Sunland Group (ASX: SDG) shares are down 92%. It’s possible to think of this SDG share price fall as being one of the most impressive ever - even companies going bust tend to take a few days to achieve that sort of performance. On the other hand, given what’s actually going on at Sundance this is entirely understandable. The shares are to be delisted at the end of the month, the last day of possible dealings is approaching. And, the real trigger for the fall, there’s been a return of capital to share holders.
As background at Sunland, it’s a property development group on the Gold Coast in Oz. Also in Dubai, where it got entangled in bribery allegations. As it did with politics on the Gold Coast in fact - such a surprise, real estate and local politics, eh? The end result of all of this is that there’s to be a delisting: “Veteran Gold Coast development company set to exit ASX
A high-profile Gold Coast development group is set to leave the ASX after almost three decades as a public company.”
Well, OK. And we can imagine that the loss of liquidity for those who keep their shares could lead to a value decline. Capital Reduction Effective Date Friday, 20 October 2023, Ex-Entitlement Date for Capital Reduction Tuesday, 24 October 2023, Record Date for Capital Reduction Wednesday, 25 October 2023, Suspension from quotation Thursday 26 October 2023 (close of trading), Delisting Date Monday, 30 October 2023 (close of
trading).
But that timeline tells us what’s really happening here.
Sunland Capital share price from Google Finance
For today’s the day for the capital reduction: “Item 9 of the Explanatory Statement discusses Resolution 4: Capital Reduction, and discloses that Sunland Group has applied to the Australian Taxation Office (ATO) for a class ruling for Australian shareholders,
seeking to confirm that no part of the proposed capital reduction will be treated as an unfranked dividend.” A capital reduction also being known as a return of capital to share holders.
Which is what has just happened: “Return of Capital amount per securityAUD 0.90000000Trading in the re-organised +securities on an "ex return of capital" basis commences 24/10/2023”.
Everyone who owned a share yesterday had a share worth 0.9 cents and a bit. Today they’ve got 0.9 cents and a share worth a bit. Which is rather less terrifying than a 92% reduction in the share price.