Temasek makes $1.25bn SingTel sale
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SingTel is Singapore's largest listed company, with a market cap of $22bn.
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SINGAPORE (Reuters) -- Singapore's government investment arm Temasek is to raise $1.25 billion by cutting its stake in Singapore Telecommunications, Southeast Asia's largest phone company, to 61.5 percent.
Temasek Holdings said in a statement Wednesday it would cut its stake from 67 percent by selling 391.96 million shares at S$1.95 ($1.15) each -- a 4.8 percent discount to SingTel's last traded price on Tuesday of S$2.05 -- and issuing a S$1.36 billion convertible bond.
The placement price is at the lower end of the book building range of S$1.95-S$1.99.
An outline of the deal was revealed by banking sources late on Tuesday.
The move is in line with the government's promise to sell down stakes in its two telecommunication companies, SingTel and Singapore Technologies Telemedia, when it signed a free trade agreement with the United States last year.
SingTel is the city state's largest listed company, with a market value of S$37 billion ($22 billion).
SingTel shares, which were suspended for the placement, fell to a low of S$1.91 in early trade on Wednesday, down 6.8 percent or 14 cents. Near midday, the stock was down eight cents to S$1.97. Volume was a brisk 26 million shares.
Increased liquidity
Some analysts said the placement was positive for SingTel, Asia's largest pan mobile operator and the owner of Australia's second-ranked Optus, as it would increase liquidity in the stock.
Himanshu Chaturvedi, analyst at DBS Vickers, said the price fall was expected after the placement.
"But there are a few supporting factors for the stock. I think a special dividend is likely. I am looking for 8.2 cents per share this year giving it a yield of four percent," he said.
"The increased free float could also marginally boost its weightings in the MSCI indices," he said.
SingTel is expected to receive a windfall from an investment in the Belgian telecom firm Belgacom, which plans to make an initial public offering later this year.
Goldman Sachs analyst Jason Billings said the placement and convertible note would lessen a "known" overhang in SingTel, and increase the company's free float.
"The second point is especially important to Australian investors as, with increased liquidity, the company could re-enter the key Australian indexes," he said in a note on the placement.
After the initial placement Temasek's holding in the company would fall to 65 percent and would fall to 61.5 percent if noteholders convert the notes into shares, Temasek said.
The zero coupon five-year exchangeable notes will be exchangeable into 540.17 million SingTel shares.
Temasek said shares and notes will widen SingTel's institutional investor base and added that it has no plans to sell more shares.
"We currently have no plans to further divest our shares in the company," it said.
SingTel Chief Executive Officer Lee Hsien Yang said the secondary share sale by Temasek would not affect the business fundamentals of the company nor would it dilute shareholders.
He said the improved liquidity should have a positive implication for SingTel's weighting in major stock indices.
The share sale comes after SingTel's stock rose 58 percent in 2003, outperforming a 32-percent gain of the key Straits Times Index.
Besides Optus, SingTel owns stakes in several regional mobile players such as Thailand's Advanced Info Service Plc (AIS), India's Bharti Tele-Ventures Ltd, Globe Telecom in the Philippines and Indonesia's Telkomsel.
Analysts had said Temasek wanted to take advantage of the rally in SingTel shares.
Merrill Lynch is handling the offering of the SingTel placement and notes, which is expected to close on January 12.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
