Share buybacks are seemingly all the rage for Australia’s pay-TV sector with both Austar United Communications and Consolidated Media Holdings planning significant repurchase schemes.
The board of satellite broadcaster Austar proposed a share buyback of…
Share buybacks are seemingly all the rage for Australia’s pay-TV sector with both Austar United Communications and Consolidated Media Holdings planning significant repurchase schemes.
The board of satellite broadcaster Austar proposed a share buyback of around A$400m to shareholders at its AGM on May 27. The company stated: “Having regard to available funding, projected cash flows and capital requirements over the next twelve months, the board has determined that the company may have capacity to return up to an additional A$400m to shareholders… The board considers that both buybacks and capital returns by way of reduction of capital are an effective means of returning any surplus capital to shareholders and will enable the company to maintain an efficient capital structure.”
It added: “If A$400m of shares were bought back at A$1.20 per share (333.3 million shares), this would represent about 26.6% of the ordinary shares in the company.” Austar’s average closing share price for the first three months of 2010 was A$1.24.
The move is part of the company’s capital management initiatives which has seen it carry out similar stock repurchase plans. Following its May 2008 AGM, the Austar shareholders approved a share buyback capital reduction plan of up to US$300m. In the period May 2008 to May 2009, the company bought back and cancelled over 68 million shares at a cost of just over A$72m.
Austar recently reported its Q1 2010 results, showing a 22% year-on-year jump in profits up from A$28.32m in Q1 2009 to A$34.42m in 2010. Revenue rose 7% to A$174.29m while operating costs decreased 2% to A$34.8m.
Meanwhile, Consolidated Media Holdings (CMH), which owns stakes in the country’s largest pay-TV business Foxtel and sports provider Premier Media Group, is proposing an on-market buyback of up to 73,770,492 shares, around 12% of the company, by utilising its surplus cash of approximately A$225m.
Shareholders will vote on the plan at the company’s AGM on May 28. James Packer and Kerry Stokes are CMH’s largest shareholders but, according to The Australian newspaper, neither would seek to participate in the repurchase. This would mean that if all 73.77 million shares were purchased, Packer’s holding in CMH would increase from 45.3% to 51.4% while Stokes’ would rise from 22.1% to 25.1%.
CMH last launched a share buyback program in August 2009 to purchase up to 10% of the company’s issued capital. This program concluded on December 1, 2009, with the company having repurchased 68,967,692 shares for a total consideration of A$210.3m.