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Santos today announced the successful completion of its off-market share buy-back of $300 million.

The outcomes of the buy-back are as follows:

Size

$300 million

Market Price

$18.8724

Buy-back discount

14%

Buy-back price

$16.23

Capital component

$2.98

Fully franked dividend component

$13.25

Tax Value

$16.42

Shares bought back

18.5 million

Percentage of issued ordinary capital

3.1%

Scale back

59.16%

The 14 per cent buy-back discount enabled Santos to return surplus capital in an efficient manner and is expected to have a positive impact on earnings per share.

Santos’ Chief Financial Officer, Peter Wasow, said “We are delighted with the strong support shareholders have shown for the buy-back, which has allowed us to repurchase 3.1 per cent of our issued capital at the maximum discount of 14 per cent. The successful completion of the buy-back demonstrates our commitment to efficient capital management and our confidence in the strength of the Company’s financial position.”

Due to the strong demand for the buy-back, a 59.16 per cent scale back of tenders is required. Shareholders who tendered their shares at a 14 per cent discount and/or as final price tenders, will have a priority allocation of 300 shares bought back before the scale back is applied. As a result of the 59.16 per cent scale back, successful shareholders will have 40.84 per cent of their shares tendered in excess of the priority allocation bought back. No tenders were excluded on the basis of a minimum price condition.

To ensure that registered shareholders with small holdings are not disadvantaged, the scale back has been structured so that successful shareholders who tendered all of their shares at a 14 per cent tender discount and/or as a final price tender and who would be left with 130 shares or less as a result of the priority allocation and scale back, will have all of their shares bought back in full.

For shareholders who have successfully tendered their shares, $13.25 of the buy-back price is treated for Australian tax purposes as a fully franked dividend. For Australian capital gains tax purposes, the deemed capital proceeds are $3.17, being the $2.98 capital component plus $0.19, being the excess of the Tax Value over the buy-back price.

Payment for shares bought back will be credited to nominated bank accounts and cheques will be posted to shareholders by 10 October 2008. Shares that have been tendered into the buy-back but not bought back are expected to be released to shareholders by Tuesday, 7 October 2008.

Shareholder enquiries in relation to the buy-back may be directed to Santos’ dedicated enquiry line on 1300 727 634 within Australia or +613 9946 4447 from outside Australia between 8:30am and 5:30pm (Eastern Daylight Time), Monday to Friday.

Further information on the buy-back can be found on Santos’ website (www.santos.com).

1 The volume weighted average price of Santos’ ordinary shares (adjusted for certain not “at-market” trades as set out in the buy-back booklet) on the ASX over the five trading days up to and including 3 October 2008 was $18.8724.

Important notice

Not for distribution or release in or into the United States or Canada.

This press release does not constitute, or form part of, any offer or invitation to sell, or any solicitation of any offer to purchase any securities in any jurisdiction, nor shall it or the fact of its distribution be relied on in connection with any contract thereof. No indications of interest in the buy-back are sought by this press release. Shareholders who are (or nominees who hold Santos Limited shares on behalf of or for the account of persons who are) in the United States or US persons, (within the meaning of Regulation S under the United States Securities Act of 1933), residents of Canada or who are otherwise excluded foreign persons will not be eligible to participate in the off-market buy-back described in this press release. ADRs and restricted employee shares may not be tendered into the buy-back. Buy-back documents, including the booklet describing the terms of the buy-back and tender forms, are not being distributed or sent into the United States or Canada.

Forward looking statements

This press release contains forward looking statements, including statements regarding the implementation of the off market buy-back and its effects on our business and securities. The results and effects of the off-market buy-back may differ materially from those expressed in, or implied by, these forward looking statements. Factors that could cause or contribute to such differences include the number of shares bought back, the buy-back price and the general trading and economic conditions affecting our business. We do not undertake any obligation to revise these forward looking statements to reflect any future events or circumstances.