By Phil Boeyen, ShareChat Business News Editor
Friday 6th October 2000 |
Text too small? |
The electricity company began its share buyback in April, and has so far purchased 3.2% of its stock on market, with the aim to take that to 5%.
Investor relations manager, Liz Kelly, says the rationale behind the buyback is to improve shareholder value, but the company is making sure it follows rather than leads the market by instructing its broker to respond to sell orders rather than putting in higher buy orders.
The company also makes sure it doesn't buy more than half of the shares trading in any one day.
Following its latest purchase yesterday of 110,000 shares at an average price of $2.5672 per share, Contact says the number of shares on issue is now around 584.5 million, excluding 19.5 million held as treasury stock.
By buying stock on market Contact says it considers the buyback in the same league as other 'value-added' shareholder categories, such as special dividends or capital returns.
And while the company itself does not receive dividends from its own stock, it can benefit from any increase in capital value.
Liz Kelly says Contact has until April next year to reach its 5% target, which in total will cost around $70 million. She says while other proposals for using funds may come up, the company has very low gearing and it would therefore be unlikely that a funding issue would stop it from reaching its 5% target.
No comments yet
UPDATE Contact increases dividend as FY earnings rise; quits wind projects
Contact increases dividend as FY earnings rise in competitive market
Contact shares drop to 2-month low, says 'hard to see' investment under Labour-Greens plan
Contact Energy, parent Origin mull redemption of $2.03 bln of notes after S and P change
Solid first half for Contact, despite retail margins squeeze
Contact sells mothballed New Plymouth power station for $24 mln
Contact Energy's King hints at greater returns as cash mounts
Contact energy beats FY profit forecast as revenue surges
Elliott leaving Contact for Origin role
Contact sees 2014 cash-flow boost as projects put on ice