Seatrium has announced plans for a share buyback and an early bond redemption to restore investor confidence in its beaten-down stock.
The offshore and marine giant said in a regulatory filing on Monday that it plans to buy back up to SGD 100m ($73.5m) of its own shares.
At the beginning of April, a combination of deeper full-year losses, conservative financial targets and a bearish sector outlook led to a spike in short interest levels of Seatrium.
At one stage the company was the second most shorted stock on the Singapore Exchange, according to S&P Global Market Intelligence.
Seatrium said the programme, which could take more than a year to complete, will allow it to buy its shares via open-market purchases funded out of existing cash reserves.
The repurchased shares will be held as treasury shares that will then be deployed for the group’s existing employee share plans, used to pay the share component of the directors’ fees, or cancelled against the group’s share capital to increase shareholder returns.
“Taking into consideration Seatrium’s improved financial position as well as capital requirements for future growth plans, the share buyback programme provides for a systematic share purchase approach that signals the group’s commitment to further align its interest with shareholders,” the company said.
It will be undertaken via a share purchase mandate approved by shareholders at last week’s annual general meeting.
This allows Seatrium to buy back up to a maximum of 2% of its total issued shares, depending on the prices at which the shares are repurchased.
The group also told investors that it plans an early redemption of a SGD 500m floating rate bond before its scheduled maturity date in 2026.
The bonds are expected to be redeemed in full on 27 May this year and will be cancelled thereafter.
“The early redemption of the bonds is part of the company’s proactive capital management efforts to optimise its borrowing cost and debt profile,” it said.
Seatrium also provided a timetable on Monday for its proposed share consolidation, in which 20 existing shares will be consolidated into one.
The last day of trading of the existing shares on a pre-consolidated basis will be 6 May. Trading of the shares on a post-consolidation basis will begin the next day.
Management hopes the share consolidation will reduce volatility in the shares, which have become little more than penny stocks trading in the range of SGD 0.086 and SGD 0.146 in the past six months.
“Lowly priced shares are generally more prone to speculation and market manipulation, which may result in excessive share price volatility,” the company said.
