Afdis moots share buy-back plan

Nqobile Bhebhe, Zimpapers Business Hub

SHAREHOLDERS of Afdis Limited are set to consider a Special Resolution seeking to authorise the listed firm to repurchase its own shares, in a strategic move aimed at enhancing shareholder value while maintaining financial prudence.

The proposal will be presented at the company’s upcoming Annual General Meeting (AGM) scheduled for July.

If approved, the resolution will grant Afdis the authority under Section 128 of the Companies and Other Business Entities Act [Chapter 24:31] to acquire its own ordinary shares from the open market, subject to prescribed terms.

“Shareholders will be asked to consider and, if deemed fit, to resolve with or without amendments, that the Company authorises in advance, in terms of Section 128 of the Companies and Other Business Entities Act (Chapter 24:31), the purchase by the Company of its own shares upon such terms and conditions and in such amounts as the Directors of the Company may from time to time determine,” reads the official notice seen by Zimpapers Business Hub.

A share buy-back is often interpreted as a signal that management believes the company’s stock is undervalued.

Such repurchases can be executed through open-market transactions or via shareholder tenders at a pre-determined price.

By reducing the total number of shares in circulation, buy-backs tend to boost earnings per share and may increase the market value of remaining shares.

If approved, the resolution would authorise the listed entity to repurchase up to 10 percent of its issued ordinary share capital in any given financial year.

The pricing of the repurchased shares will be tightly controlled.

Transactions will be conducted within a pricing band capped at five percent above and floored at five percent below the volume-weighted average price on the Zimbabwe Stock Exchange (ZSE) over the five trading days preceding the transaction.

Afdis added that in considering cash resource availability, the Directors will take account of, inter alia, the long-term cash needs of the company and will ensure the company remains solvent after the re-purchase.