City Developments Limited (CDL) is seeking to buy back 10% of its preference shares, or about 26.8 million in preference shares, through an off-market equal access offer. The group is offering preference shareholders 78 cents per preference share.
The offer comes after CDL’s shareholders approved a general mandate for the board to purchase non-redeemable convertible noncumulative preference shares at its annual general meeting (AGM) on April 23.
Through the offer, each preference shareholder is entitled to sell 10% of his or her shares held as at 5.30pm on June 2. Preference shareholders may also put more than 10% of their shares up for tender if other shareholders do not accept their full entitlement under the offer. However, the 26.8 million limit still stands.
As at April 23, CDL has 268.01 million preference shares issued.
The offer will be open for acceptance for 10 calendar days, excluding public holidays, from May 23, which is when CDL will issue an offer letter to its preference shareholders. June 2 is also the deadline for acceptances to be made.
According to CDL, the off-market offer allows the group to “exercise greater control” over its share capital in relation to its preference shares. It adds that it does not intend to exercise its right of conversion in relation to the preference shares. Furthermore, the trading volume of CDL’s preference shares has and continues to remain low, with an average daily trading volume of about 3,333 preference shares during the one-month period up to May 9. The group has also seen about 11,237 preference shares, 8,796 preference shares and 8,571 preference shares traded during the three-month, six-month and twelve-month periods respectively. Each of these represents less than 0.0042% of the total number of issued preference shares.
Payment of the preference shares will be made on June 10.
At its AGM on April 23, CDL’s CEO Sherman Kwek acknowledged that it was an “opportune time” to discuss share buybacks given the group’s share price levels at the time.
As at the FY2024 ended Dec 31, 2024, CDL's net asset value (NAV) stood at $10.17 per share while its revalued NAV (RNAV) stood at $17.57 per share or $19.68 per share considering its fair value taken all valuation surpluses on portfolio.
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At its closing price of $4.90 on April 23, CDL's shares were down 17.23% from the past year and down 4.3% year-to-date.
In March 2024, CDL initiated a share buyback programme for its ordinary shares via open market purchases, as it noted that its shares were trading significantly below their intrinsic value, despite having "strong fundamentals".
Days after, the group stepped up its share buybacks, spending nearly $13 million over three trading days. Yet, CDL stopped three months later. It last bought back its shares from the market in June 2024.
Shares in CDL closed 4 cents lower or 0.83% down at $4.81 on May 9, 6.05% down year-to-date.
