Forum Archive Index - November 2002

["G Stolwyk" <stolwyk@wave.co.nz>]

Someone asked, "why the Buyback" on another channel and this was my reply:

 

X,

You said "Firstly CO normally operate a buyback when the share price is depressed and is the best use of the CO money. So why is SKC doing it?"

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My comment: SKC is a powerful company and doesn't need to buy back shares to keep up the shareprices; you are so right about that!

But there are competing groups of Shareholders: One vocal group, who wants buybacks and less dividends. This group also strongly believes that when good margins from potential projects do not exist, such plans be shelved and the money spent on "Efficient use of Capital".

Buybacks have a prominent place in that. I belong to that group and believe that the current number of some 233 mill shares ought to be reduced to about 200 mill. over time.

Obviously, there are limits to that but I would appreciate any speed-up of this acquisition before prices rise too much. It will be cheaper for SKC to buy them now than having to buy them back when prices could be higher.

Since some less successful investments a few years ago, this group has now more influence. However, I do strongly support SKC's latest proposals re Convention Centre and Hotel.

Then there is another group who wants dividends only and depends on these for a living: SKC has many elderly shareholders.

Then there is another one who wants buybacks and dividends.

So the Management decided to split up the $100 mill. amongst these groups; as simple as that: final tactics depend also on available Imputation credits.

That is my opinion,

Gerry 
Holder since Aug. 1995