The Nation Media Group has initiated a share buyback program targeting 10 per cent of its issued shares in a plan that is set to see shareholders cash in on their stake.
The programme, which shall be guided by regulations of the Companies Act, is subject to regulatory and shareholder endorsement.
Share buybacks, which was introduced in Kenya by roll out of the Companies Act, 2015 (Companies Act), simply refers to the repurchasing of a portion of shares by the firm that issued them.
It is one of the ways for a company to return funds to shareholders, effectively reducing the number of issued shares and increasing the proportional rights of any single share, the media company noted in a statement.
In a share buyback plan, a company buys back its shares and then cancels them, effectively reducing the amount of the company’s issued share capital by the nominal value of the cancelled stocks. This means that the remaining shareholders hold larger stakes in the company.
“The share buy-back offers the shareholders an alternative option of taking cash thereby realising a return on their investment” NMG Chief Executive Stephen Gitagama told Daily Nation.
At close of business on Thursday, NMG stock was trading at Sh14.65, recording a 9.33 per cent upswing from its previous closing price of Sh13.40. The company’s share price has remained suppressed in the market since announcement of half year results 2020 where it did not declare any interim dividend.
Nation Media Group has a current market capitalization of about Sh2.8 billion. Its share has recorded a 52 week high of Sh29 per share.
Nation Media Group, together with its subsidiaries in East and Central Africa, is involved in the publication, printing, and distribution of newspapers and magazines; radio and television broadcasting business.
Even as it shrugs off impacts of Covid-19 pandemic on the business, the media company has embarked on an extensive digital investment plan launching Nation.Africa platform complete with a paywall for news subscription in a bid to shore up its revenues.