Dual-listed Comba Telecom STC Systems, says it will terminate the proposed spin-off and A-share listing of Comba Network. Comba Telecom Systems has a primary listing on the Hong Kong Stock Exchange (HKEX) and secondary listing on the Singapore Exchange S68 (SGX). The company joined SGX’s Mainboard in January 2023.
In its announcement released on the evening of Oct 18, the termination comes amid “significant changes” in the domestic initial public offering (IPO) environment and capital market as well as latest developments in the macroeconomic and market environment.
According to the company’s announcements in April 2021 and September 2021, Comba Telecom Systems proposed the spin-off and separate listing of Comba Network on the Shanghai Stock Exchange Science and Technology Innovation Board, also known as the Shanghai Stock Exchange STAR Market.
With the termination, Comba Telecom will buy back its stakes in Comba Network. The company entered into agreements with each of the G limited partners and Non-G limited partners to buy back the incentive shares held by the latter for a total consideration of RMB142 million ($26.2 million). Of the sum, about RMB47 million was spent on buying back the incentive shares held by the connected partnerships.
The G partnerships were established to hold the incentive shares for and on behalf of a former director of Comba Telcom, as well as on behalf of the relevant directors and employees of Comba Network group. The non-G partnerships were established to hold the incentive shares for and on behalf of certain directors, as well as the relevant directors, employees and consultants of the group (other than the Comba Network group).
Upon completion of all the buybacks, Comba Telecom Systems’ stake in Comba Network will increase to 89.3% from 78.7%. Comba Network will remain as an indirect non-wholly-owned subsidiary of the company.
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“In light of the termination [of the proposed spin-off listing], the board is now of the view that the original purposes of the [share incentive] scheme is no longer achievable given that the selected participants who originally obtained their incentive shares will no longer be able to benefit from the potential upside from a contemplated completion of the proposed spin-off and the proposed A-share listing,” reads Comba Telecom Systems’ statement.
“The board is of the view that the buybacks will boost enthusiasm and morale of key personnel and selected participants by ensuring that they will be offered an opportunity to recover the capital contribution they previously made to obtain their respective incentive shares,” it adds.
Shares in Comba Telecom closed flat at 9.3 cents on Oct 18.
