MTN, which is in merger talks Bharti Airtel, has decided to buy back 10% of its share capital. The South African telco will move a special resolution at its annual general meeting on June 19.
The Johannesburg-based company will also seek shareholders’ permission to authorise its board to sell 10% of its unissued share capital at a price to be determined by its board. It had passed an ordinary resolution to this effect at the last AGM. In the absence of any move in this direction, the authority given to the board is slated to lapse at the next AGM. The company now proposes to extend it for another year.
While the rationale for the proposed capital decisions is unclear, companies abroad often buy back shares to hold these as treasury stock instead of cancelling the shares as Indian companies are required to do. After the scrip gets repriced in the market following the buyback, these shares are sold at a higher price.
Industry sources said the proposed restructuring of share capital is linked to the company’s plans to merge with Bharti Airtel.
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