Troubled Tiger Airways makes its play

Steve Creedy
The Australian

Tiger Airways is expected to reveal further details of its initial public offering today as it begins a roadshow aimed at convincing investors to help it reduce debt and fund further expansion.

The struggling Singapore-backed airline hopes to raise between $S225 million ($177m) and $S250m but enters the market amid speculation it will battle to find backers.

The company yesterday announced it had appointed Standard Chartered Bank to arrange its first Export Credit Agency-backed financing arrangement with Frances Coface for two A320 aircraft.

The notoriously cagey carrier last month lodged a draft initial public offering document that shows its Australian operations made a cumulative loss of $79.3m since its launch in 2007 and September 30.

The partial float will see private investment firm Indigo Partners, which currently owns 24 per cent of Tiger, put a proportion of its stake on the market. The Ryan family’s RyanAsia, which owns 16 per cent, will also sell shares if the offer is oversubscribed.

Indigo’s Bill Franke and RyanAsia’s Declan Ryan, both industry veterans, have already quit the board and the airline this week announced a new chairman, accountant Gerard Ee Hock Kim, and three new independent directors.

Some industry insiders view the capital raising as a desperate bid for cash amid signs existing shareholders are reluctant to stump up further capital. The airline had $S18.5m in cash at September 30 with a net liability position of $S106.8m as it faces payments of $US778m for aircraft alone by the end of fiscal 2012. However, Tiger says in its prospectus it is confident it can generate the cashflow to pay its bills.

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