StarHub investors to get $444m windfall

STARHUB investors can look forward to a cash windfall, after the telco announced yesterday that it will pay out $444 million in a capital reduction exercise.

A shareholder with 1,000 shares will receive $228.80, as the telco looks to cancel 8.3 per cent of its shares in circulation.

The move, which the company hinted at last month, follows its first capital reduction exercise last September when it paid out a total of $652 million.

The new exercise will involve StarHub cancelling one share for every 12 held by its investors. This will reduce the number of shares by 155.3 million.

For each share cancelled, the telco will pay $2.86 - the average closing price of the stock between Tuesday last week and Monday. The capital reduction will improve StarHub's return on equity from 23.7 per cent to 26.6 per cent, based on last year's figures.

StarHub added that its financial position should remain strong, with cash flows from operations expected to support its policy of paying out annual dividends of at least 14 cents per share.

'Considering StarHub's cash flow trends, cash operating requirements and investment needs, we have decided that a second capital reduction exercise is appropriate,' said chief executive Terry Clontz.

The exercise will be put to the vote at a shareholders' meeting on April 18. If all approvals are met, investors should receive their cash bonus by July.

BRYAN LEE