Homegrown bakery BreadTalk will be delisted from the SGX (Singapore Exchange Securities Trading Limited).

On Feb. 24, the founders, George Quek Meng Tong and his wife, Katherine Lee Lih Leng, announced to buy back shares at S$0.77 per share, in a deal known as a voluntary conditional cash offer to acquire all of the issued ordinary shares.

News of the delisting have made headlines in Singapore as retail investors seek credible explanations for the move.

Rationale for delisting

The announcement also provided the rationale behind the offer, which was broken down into four points.

Firstly, it offers an opportunity for shareholders to exit their investment at a compelling premium, without incurring brokerage and other trading costs.

Secondly, the move offers BreadTalk greater management flexibility to address the challenges facing the group, and optimises the use of BreadTalk’s management and resources.

Thirdly, BreadTalk incurs cost in order to maintain its listed status. Being unlisted means that the resources can be channeled to its business operations instead.

Lastly, BreadTalk is unlikely to require access to Singapore equity capital markets to finance its operations in the foreseeable future, as it has other sources of funding.

Affected by Covid-19 outbreak

A financial report released on Feb. 24 revealed that the group made a loss of S$5.2 million in 2019 with the last quarter of the year netting a S$8.1 million loss.

In comparison, they made a profit of S$15.2 million in 2018.

BreadTalk also noted that the operating environment is "challenging" across key markets, including Singapore, China and Hong Kong.

The situation has also been aggravated by the Covid-19 outbreak.

The management team has been working actively to turnaround the loss-making businesses, the report added.

The group owns a number of popular brands, including Toast Box, Din Tai Fung, Food Republic, Food Junction, and Song Fa Bak Kut Teh.

For Song Fa, however, it only owns the franchise in China, China-Taiwan, and Thailand, not Singapore.

Resignation of CFO and CIO

Previously, it was announced that Chan Ying Jian, who is both Chief Financial Officer (CFO) and Chief Investment Officer (CIO) of BreadTalk Group, has resigned.

He will leave BreadTalk on March 15, 2020.

Quek, who is the group executive chairman, will oversee the group’s accounting, financial, treasury and tax matters, assisted by the group financial controller and division financial controller.

Top image by BreadTalk's Facebook page