Gujarat Ambuja Exports said in a regulatory filing on Tuesday that it has decided to buy back 2.36 crore shares worth R225 crore. The buyback offer is for R95 per share, 9.5% less than Tuesday’s closing price of R105 on BSE.
The buyback is proposed to be made from all the existing shareholders of the company on a proportionate basis under the tender offer route. The company has cash and equivalents of R39.68 crore as on March 31, 2016.
The promoters have 71.96% of the shares in the company as of December 2016. The company has appointed SBI Capital Markets as the manager for the buyback offer. In calendar year 2016, firms had spent more than R26,853 crore on buybacks, the highest since 2011.
According to Securities and Exchange Board of India (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 R100 crore.
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Buybacks have become the preferred route over dividends, as dividend income in the hands of all residents, domestic companies, trusts or funds except those established for religious, educational or charitable purposes, attracts an additional dividend tax of 10% dividend income over R10 lakh a year.