SCMP Group announces share buy-back plan
Offer could resolve public float issue that led the company to suspend trading in February 2013
SCMP Group, publisher of the South China Morning Post, has proposed a share buy-back which, if implemented, could lead to the delisting of the firm from the local stock market, according to an announcement on the stock exchange website yesterday.
The company said the buy-back offer could resolve the public float issue that led the company to suspend trading in its shares in Hong Kong in February last year. The proposal requires regulatory approval and shareholders will be allowed to vote for or against it.
"In spite of the current trading status, it remains business as usual for the SCMP Group. Our underlying business is strong, our global readership is rising and our growth thrust initiatives are bearing fruit," said Robin Hu, chief executive of the SCMP Group. "Our objective is to effectively resolve the public float situation, and we are constantly reviewing all viable options to address this. At present, the share buy-back proposal is the identified viable route, though it must be stressed that it is still at a preliminary stage, and is subject to clearance by relevant regulatory bodies."
"Our top priority will always be to protect the interests of our shareholders, including minority shareholders," he added.
Shares of the SCMP Group were suspended on February 26, 2013 after the proportion of stock held by independent shareholders fell to 10.59 per cent of the total shares issued. Hong Kong listing rules require listed companies to have a public float of at least 25 per cent of issued shares. Falling below that requires trading to be halted until the minimum public float is restored.
The SCMP Group statement said it had identified three possible options to resolve the issue.
The first option requires its substantial shareholders, Silchester and Kerry Media, to sell down their shares proportionally to restore the public float while they agree not to acquire further shares of the company for a certain period of time. The second option is to delist the shares by the substantial shareholders making a cash offer to all shareholders. The third option is for the company to buy back outstanding shares.
The company wrote to the two major shareholders to seek their views in January. Kerry Media replied that it did not accept the first two options and gave no comment on the share buy-back. Silchester said that it was not prepared to support or participate in any of the proposals until such time as it was satisfied with the transparency of the pricing and value of the company's assets.
Since the first two proposals could not go ahead without the support of the substantial shareholders, the SCMP board considered the share buy-back to be the way forward.
"While this option does not bring about resumption of trade … it gives independent shareholders a clear end to the current impasse, and an opportunity to realise the value of their shares," the SCMP announcement said.