Stats has called off its US$813 mln (S$1,243 mln based on US$1=S$1.53) capital reduction / distribution plan, which was first proposed in Jan ’08, and which obtained shareholders approval in March.

Temasek spent S$1.6 bln (paying $1.75 per Stats share) to raise its stake to 83.05% from 35.6% during the takeover in early 2007. (If they had secured 90% or more, the offer price would have been $1.88.).

Temasek’s share of the distribution would have been about S$1 bln.

OCBC is Stats’ principal banker, while Goldman Sachs was the financial advisor to Temasek in the 2007 Takeover exercise.

Some may say the latest development was not a total surprise, given that shareholders approval was obtained almost a year ago.

Balance sheet also does not justify such a payout, given Net Tangible Assets of US$952.76 mln (US$1548.66 mln less US$595.89 mln of Goodwill & Intangible Assets, resulting from the acquisition of Chippac. (Admittedly, gearing has improved, with Short-&-Long-term Debts of US$473.45 mln, down from US$664.63 mln at end ‘07.) Stats swung into the red in Q4 ‘08 of US$22.15 mln first since Q3 ‘05 from US$41.35 mln profit a year ago.

Finally, note that at 40.5 cents yesterday, Stats’ market cap of S$892 mln was well below the proposed distribution! And it has been 4 months since Stats’ market cap first fell below the proposed distribution, reflecting investors’ skepticism!