Samko Timber Plans Capital Reduction and Cash Distribution Amid Subsidiary Disposals

Singapore, January 9, 2025 – Samko Timber Limited has unveiled a sweeping restructuring initiative that includes a proposed capital reduction and cash distribution, following the sale of key subsidiaries. The move is expected to reshape the company’s financial structure and return value to its shareholders, but it comes with cautionary signals that investors should heed.

Key Highlights of the Announcement

• The company is selling three of its key subsidiaries:
  • PT Sumber Graha Sejahtera (98.44% ownership)
  • Samko Trading Pte. Ltd. (100% ownership)
  • Samko Forestry Pte. Ltd. (100% ownership)
• Net proceeds from the sale, after deducting professional fees of approximately S\$700,000, are estimated to be around S\$4.3 million.
• A proposed capital reduction of S\$3.3 million will reduce the company’s issued and paid-up share capital from S\$71,379,118.49 to S\$68,079,118.49.
• Shareholders will receive a cash distribution of S\$3.3 million, equivalent to S\$0.0004 per share.

Details Shareholders Should Know

Samko Timber’s restructuring plan will require shareholder approval at an upcoming Extraordinary General Meeting (EGM). Key conditions for approval include:

• Completion of the subsidiary disposals.
• Directors making a Solvency Statement and meeting solvency requirements under Singapore’s Companies Act.
• Approval by at least 75% of shareholders present at the EGM.
• Compliance with publicity requirements and clearance of any objections from creditors within the statutory timeframe.

The company has emphasized that the restructuring is designed to return surplus funds to shareholders and partly cancel share capital that is no longer represented by available assets due to losses from the subsidiary disposals.

Financial Effects of the Restructuring

The company has provided pro forma financial effects for illustrative purposes. Here are the key changes:

• Share Capital: Paid-up capital will decrease by S\$3.3 million post-restructuring, but the number of shares will remain unchanged at 8,646,408,068.
• NTA/NTL: The Net Tangible Liabilities (NTL) per share is expected to improve slightly after the restructuring, from Rp(171) to Rp8 as of September 30, 2024.
• Loss Per Share (LPS): The LPS will remain unchanged post-restructuring at Rp(85) for FY2023 and Rp(16) for 9M2024.
• Gearing: The company will remain in a “not meaningful” state for its gearing ratio, as negative equity persists.

Shareholder Interests and Potential Price Sensitivity

As of the latest practicable date, Sampoerna Forestry Limited remains the largest shareholder with a 67.91% stake, followed by Lin Zhenlong with 14.00%. None of the directors or controlling shareholders has any additional interest in the proposed capital reduction or cash distribution, other than through their shareholdings.

The announcement could have a material impact on Samko Timber’s share price, given the substantial changes to its capital structure and the return of cash to shareholders. However, the company has cautioned that there is no certainty the restructuring will be completed, and shareholders should exercise caution when trading the shares.

Upcoming EGM and Next Steps

The company will issue a circular to shareholders, including details of the EGM, in the coming weeks. The directors have collectively accepted responsibility for the accuracy of the announcement and reaffirmed their commitment to full transparency.

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Shareholders and potential investors are advised to consult professional advisers if they have any concerns or doubts regarding the proposed restructuring or its impact on the company’s share value.

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