Thursday 24th October 2019
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Metlifecare took on board "robust feedback" from its major shareholders and will buy back up to $30 million of shares, having rejected such a move two months ago.
Chair Kim Ellis told shareholders at today's annual meeting that the share price was a "significant and largely unexplained discount to the underlying value of Metlifecare," and that buying back shares was a means to close that gap. The shares rose 4.7 percent to $4.86, still a steep discount to the net tangible asset value of $6.96 per share.
"After extensive consideration and analysis by the board including robust feedback and engagement with our major shareholders, we have determined that we will proceed with a share buy-back programme for up to $30 million," Ellis said in speech notes published on the NZX.
"Given the sustained significant market discount to the intrinsic value of the company, this investment will be a value accretive allocation of capital."
Ellis raised the prospect of a buyback at last year's annual meeting, but as recently as August, chief executive Glen Sowry said such a move had been ruled out in favour of using those funds to develop the portfolio.
Today, Ellis emphasised that the buyback wouldn't slow the pace of development and said more details will be announced next month.
Metlifecare raised $100 million in a retail bond offering last month, with the funds set to repay bank debt and help pay for the development programme. The 2026 notes pay annual interest of 3 percent and last traded at a yield of 2.8 percent.
Sowry told shareholders that unit sales had maintained the momentum of the June year when it reported a 7 percent increase in the sale of occupation rights agreements.
"Encouragingly, there has also been a lift in the number of houses sold and a reduction in days on market which are all positive signs of an improving Auckland housing market. We expect this will translate into improved sales performance over the next 12-24 months," he said.
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