Yangzijiang Financial proposes adoption of share buyback mandate

YANGZIJIANG Financial Holding, the spin-off from Yangzijiang Shipbuilding, will host an extraordinary general meeting on June 8 to seek shareholders’ approval for the company to adopt a share buyback mandate, it announced in a bourse filing on Monday (May 23).

The proposed mandate is to allow the company to buy back up to 10 per cent of its own issued ordinary share capital. 

Its terms stated that the purchase price to be paid for a share must not exceed 105 per cent of the average closing market price of the shares in the case of an on-market share buyback. In the case of an off-market share buyback, the purchase price must not exceed 120 per cent of the average closing market price of the shares.

As of May 13, its issued and paid up capital is S$4.264 billion, comprising 3.95 billion shares. This means that the company will be able to buy back up to 395 million shares, if the resolution is passed.

Explaining its rationale, the company said it wishes to give its directors the flexibility to undertake share buybacks “at any time when circumstances permit”. 

This is with the objective of increasing shareholders’ value and to improve the return of equity of the group, it pointed out, adding that a share buyback made at an appropriate price level is one of the ways through which the return on equity of the group may be enhanced.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

“The directors believe that the share buyback mandate provides the company with a mechanism to facilitate the return of surplus cash over and above the group’s working capital requirements in an expedient and cost-efficient manner,” it stated in its letter to shareholders.

“Share buybacks also allow the Directors to exercise control over the Company’s share structure and, depending on market conditions, may lead to an enhancement of the earnings per share and/or net tangible assets per share.”

The company also said its directors believe that share buybacks “may also help to mitigate short-term market volatility and offset the effects of share price speculation”.

All in all, it pointed out that share buybacks will only be undertaken as and when the directors consider it to be in the “best interests” of the company and its shareholders.

If approved, the mandate will begin from the day of the vote till the date of its next annual general meeting, when the share buybacks are carried out to the full extent mandated, or when the mandate is revoked or varied by shareholders in a general meeting.

Shares of Yangzijiang Financial have traded down 20.9 per cent since the stock made a lacklustre trading debut on Apr 28. Before the announcement on Monday, the counter closed up 2.4 per cent or S$0.01, at S$0.44.