Contact buyback two-thirds complete

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.

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