THE board and top management of Sats should announce they will each personally buy a meaningful amount of stock in the market after the company&rsquo s scheduled release of its half-year results later today (Nov 9).

 

This is not a big ask. Shares in Sats have fallen dramatically since the company announced the acquisition of Worldwide Flight Services (WFS) on Sep 28. Even after the rebound over the past fortnight, the stock is still down more than 30 per cent.

 

The company has said the acquisition would boost its pro forma FY2022 earnings per share by some 78 per cent.

 

But many investors expect that Sats will fund the purchase of WFS through a deeply discounted rights issue &ndash the announcement of which could trigger a fall in its share price.

 

Sats has said its &ldquo base funding plan&rdquo involves raising equity capital from shareholders and new strategic investors. This might include a placement of new shares, hybrid securities or convertible instruments.

 

The pro forma financial effects of the transaction that Sats released as part of its disclosure requirements were calculated on the assumption the company will raise S$1.7 billion through a rights issue of 609 million new shares priced at S$2.79 each. This is a nearly 28 per cent discount to the market price of Sats shares at the time.

 

Some investors may also be nervous about the outlook for WFS, and doubt Sats will see as significant an increase in profitability following the acquisition as it implicitly claims.

 

By demonstrating their willingness to invest a meaningful amount of their personal money in Sats shares, the board and management of Sats could help sweep away this doubt and uncertainty in the market.

 

The gesture would indicate that the board and management of Sats believe the company&rsquo s shares will offer good value after their steep decline. It might also go some way to convince investors that the board and management believe their capital raising plans will not result in a further decline in Sats&rsquo share price.

 

The move could also quell the fear and fury many investors feel ahead of the Sias-Sats Hybrid Dialogue scheduled for next week (Nov 14), and ensure the discussion is civil and constructive.

 

How much would the board and management of Sats need to personally invest in the company to lift sentiment?

 

Much depends on how much Sats currently pays each of them.

 

The company&rsquo s independent non-executive chairman Euleen Goh was paid fees totalling S$249,000 for FY2022, and S$214,795 for FY2021. (Sats has a Mar 31 year end).

 

She has served as an independent director (ID) of Sats since Aug 1, 2013. Her continued appointment as an ID was approved for a further three years under a &ldquo two-tier&rdquo vote at the company&rsquo s most recent annual general meeting on Jul 22.

 

The company&rsquo s current president and chief executive Kerry Mok was appointed only on Dec 15, 2021. For FY2022, he was paid a pro-rated amount of S$387,874 comprising salary, bonuses and benefits for that role.

 

Prior to becoming president and CEO of Sats, he was part of the group&rsquo s senior management team. For FY2021, he was paid between S$1 million and S$1.25 million in salary, bonuses and benefits.

 

Some may ask if it is fair to expect a company&rsquo s senior officials to risk their income just to assuage angry investors, but this is exactly the point: After the steep slump Sats&rsquo share price suffered, a purchase of its shares should not feel like a risk, but an opportunity.

 

If the board and management of Sats really believe the acquisition of WFS will significantly boost the group&rsquo s profitability, they ought to be itching to buy the stock at its current market price.

THE board and top management of Sats should announce they will each personally buy a meaningful amount of stock in the market after the company&rsquo s scheduled release of its half-year results later today (Nov 9).

 

This is not a big ask. Shares in Sats have fallen dramatically since the company announced the acquisition of Worldwide Flight Services (WFS) on Sep 28. Even after the rebound over the past fortnight, the stock is still down more than 30 per cent.

 

The company has said the acquisition would boost its pro forma FY2022 earnings per share by some 78 per cent.

 

But many investors expect that Sats will fund the purchase of WFS through a deeply discounted rights issue &ndash the announcement of which could trigger a fall in its share price.

 

Sats has said its &ldquo base funding plan&rdquo involves raising equity capital from shareholders and new strategic investors. This might include a placement of new shares, hybrid securities or convertible instruments.

 

The pro forma financial effects of the transaction that Sats released as part of its disclosure requirements were calculated on the assumption the company will raise S$1.7 billion through a rights issue of 609 million new shares priced at S$2.79 each. This is a nearly 28 per cent discount to the market price of Sats shares at the time.

 

Some investors may also be nervous about the outlook for WFS, and doubt Sats will see as significant an increase in profitability following the acquisition as it implicitly claims.

 

By demonstrating their willingness to invest a meaningful amount of their personal money in Sats shares, the board and management of Sats could help sweep away this doubt and uncertainty in the market.

 

The gesture would indicate that the board and management of Sats believe the company&rsquo s shares will offer good value after their steep decline. It might also go some way to convince investors that the board and management believe their capital raising plans will not result in a further decline in Sats&rsquo share price.

 

The move could also quell the fear and fury many investors feel ahead of the Sias-Sats Hybrid Dialogue scheduled for next week (Nov 14), and ensure the discussion is civil and constructive.

 

How much would the board and management of Sats need to personally invest in the company to lift sentiment?

 

Much depends on how much Sats currently pays each of them.

 

The company&rsquo s independent non-executive chairman Euleen Goh was paid fees totalling S$249,000 for FY2022, and S$214,795 for FY2021. (Sats has a Mar 31 year end).

 

She has served as an independent director (ID) of Sats since Aug 1, 2013. Her continued appointment as an ID was approved for a further three years under a &ldquo two-tier&rdquo vote at the company&rsquo s most recent annual general meeting on Jul 22.

 

The company&rsquo s current president and chief executive Kerry Mok was appointed only on Dec 15, 2021. For FY2022, he was paid a pro-rated amount of S$387,874 comprising salary, bonuses and benefits for that role.

 

Prior to becoming president and CEO of Sats, he was part of the group&rsquo s senior management team. For FY2021, he was paid between S$1 million and S$1.25 million in salary, bonuses and benefits.

 

Some may ask if it is fair to expect a company&rsquo s senior officials to risk their income just to assuage angry investors, but this is exactly the point: After the steep slump Sats&rsquo share price suffered, a purchase of its shares should not feel like a risk, but an opportunity.

 

If the board and management of Sats really believe the acquisition of WFS will significantly boost the group&rsquo s profitability, they ought to be itching to buy the stock at its current market price.