PPP 0.00% 3.7¢ pan pacific petroleum nl

so lets do a share buyback

  1. 4,510 Posts.
    This is how a voluntary share buyback could work for PPP.

    PPP has 588M shares on issue.

    Let us say they launch a formal voluntary share buyback at (say) 25 cents a share, on a 1:3 basis. This means for every 3 shares you own, the company will give you 25 cents for 1 of them and you keep the other two.

    As this is a VOLUNTARY share buyback you do not need to participate if you do not want to. However (just like a rights issue) you can also oversubscribe to a voluntary issue as well, so someone could put 100% of their shares forward for the buyback and mop up the entitlements of those (ie me) who choose not to participate at all.

    Out of the 588M shares on issue, I suspect the 188M or so shares held by major shareholders will opt out and I also doubt they would get a full participation in any case, but there will be a core of shareholders (including a lot of arbitrageurs and day traders who will go for 100%) will may take the opportunity to sell out 100% of their holdings.

    So, for arguments sake, let's say 130M out of the possible 196M available for buyback participate (including the oversubscriptions). That would cost 130M x 25 cents = $33M.

    Once completed, the new company looks like this.

    588M - 130M shares cancelled = 455M shares

    Cash on hand of 149M - 33M buyback + reserves value of $130M = new net assets of $246M.

    New NTA = $246M/455M shares = 54.1 cps.

    The remaining 455M sharehoders just increased their NTA per share from 47.4 to 54.1 cps. That is a gain of $30M for an investment of $33M and they never even left the office. That is almost 100% return on OUR money.

    Unless they can produce a deal that is going to deliver a 100% immediate risk free gain, what is the point?

    This is free money sitting under their noses.

    Tickets to the AGM are booked.
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