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Aussie Broadband (ASX:ABB) plans to buyback 10% of capital over the next 12 months to hit two birds with one stone: Fund CapEx and reduce debt.
Of course, maximising shareholder value is also a constituent of the company’s rationale – which is handy, seeing as share buybacks allow a company to push its own share price up.
At this stage, ABB is set to commencing buying back its shares off the market after it realises its HY25 results in February CY2025.
There is no hard figure yet on how many shares will be bought – but the company reported on Wednesday it will depend on the prevailing share price; “market conditions,” future CapEx obligations, and “unforeseen circumstances.”
There was at least one wet blanket clause tacked on at the very bottom of the company’s announcement: “There can be no certainty that Aussie will repurchase any or all of the shares announced under the buyback.”
Apart from that, a 3.5%+ jump in the company’s share price in arvo trades on Wednesday Sydney time suggests a positive investor reaction to news of the plan. The buyback does not need shareholder approval.
Its debt obligations are also a key part of the company’s rationale.
“As at 30 June 2024, Aussie had net debt of $138.0m1, representing net leverage of 1.1×2 FY24 EBITDA,” ABB wrote on Wednesday.
“Since this date, Aussie has sold its residual stake in Superloop for gross pre-tax proceeds of $99.8m, representing a gain on sale of $42.7M.”
ABB last traded at $3.72/sh.
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