Centum Investment Firm Plc has launched its share repurchase program after gaining approval from its shareholders on Friday.
The company’s offer to buy back 66.5 million shares, which began on Monday, is planned to last 18 months, ending on August 8, 2020.
At the company’s special general meeting last week, shareholders overwhelmingly endorsed the share repurchase, with 98.59 percent voting in favor of the measure.
Centum’s management, which has put aside Sh600.8 million to fund the repurchase, expects the initiative to help stabilize the company’s share price and market valuation.
“The share buyback is expected to provide liquidity to shareholders who may not have been able to trade due to the current depressed market conditions. It will reward long-term shareholders whose net asset value per share will improve as a result of the reduction in shares,” Centum’s chief executive James Mworia told shareholders.
The company has set the maximum share purchase price at Sh9.03 and the minimum at 50 cents.
Aside from shareholder approval, Centum has Capital Markets Authority clearance to increase the number of shares acquired under the program above the 25 percent daily-volume cap.
Because Centum’s daily traded volumes are often less than 100,000, the capital markets regulator’s exemption is critical in permitting Centum to meet the share repurchase objective within the 18-month term.
The share repurchase program is accessible to all shareholders, regardless of size, however there is a maximum buyback amount.
Centum’s floating shares are expected to reduce to 598.9 million at the end of the buyback exercise.
The board of Centum has reserved the right to terminate the buyback on conditions including when the program is no longer deemed to be in the best interest of the company, changes in economic and market conditions and the incidence of a material change in the firm’s financial position.
On Monday, in excess of 500,000 Centum shares were traded, marking a huge increase from the normal volumes.
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