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TOP-UP SHARES UNDER THE TOP-UP OFFER

Shplayer, thanks for your reply... Yes, I am very clear about it now and also I know I'm the fortunate one :) . I didn't know previously that SIA only offers investors to top up to nearest 200 shrs. I thought it's the same for everyone.. i.e. cancel x shares and SIA sells x shares back. That's why I thought, why bother?

 

Thanks again for taking effort to answer my quesiton.

 

EastonBay,

Share buy back is a tool that management use to for various purposes. Some of them are:

1. To reduce the issued shares in the market by buy back and cancelling the shares so that, theoretically, if $$$ earnings is stagnant, the eps will improve cos the earnings has less shares to divided into.
2. To utilise excess capital in the company.
3. When accounting rules were changed recently that companies will have to expense employee share options, companies have bought back shares and kept it in their treasury for the purpose of re issuing them as option shares.

As for SIA share buy back, under the current situation, I think the small investor is better of than the big investor.

For example, if an investor holds 1000 shares, they will have to 'sell' 60 shares back to SIA at $18.46. This is less than the recent market price of  approx $19.00 that SIA has been trading at for the past few sessions. Because this investor will be left with 940 shares (SIA can be traded in 1000 and 200 share lots), this investor will be left with an odd lot of 140 shares (940 - 200x4). SIA has been considerate enough the offer to 'sell' back the 60 shares at $18.46 so that the investor is not left in this dilemma holding odd lots.

An investor holding 5,000 shares will have 300 shares bought back leaving him with 4,700 shares. In this case, SIA will only offer to 'sell' back 100 shares so that he will not be stuck with odd lots.

Another investor holding 10,000 will have 600 shares 'bought' back leaving him with 9,400 shares. This shareholder will not have odd lots and SIA will not offer any 'sell' back shares.

Hope this is clear.

 

Shplayer: Sorry to trouble you again. I'm just wondering what's the point of this whole cap reduction exercise.. see they cancelled 60 shares out of 1000 shares at 18.46. Especially for those holding only 1000 shr, now we have to buy back 60 shrs from the company to round it off at 18.46.  Does it mean theoretically those small time investors do not benefit from it all?

Could you pls enlighten me?

(I remember you are also SIA investor)

Got this from SGX website.

The Top-Up Offer Price is S$18.46 in case for each Top-Up Share payable in full on acceptance, which is the same amount as the Cash Distribution per Share under the Capital Reduction. However, no actual payment by the accepting Relevant Shareholders would need to be made. Instead, the Cash Distribution which would have been paid to an accepting Relevant Shareholder (or to his CPF agent bank, in the case of an accepting Relevant CPF Holder, or to his Depository Agent, in the case of an accepting Relevant Sub-Account Holder) in respect of his Shares or Shares held on behalf of him which would have been cancelled pursuant to the Capital Reduction which will be applied towards the payment of the aggregate Top-Up Offer Price for the Top-Up Shares accepted by him under the Top-Up Offer. By accepting the Top-Up Offer, the accepting Relevant Shareholder is deemed to have irrevocably authorised the Company and if applicable, CDP to apply the Cash Distribution towards such payment.