Bangkok--3 Nov--SET
Twenty-one companies on the Thai bourse have already bought back their shares from the market so far this year. Two of them have completed their buy-back plans while 19 others are in the middle of the process, Ms. Patareeya Benjapolchai, president of The Stock Exchange of Thailand (SET) said today. The total budget spent on this plan amounted THB 7.41 billion (approx. US$24.8 million) as of October 30, 2008.
“SET encouraged listed companies to buy back shares, as it believes such an approach is a management tool when the company has high accumulated profits and liquidity to invest in its own operation, or when its share price is undervalued and when this investment can produce higher yields than other types of investment. Moreover, it is also a tool used in the firm’s financial restructuring, as each time the number of its shares is made smaller, its EPS rises,” said Mrs. Patareeya.
Listed firms executing share buy-back plans must have retained earnings and excess liquidity sufficient to repay their debts due within the next six months. The fund used for share repurchase should not impact the ability to repay future debts. In addition, the buy-back must not lower their free float to less than 15%.
SET regulations on setting buy-back or sell-back prices on the main board are:
- The purchase price: must not be higher than the 5-day average closing price prior to the buy-back date PLUS 15% of this average price.
- The resale pricel: must not be lower than the 5-day average closing price prior to the reselling date MINUS 15% of this average price.
SET is approaching Ministry of Commerce for an approval to amend related Commerce Ministry regulations to facilitate share buy-back. Currently, the ministry regulations ban listed companies from selling their shares which have been bought back during the first six months of being bought. Also, such shares must be sold within three years, or else the firm must decrease its capital. In addition, SET also requests for an amendment to allow listed firms which have brought back their shares may sell them back through channels other than SET, e.g., ESOP or stock dividends, or to existing shareholders.
After the end of the accounting period but before financial reports have been submitted to SET, listed firms can still buy back shares if they have internal Chinese Walls in place to prevent the division or person who responsible for managing the treasury stock program from accessing information that has not been disclosed to the public and could impact share prices.
For more information, please contact the Corporate Communications Dept.
Ladawan Kantawong
Tel: 0-2229-2036 / Sarinluck Jitkawong Tel: 0-2229-2037
Watsamon Saowakhonsathien Tel: 0-2229-2797