Sakae CFO wrongly bought back shares at a price above permissible level

MAINBOARD-LISTED restaurant operator Sakae Holdings has suspended its share buyback after its chief financial officer (CFO) Tan Yiok Ping wrongly bought back the company’s shares at S$0.118, above the maximum allowed price of S$0.104.

On Oct 27, Tan had queued the purchase of shares, at a share buyback purchase price of up to S$0.118, through the company’s account with UOB Kay Hian.

However, Sakae said in a bourse filing on Monday (Oct 31) that the purchase price of S$0.118 was a mistake by the CFO, as it exceeded the maximum purchase price approved to be paid for each share under the share buyback mandate.

Under the share buyback mandate, the market purchase maximum price should not exceed 105 per cent of the average closing price, which on Oct 27 was S$0.104.

Shareholders had previously approved the share buyback mandate at its annual general meeting on Oct 29.

By the end of the trading day, Sakae had purchased 500,000 shares at S$0.118, which represented 113 per cent of the applicable average closing price. The oversight was only realised by Tan at the end of the trading day, the company said.

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Following this, Sakae’s chief executive officer was notified, and both the board and the Singapore Exchange were alerted. “The board immediately directed management and CFO to suspend the buying back of shares pursuant to the share buyback mandate,” it added.

Sakae noted that the 500,000 shares purchased pursuant to the share buyback is “insignificant”, representing only 0.35 per cent of the total issued and paid-up shares of the company at the relevant time.

It added that the additional consideration of S$4,500 paid will not have any material impact on the net tangible assets per share and earnings per share of the group for the current financial year ending Jun 30, 2023.

It also said that the share buyback purchase price of S$0.118, while exceeding the market purchase maximum price of S$0.109, does not exceed the maximum purchase price approved to be paid for each share in the case of an off-market purchase, being 120 per cent of the average closing price.

“The board states that it takes the share buyback mandate from the shareholders seriously and will make improvements to prevent such mistakes,” Sakae said.

It added that the company will not undertake any buyback of its shares pursuant to the share buyback mandate until “such improvements are in place”.

Shares of Sakae closed at S$0.091 on Monday, down S$0.027 or 22.9 per cent, after the announcement.