EDU Holdings Announces Strategic Share Buy-Backs to Boost Shareholder Value
EDU (EDU) Share Update September 2024 Monday 23rd
EDU Holdings Announces Share Buy-Back Plans Amid Market Uncertainty
EDU Holdings Limited (EDU), a prominent tertiary education group, has announced its intention to undertake both on-market and selective share buy-backs, aiming to enhance shareholder value despite current market uncertainties.
Instant Summary:
- EDU Holdings to initiate an on-market buy-back of up to $1 million or approximately 16.5 million shares.
- Selective buy-backs involve agreements with Viburnum Funds Pty Ltd and Global UCW Pty Limited for 14.66 million shares at $0.06 per share.
- Buy-back price is at a 3.7% discount to the 20-day VWAP of EDU shares.
- Total purchase consideration for selective buy-backs is $879,662.
- Shareholder approval required for selective buy-backs at an extraordinary general meeting.
On-Market Buy-Back
EDU Holdings Limited has announced its plan to initiate an on-market buy-back of up to $1 million or approximately 16.5 million ordinary shares over the next 12 months. The buy-back is set to commence on 11 October 2024, adhering to the 10/12 limit under the Corporations Act 2001 (Cth). The company has appointed Taylor Collison as its broker for this initiative. This move comes as part of EDU's strategy to manage its capital effectively and enhance shareholder value.
Selective Buy-Backs
In addition to the on-market buy-back, EDU has entered into agreements for selective buy-backs with two institutional shareholders: Viburnum Funds Pty Ltd and Global UCW Pty Limited. The agreements cover a total of 14,661,035 shares at a price of $0.06 per share, representing a 3.7% discount to the 20-day volume-weighted average price (VWAP) of EDU shares. The total purchase consideration for these selective buy-backs amounts to $879,662.
The selective buy-backs account for 8.9% of the company's outstanding issued ordinary shares and are subject to shareholder approval through a special resolution at an upcoming extraordinary general meeting. Notably, Global UCW Pty Limited is associated with EDU's Chair, Mr. Gary Burg, who will remain a substantial shareholder in the company.
CEO's Statement
Commenting on the announcement, EDU's CEO, Adam Davis, expressed optimism about the company's financial position. 'It is encouraging that the current strength of the balance sheet provides the company with the flexibility to initiate this capital management initiative at a time when the business is trading at a substantial discount to the board’s view on its long-term value,' Davis said.
Further details regarding the selective buy-backs will be included in the Notice of Meeting, which will be dispatched to shareholders in due course.
The announcement of share buy-backs is generally viewed positively by investors as it indicates the company's confidence in its financial health and future prospects. By reducing the number of outstanding shares, the buy-backs can potentially increase earnings per share (EPS) and enhance shareholder value. However, the market's reaction might be tempered by the broader uncertainties related to the government's proposed caps on new international student commencements from 2025.
Investor Reaction:
Analysts are likely to view the buy-back announcement favorably, as it demonstrates proactive capital management by EDU Holdings. However, some caution may be expressed due to the external market uncertainties. The selective buy-backs, particularly the involvement of institutional shareholders, could be seen as a vote of confidence in the company's long-term value.
Conclusion:
Investors should keep an eye on the upcoming extraordinary general meeting for approval of the selective buy-backs and monitor EDU Holdings' performance in the coming months. The company's strategic initiatives to manage its capital effectively amidst market uncertainties could provide a solid foundation for future growth.