OK seeks shareholders nod to buy back shares

RYAN CHIGOCHE

Zimbabwe Stock Exchange listed retail group, OK Zimbabwe Limited, will seek approval of shareholders for its plan to buy back its shares as it joins a list of other listed entities that have pursued a similar route meant to stabilise the share price.

The issue is proposed to pass as a special business resolution at the annual general meeting (AGM) scheduled for July 28, 2022 at the company’s headquarters in Graniteside, Harare.

Ok Zimbabwe has no shortage of cash to buy back its own shares.

According to its financial results for the year to March 31, 2022, OK Zimbabwe had cash and cash equivalents amounting to ZWL$723.5m.

The retailer posted a ZWL$2.8bn profit in the period under review, a 49% increase from ZWL$1.9bn reported in prior comparative period.

In the notice to the shareholders for their AGM, OK Zimbabwe company secretary, Margaret Munyuru, put forth proposals on the meeting’s agenda to have shareholders nod to enable the company to buy back its own shares.

“…The company be and is hereby authorised and empowered to purchase its own shares in issue up to a maximum  of 10% of the issued share capital upon such terms and conditions and in such amounts  as the directors of the company may from time to time determine.

Such authority  hereby specifies that the purchase price shall not be lower than the nominal value of the company’s shares and not greater than 5% nor 5% below the weighted average  trading price for such ordinary shares traded over five business days immediately preceding the date of purchase of such shares by the company,” Munyuru said.

“The shares to be acquired under this resolution shall be ordinary shares in the company and the maximum number of shares which may be acquired under this resolution shall be 10% of the ordinary shares of the company in issue prior to the date of this resolution,” Munyuru said in a notice to shareholders.”

Head of research at securities firm Morgan & Co, Batanai Matsika, told Business Times: “We have seen the market derating so for a lot of companies their shares are looking very cheap so it’s cheaper for them to actually buy back their own shares. But also it helps to create demand for the stocks as it helps to stabilise the price so that they don’t depreciate in value. So right now, companies are doing it because it’s cheaper to do that.”

At the same AGM, OK Zimbabwe will also seek authority from shareholders to modify its employee share option scheme to a Share Appreciation Rights Scheme.

This is also expected to pass through a special resolution.

If it passes the modified scheme will be authorised for immediate adoption and implementation and the directors will allocate up to 63 181 464 ordinary shares to this scheme.

Econet is buying back its shares while African Distillers and Zimre Holdings Limited have approached shareholders to approve the proposal to undertake the share buyback exercise.