By Nick Stride
Friday 28th April 2000 |
Text too small? |
Contact announced late last month it would buy back 5% of its shares on the market from March 31. It said the shares were trading at a "substantial discount" to their fair value. The buyback was "a highly attractive investment opportunity."
The programme also gave Edison, which owns 40% of Contact, a temporary reprieve from the demands of its financiers.
Edison paid for its Contact buy partly through the issue of Edison Contact Finance Ltd redeemable preference shares. The terms of the $400 million issue specify a debt-to-valuation ratio of 0.65, meaning Edison is in breach of the terms if Contact's share price is below $2.55 on May 14, just two weeks away.
For every 1c fall below $2.55 Edison must stump up a margin call of $2.43 million. At Wednesday's closing price of $2.43 the bill was $28.3 million.
The terms give Edison an unspecified "cure" period to remedy a breach. But with Contact's share buyback failing to prop up the price the US company may have to come up with another tactic.
The buyback programme aims to gather 30.2 million shares, but at the close of trading on Wednesday it had secured only 2.87 million shares at a cost of $7.4 million.
No comments yet
GTK - Half-Year Results Announcement Date
Government ends war on farming
Sky and BBC Studios renew expanded, multi-year agreement
AOF - Q1 Improved Trading Performance & FY24 Guidance Maintained
Devon Funds Morning Note - 23 April 2024
April 23rd Morning Report
RYM - Group CEO Update
BGI - Director Michael Chai
RAD - Final Dividend and Strong FY24 Operating Performance
RYM - Group CEO Update