Dangote Cement Plc, on Monday, said it spent over N9.769bn to repurchase 40.2m units of its shares on the Nigerian Stock Exchange (NSE) as it announced the first tranche of its ongoing share buy-back programme.
The 40.2m units, according to a regulatory filing by Edward Imoedemhe, its deputy company secretary, represented 0.24% of its issued and fully paid ordinary shares, translating to an average price of N243.0218 each.
Recall that the board, in the explanatory note to the proposal for the share buy-back announced a year ago, said it would execute the programme utilizing its huge N731.15bn retained earnings as of September 30, 2019, and that it intended to fund the programme from its reserves. The board members, who together hold 243,540,000 ordinary shares, the company assured, will not participate in the programme.
Recall also that shareholders of the company, on January 12, 2020, approved the board’s proposal for the programme which was aimed at buying back up to 10% of its total shares in issue. It is part of a corporate strategy to improve Returns on Equity and shareholder value while facilitating future long-term growth, it had explained at the time.
With this completion of the first tranche, which was announced on December 21, 2020 which opened Wednesday, December 30, and closed the following day, Dangote Cement Plc, says it now has 17,000,307,404 ordinary shares issued and fully paid.
The company, Imoedemhe assured on Monday, “will continue to monitor the evolving business environment and market conditions, in making decisions on further tranches of the share buy-back programme.”
At the 2020 EGM, the directors told shareholders that 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.
The board had also proposed 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.
According to the document, the 10% stake or up to 1, 704,050,741 fully paid ordinary units to be repurchased under the programme, was however 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.