Contact Energy to buy back $100m of shares in absence of capital projects
The company will buy up to 25 million shares, or about 3.4 percent of its stock.
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Contact Energy [NZX: CEN], whose cornerstone investor Origin Energy sold out in August, plans to buy back up to $100 million shares through the rest of the financial year, as a lack of large capital projects free up cash for investors.
The Wellington-based company will buy up to 25 million shares, or about 3.4 percent of its stock, in an on-market share buyback for a total purchase price of up to $100 million, it said in a statement. Contact signalled the possibility of a share buyback earlier this year when it announced a special dividend payment and a new dividend policy after ditching plans to invest in geothermal projects overseas.
"With no near term plans for large capital payments, we have the capacity to return additional cash flow and we believe a share buyback is an efficient way of distributing funds to shareholders," chief executive Dennis Barnes said.
In August, Contact reported a 29 percent drop in underlying earnings in what Barnes described as a "disappointing" financial performance.
Former cornerstone shareholder Origin sold its 53 percent stake in August as the ASX-listed company came under pressure to strengthen its balance sheet due to cost over-runs and slumping gas prices affecting its A$25 billion liquefied natural gas project in Queensland.
Contact appointed First NZ Capital to act as its broker for the share buyback, with stock only acquired on the NZX main board in on-market transactions.
The company's shares rose 1.8 percent to $4.99, and have declined 15 percent this year.
(BusinessDesk)
Paul McBeth
Thu, 15 Oct 2015
Thu, 15 Oct 2015
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Contact Energy to buy back $100m of shares in absence of capital projects
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