Singapore Telecommunications Ltd, Southeast Asia's biggest phone company, plans to raise as much as S$684 million (US$387 million) by selling shares in its postal unit.
Singapore Telecommunications plans to sell 60 percent of the country's post office, Singapore Post Ltd, it said in a statement to the stock exchange. The initial public offering of as much as 1.14 billion shares will be made to investors at a maximum of S$0.60 per share, with the price to be declared on May 7.
Singapore Telecommunications is selling the unit to focus on its phone-related businesses and cut debt, which stood at about S$10 billion on Dec. 31. The company is also selling its Yellow Pages directory business. The Singapore Post shares will be priced to offer a dividend payout of 7.8 percent, based on the minimum price of US$0.54.
"The divestment of SingPost makes sense as it allows SingTel to deliver on its promise to sell non-core assets and cut its debt," said Chris Wong, who helps manage S$2.4 billion at Aberdeen Asset Management in Singapore. "A 7 to 8 percent dividend yield is attractive and we are looking to talk to them this week."
Singapore Telecommunications Chief Executive Lee Hsien Yang declined to specify the company's plans with the proceeds or the impact of the sale on earnings, deferring answers until it announces fourth-quarter results next month.
Both Standard & Poor's and Moody's Investors Service have said they may cut credit ratings on Singapore Telecommunications if it doesn't reduce debt.
Singapore Post hopes to meet investor demand for higher dividends as the country's stock market loses value for a fourth year and severe acute respiratory syndrome, or SARS, hurts the tourism industry and curbs economic growth.
"We offer investors a relatively safe investment," Chairman Lim Ho Kee said at a press conference. "We will look to return excess cash to our shareholders."
The outbreak SARS has forced Singapore Post to market the shares to investors world-wide through video-conferences rather than face-to-face meetings, said Colin West, the head of Asian equity capital markets at UBS Warburg, which is helping arrange the share sale.
Many investors declined to meet the company's management in person because of fears of the respiratory disease, West said.
SARS hasn't had any impact on demand for Singapore Post's services, CEO William Tan said.
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