Car dealer Combined Motor Holdings (CMH) has formally launched a R398m share repurchase offer, saying it has more cash than it needs and will return the excess to shareholders rather than have it earning low interest.
CMH said its cash and near-cash reserves had remained above operational requirements for several years, and that the funds would not be needed for any purpose in the coming 12 months. The company also said its shares traded with limited liquidity, and the offer also gave larger investors an opportunity to reduce their holdings if needed.
The group will buy back up to 11.2-million shares, or 15% of its issued stock, at R35.50 a share through a voluntary, pro-rata offer to all shareholders. The offer opens on November 17 and closes on December 12, with the repurchased shares set to be delisted and cancelled on December 17.
Shareholders may choose to tender all, part or none of their 15% entitlement, and no oversubscriptions will be allowed. The company said future earnings and dividend per share may rise after the buyback because the number of shares in issue would fall, though it could not quantify the effect until the offer closed.
The offer is unconditional, will be settled fully in cash, and CMH said it met all solvency and liquidity requirements after the payout. With the full details now published, the group has withdrawn the cautionary notice it issued in October.
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