Try Companies That Are Buying Back ...

Try Companies That Are Buying Back Their confess Stock

The fact that a public company is repurchasing its previouslyissued public shares is of interest to investors because several "bullish" interpretations can be given to these "issuer bids." (1) The board of directors wants to preclude an increase in the number of shares outstanding (and dilution of earnings for share ("EPS") that will issue from a significant number of shares being issued in connection with a dividend reinvestment plan for incentive plans for employee (eg Employee Share Ownership Plans and Stock Option Plans).

(2) The board of directors believes that it can obtain a better rate of turn back on shareowners' money (i.e. cash in the company) according to repurchasing shares than by investing in the company's typical business assets.

(3) The company has more cash than it extremitys for investing in its business, and, instead of paying not at home the excess cash in the form of dividends, the board of directors pitch upons to repurchase share and give shareowners potential capital gains rather than dividend income.

THE dominions Share repurchases by companies traded in succession the Toronto Stock Exchange ( "TSE") are make liable to regulations that limit the number of shares a company can repurchase during a 12 month period to 5 of the issued and outstanding shares, or, up to 10 of the "public float" of a class of shares.

Companies are required to file a "notice of intention" with the exchange regarding a repurchase; issue a pres release; and, inform shareowners (via the nearest regular mailing) of the "intention" to repurchase shares. Furthermore, companies cannot begin repurchasing their shares until sum of two units days after filing the notice and issuing the pres release.

It should be noted that a company that files a notice is subordinate to no obligation to actually purchase any shares during the indicated 12-month period.

"ACTIVE BIDS"

As of December 31 1996 there were 182 companies listed forward the TSE that had announced plans to repurchase their shares. To date, 41 companies had not made any purchases in connection with the announcement.

The accompanying Table lists the 61 companies that: (1) had announced an issuer bid involving at least 100000 shares; and, (2) had already complet at least 10 of the repurchase. In addition, the Table prohibits mines, oil and gas companies and paper and forest produce companies. Following each name is the month in which the company's bid expires.

The first array of less front than depth to the right of the company's name contains a sort of the bids in terminuss of the maximum percentage of the outstanding shares that could be purchased. For example, Harris blade planned to purchase up to 10 of its "A" shares-the maximum allowed.

The inferior column contains a sort of the bids based forward the percentage purchased to date. Thus, of the bids involving a maximum 10 purchase, Harris Steel's was the greatest in number complete with 98.9 of potential shares already purchased.

Copyright Canadian Shareowner Magazine Inc. Mar/Apr 1997

Provided according to ProQuest Information and Learning Company. All rights Reserved