While the budget carrier has done well in its restructuring to improve its financial position, its development ­potential is limited without deeper ­integration with the SIA Group to build a strong foundation for growth over the long term,” he added.

Tiger told TODAY it has appointed Maybank Kim Eng Securities as an ­independent financial adviser to evaluate SIA’s offer. 

It added that a circular containing recommendations from the ­adviser and the advice of the independent ­directors on the offer will be dispatched to shareholders and PCCS (perpetual convertible capital securities) holders in due course.

Analysts whom TODAY spoke to said SIA’s offer is fair considering the aviation industry’s challenges. 

“Tiger has been trading below 60 cents for almost four years … It cannot be compared to the IPO price as the current market conditions are different. For those investors who bought the shares at the IPO price of S$1.50, it is a risk that they have to take — on whether the shares will fall or ­increase after listing,” said IG Markets analyst Bernard Aw.

“The fundamentals underpinning budget airlines, overall, are not in a very good shape, and for the aviation industry in general. The pricing is a reflection of current conditions,” he added.

Tiger shares ended unchanged at S$0.405 cents today, while SIA shares rose 0.5 per cent to S$10.74.