Directors of Dangote Cement Plc, on Friday, has scheduled an extraordinary general meeting for January 12, 2020, where shareholders are to consider a proposal that the company buys back up to 10% of its total shares in issue.
Before the vote, the shareholders are expected to approve an amendment of the company’s Articles of Association by inserting three new clauses that would reduce its share capital and authorise the proposed buy-back.
The board, according to Edward Imoedemhe, Dangote Cement’s deputy company secretary, is also proposing that subject to applicable law or the directive of the appropriate regulatory authority, the company may cancel such repurchased issued shares or otherwise acquired under the Proposed Transaction as confirmed by the company’s registrars.
In the accompanying explanatory note, Dangote Cement said the share buy-back is part of its corporate strategy of improving Returns on Equity and shareholder value while facilitating future long-term growth.
The directors believe the buy-back is one of the appropriate capital allocation decisions to improve long-term shareholder value (improving earnings per share); besides supporting the company’s continuous capital structure and balance sheet efficiency. It is also expected to reduce the average cost of capital and therefore enhance shareholder value in the long-term.
“The relevant shares will be repurchased out of the profit of the company and any such number of shares bought under the programme is required to be cancelled in accordance with the SEC (Securities and Exchange Commission) Rules and the Nigerian Stock Exchange Rulebook 2015, which will consequently lead to a reduction in issued share capital,” the company explained further.
Section 160(1) of the Companies and Allied Matters Act (CAMA) provides that the Articles of Association of a company must authorize any share buy-back programme to be undertaken by the company, just as it must authorize any reduction of the company’s share capital as provided under Section 160 of CAMA.
Also, the programme is to be completed within 12 months from the date of receiving the shareholders’ approval, even as “the board may delay, amend or terminate the programme at any time by releasing an announcement to that effect to the NSE, irrespectively of whether any or all of the shares have been repurchased.
Unless otherwise approved by the regulator, the company says it shall not implement the programme within 15 days before the publication of its annual or interim results.
With a huge N731.15bn in retained earnings as of September 30, this year, the company says it intends to fund the programme from its reserves.
The board members, who together hold 243,540,000 ordinary shares, the company said, will not participate in the buy-back programme.
Vetiva Capital Management Limited and Banwo & Ighodalo are acting as financial advisers and legal advisers respectively to Dangote Cement Plc in connection with the proposed share buy-back programme.
According to the document, the 10% stake or up to 1, 704,050,741 fully paid ordinary units to be repurchased under the programme, will however be subject to availability of the shares. The company is also under no obligation to buy all or any of the buy-back shares.
The buy-back will also be either at the prevailing market price, or through a self-tender offer at a price to be determined by the board, but not more than 5% above the average calculated market price over the five days preceding the offer.