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Sakae Holdings clarifies share buy-back purchase price on Oct 27 was CFO's mistake

Felicia Tan
Felicia Tan10/31/2022 08:46 AM GMT+08  • 2 min read
Sakae Holdings clarifies share buy-back purchase price on Oct 27 was CFO's mistake
One of Sakae Sushi's outlets at Bugis Junction. Photo: Samuel Isaac Chua/The Edge Singapore
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Sakae Holdings has clarified that the higher share buy-back purchase price of 11.8 cents conducted on Oct 27 was a mistake made by the company’s chief financial officer (CFO).

The company, on the morning of Oct 28, issued its share buy-back notice on the bourse, saying that it had purchased 500,000 shares on Oct 27 with the highest price per share being 11.8 cents. The lowest price per share stood at 11.6 cents.

The total consideration of the shares purchased on Oct 27 stood at $58,840.

The share buy-back comes after the adoption of a share buy-back mandate at Sakae Holdings’ annual general meeting (AGM) held on Oct 29, 2021.

Under the share buy-back mandate, the market purchase maximum price should not exceed 105% of the average closing price, which was 10.4 cents on Oct 27.

The share price of 11.8 cents apiece represented 113% of the day’s closing price.

See also: Biden's misguided tax on share buybacks

According to the company, the oversight was only realised by the CFO at the end of the trading day.

Following the realisation of the mistake, the company suspended the buying back of shares under the share buy-back mandate.

In its Oct 31 statement, the board says the 500,000 shares purchased are “insignificant”, representing only 0.35% of the company’s total issued and paid-up share capital.

See also: Bharti Airtel subsidiary buys back US$450 mil of 5.35% notes due 2024, 50% higher than initial tender offer

The additional consideration paid, which is at $4,500, will not have any material impact on the group’s net tangible assets (NTA) per share and earnings per share (EPS) for the current financial year ending June 30. The sum is calculated by multiplying the number of shares purchased, by the difference between the share buy-back purchase price of 11.8 cents and the market purchase maximum price of 10.9 cents.

Plus, the share buy-back purchase price of 11.8 cents, while exceeding the market purchase maximum price of 10.9 cents does not exceed the maximum purchase price approved to be paid for each share in the case of an off-market purchase at 120% of the average closing price.

Finally, none of the company’s directors or controlling shareholders had any interest in the share buy-back.

Shares in Sakae closed flat at 11.8 cents on Oct 28.

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