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Hanwell plans capital reduction exercise to return surplus cash

HANWELL Holdings plans to do a capital reduction exercise to return to shareholders surplus capital through a cash distribution.

The exercise will be done by reducing the company’s issued and paid-up share capital by S$20 million from S$200.1 million to S$180.1 million. The amount will be distributed to shareholders based on a price of S$0.03614 per share.

The company said in an announcement on Thursday: “The directors are of the view that the capital reduction is in the best interests of the company as the cash distribution comprises the paid-up capital in excess of the immediate requirements of the company.

“If effected, the capital reduction and cash distribution would result in the company having a more efficient capital structure, thereby improving shareholders’ return on equity. In determining the level of capital to be returned to shareholders, the company has ensured that it retains sufficient capital for its business and operation needs.”

The exercise will have no impact on the earnings per share of the company, although it will bump up return on equity (excluding non-controlling interest) from 3.32 per cent to 3.55 per cent on a pro forma basis, based on the company’s unaudited financial statements for the nine months ended Sept 30, 2018, and assuming that the exercise was completed on Sept 30, 2018.

The company plans to seek shareholders’ approval for the capital reduction and cash distribution at an extraordinary general meeting to be convened.