Societe Generale extends one-off payment to SIA short DLC holders

The DLC lost its value after price adjustments were made to offset share dilution.

Societe Generale’s SG Issuer is giving a single exceptional payment to investors of the 5x Short daily leverage certificates (DLCs) on Singapore Airlines (SIA) as “goodwill gesture,” the issuing entity announced in an SGX filing.

The single exceptional payment will amount to $0.30 per 5x Short DLC on SIA. This will be made to registered holders of the DLC as of 11 May.

On 6 May, an airbag mechanism was triggered as the underlying unit price of the DLCs rose by more than 20%. As the underlying stock price reached $4.59, the DLCs lost 100% of value. Trading and market making activities for the DLCs have been permanently suspended. 

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This followed after a corporate action adjustment involving SIA’s new ordinary shares and mandatory convertible bonds, which was made to offset the dilutive or concentrative effect on the underlying asset price, by way of adjusting the Rfactor of the SIA DLCs.

“We emphasise that the goodwill payment amount is not intended to compensate investors for all loss given the risks investors assumed in purchasing these structured products,” SG Issuer said.