Date: January 5, 2016
SIAS is pleased to note that SIA has responded favourably to our appeal on behalf of Tiger Airways minority shareholders by raising its offer from $0.41 to $0.45 and also by extending the offer period to 22 Jan 2016. Nevertheless, some minority shareholders are still not satisfied and have voiced their concerns that the offer still undervalues what long term shareholders have paid and have been seeking advice from SIAS on how they should proceed. SIAS can only assist shareholders to make an informed decision but not advise on how they should vote. As there are many investors with different risk appetite and investment styles, SIAS can only assist in providing the different scenarios for them to consider.
Firstly, if a shareholder had previously accepted SIA’s offer, he would be entitled to the revised offer. Shareholders need not worry about this.
What happens if a shareholder does not accept the offer?
If SIA manages to achieve over 90%, SIA will be able to privatise the Tiger Airways. If the shareholder has not accepted the offer, he will continue to remain a shareholder of Tiger Airways. But Tiger Airways would not be listed and he would have difficulty in trading his shares. Nevertheless, under the Singapore take- over code, he will have an additional 3 months to decide to tender his Tiger Airways shares to SIA, and SIA will have to honour the original offer price. After this 3 month period, SIA is not obliged to accept his Tiger Airways shares, and he will continue to remain a Tiger Airways shareholder as an unlisted company. Then if the shareholder wishes to sell, he will have to find a buyer privately and have to determine the price as well. To do so will not be easy.
If SIA does not manage to achieve the 90% to delist Tiger Airways, then Tiger Airways will continue to be listed on SGX. Minority shareholders who did not accept the offer will continue to be shareholders of Tiger Airways as a public listed company but the share price would be determined by market forces at that point in time and it may or may not go below the offer price.
SIAS clearly understands the rationale for SIA’s intention of taking Tiger Airways private and integrating Tiger Airways into its multi-brand portfolio strategy for greater efficiency and flexibility. To not be able to achieve this could possibly lead to less efficient use of resources and potentially lower profitability. While fuel prices have fallen, helping to boost the bottom line, the operating environment is still challenging with rising competition from other low cost carriers and other regional airlines.
Whether SIA can achieve its 90% threshold, would very much depend on those who have been hoping for an upward revision to accept the current revised offer. They are well-advised to revisit the IFA report before making up their minds.
Founder, President & CEO
Securities Investors Association (Singapore)