SINGAPORE (Sept 24): Stamford Land Corp and Singapore Shipping Corp, which share a common executive chairman in Ow Chio Kiat, have received mandates from shareholders to buy back up to 10% of their total issued shares. With the mandates in hand, both companies have proceeded with the share buybacks at a steady clip.
Unless held as treasury shares, shares bought back are cancelled. The smaller share base effectively enlarges the stake owned by each existing shareholder without them actually buying more shares. This means Ow will be able to tighten his hold over both companies.
In the case of Stamford Land, the 10% mandate translates into 86.4 million shares. According to a July 12 shareholders’ circular, Ow and the parties acting in concert with him own a total of 392.4 million shares, or 45.4% of the company.
If all shares allowed under the mandate are bought and cancelled, the company’s share base would be reduced to about 777.7 million shares. Ow and his concert parties would see their stake raised to 50.46%, assuming they do not buy more shares.
However, even if Ow and his concert parties cross the 50% threshold, they are exempted from making a general offer as required by the Companies Act. That is because the shareholders, in voting for the buyback mandate, also agreed to that waiver. At the extraordinary general meeting held on July 27, of the total of 54.3 million shares represented, 79.69% voted for the share buyback resolution, with the remainder against it.
Stamford Land wasted no time buying back shares once the mandate was received. It was in the market for at least 20 trading days. The most recent purchase, of 107,500 shares, was made on Sept 18. The company’s share base is now down from more than 864 million shares to just over 857 million shares and just under 7.1 million treasury shares, which carry no voting rights. Stamford Land paid between 49 and 49.5 cents each for the shares, which is a significant discount to its net asset value of 62 cents as at June 30, 2018, up from 60 cents as at March 31, 2018. Year to date, Stamford Land shares have gained 2.02% to close at 50.5 cents on Sept 19.
Incidentally, Stamford Land has brought a defamation suit against shareholder Mano Sabnani, who had taken issue with the salaries paid to Ow; deputy executive chairman Cheo Guan, who is Ow’s brother, and CEO Yew Heng, who is Ow’s son, at its AGM on July 27.
Sabnani also questioned why the company planned to again pay a dividend of just one cent for FY2018 even though earnings improved by 63.2% y-o-y to $56.4 million over FY2017. Sabnani, an active and vocal investor, recounted his experience at the AGM in a Facebook posting later that day, and the post was reprinted by The Business Times on July 31. The company announced on Sept 9 that it was suing Sabnani for remarks made at both the July 27 AGM and the FY2016 AGM.
A similar share buyback mandate was secured by Singapore Shipping on July 27 from its shareholders. Prior to this, Ow and his concert parties held a total of 194.7 million shares, or 44.6% of the total, based on a share base of 437 million. Assuming all 10% of the shares are bought back and cancelled, that would mean that Ow and the concert parties would hold 49.5% of the company, if they do not buy more shares.
Since obtaining the mandate, the company has bought back shares on at least 17 days. The most recent purchase was made on Sept 18 — 2,000 shares were bought at 29 cents each. As at Sept 18, the company had a reduced base of just below 434.5 million shares and just over 2.5 million treasury shares.
As with Stamford Land, Singapore Shipping’s earnings have improved. For FY2018 ended March 31, 2018, it reported a 22% y-o-y increase in earnings to US$10.4 million ($14.3 million). Revenue was up 6.4% y-o-y to US$46.2 million. Similar to Stamford Land, Singapore Shipping plans to pay a dividend of one cent for FY2018, same as in the previous year. Year to date, Singapore Shipping shares have dropped 3.33% to close at 29 cents on Sept 19.
