Mumbai-based Allcargo Logistics has submitted a draft letter of offer with the Securities and Exchange Board of India (Sebi) regarding its buyback of 64 lakh shares from the existing shareholders for about Rs 124 crore. The offer represents 2.54% of the total number of outstanding equity shares of the company.
The buyback offer is for Rs 195 per share,14% above its closing price of Rs 171 a piece on Friday at the Bombay Stock Exchange (BSE). The company has cash and equivalents of Rs 274 crore as on March 31,2016.The buyback is proposed to be made from all the existing shareholders, including promoters, of the company on a proportionate basis under the tender offer route.
Promoters have 69.84% stake in the company as on September 31, 2016. The company has appointed Inga Capital as the manager to the buyback offer.
According to Sebi rules a company can buy back shares either from its existing shareholders on a proportionate basis through a tender offer, the open market or odd lot holders.
In the case of a tender offer, the company has to deposit 25% of the consideration in the escrow account if the consideration does not exceed Rs 100 crore. Companies offer buybacks to enhance their value since the shares bought back are extinguished and the earnings per share (EPS) gets a boost.