Arthur Lok Jack, chairman of Guardian Holdings Limited. - File
Trinidad's insurance and property conglomerate Guardian Holdings Limited (GHL) has made an offer to buy back as much as four per cent or 8.2 million of its issued ordinary shares, a move the company said should boost shareholder value.
Four per cent is the limit allowed by regulators in the company's home market.
The buy-back offer, which is worth more than TT$140 million at current market prices, remains on the market for six months - from Friday, January 30 to July 31.
Guardian Holdings directors are executing the repurchase at a time when the company's stock has been hammered on the local market.
Its share price plummeted from TT$31 per stock unit in July last year to a low of TT$16 a share on Tuesday.
GHL's decision to buy back its shares is also the first activity of its kind on the Trinidad and Tobago Stock Exchange.
Arlene Stephen, communications manager at the Trinidad and Tobago Securities and Exchange Commission (TTSEC) said GHL consulted with the regulator on the decision.
The TTSEC guidelines limit companies to repurchasing four per cent of their shareholding.
Shares in Guardian Holdings surged TT$1.60 higher to TT$17.60 on Wednesday in trading on the Trinidad Stock Exchange as news of chairman Arthur Lok Jack's announcement revolved around the market.
In Jamaica, the stock did not trade, and late in the day, analysts said they were still digesting the news.
Company's interest
"Directors believe that the repurchase by GHL of its own shares at the prevailing market price is in the best interest of the company and its shareholders," said Lok Jack.
"Depending market conditions and funding arrangements at the time, such repurchases could lead to an enhancement of the net assets of the company and/or its earnings per share," said GHL.
"We have determined that given the nature of the investment environment, the very best use of available funds is to invest in Guardian itself, the market price of which we feel is definitely undervalued," Lok Jack said in a letter to shareholders.
Essentially, Guardian considers its shares under-valued because of current market conditions.
The company's current book value is about TT$19.30 per share.
Neither the Lok Jacks, the family of former GHL chairman Nazir Ahamad, who is deceased, nor any holder of 10 per cent of stock will offer up their holdings for sale.
business@gleanerjm.com