6th Feb 2017 11:15
LONDON (Alliance News) - National Grid PLC on Monday said it has started a new share buyback programme with the "sole purpose" of reducing its share capital following the dilution that resulted from the take-up of its scrip dividend offer.
National Grid offered a scrip alternative for its interim dividend payment made in January 2017, allowing shareholders to take their dividend payout in the form of shares rather than cash.
The new buyback programme will be managed Merrill Lynch International.
The programme will end "no later" than February 17, and follows the end of the last share buyback programme that closed on January 27, which was managed by Barclays Capital Securities Ltd.
The last share buyback programme was originally launched in November, when the company capped the programme at 15.5 million shares for a total maximum consideration of GBP155 million.
National Grid said it will purchase a maximum of GBP35 million worth of shares under the latest programme, capped at 3.5 million shares, with all purchased shares to be held in the treasury.
The scrip dividend saw 3.5 million shares issued, with just over 3 million shares being issued under the programme, which were admitted to trading in January at 920.92 pence each. The other 468,885 shares comprised of 93,777 American Depositary Receipts - each representing five shares - priced at USD57.4009 each.
"For the avoidance of doubt, no repurchases will be made in the US or in respect of the company's American Depositary Receipts," said National Grid said on Monday.
That was in relation to the interim dividend of 15.17 pence paid for the first half ended September 30, or 94.27 cents for ADRs. That interim payout was up from the interim payment of 15 pence per share paid a year earlier.
National Grid's current dividend policy is to increase the payout at least in line with the rate of RPI inflation each year for the foreseeable future, meaning shareholders can expect a rise to the full year payout for the previous financial year ended in March 2016 of 43.34 pence.
In December, National Grid said it would look to return GBP4.00 billion to shareholders through special dividends and buybacks, following on from the sale of a 61% stake in its UK gas distribution business for GBP3.60 billion in cash.
National Grid, which has chosen to retain a 39% stake in the gas distribution business, also took on GBP1.80 billion in additional debt financing at the time of the deal, which is expected to close towards the end of the first quarter of 2017.
National Grid is waiting on merger clearance from the European Commission.
The company said it planned to return "at least 75% of the net proceeds" through a special dividend in the "second quarter of calendar year 2017". Those net proceeds are calculated after GBP700 million is retained of the new debt to maintain the equity value of its remaining stake in the business, and after the deduction of around GBP500 million in costs.
Notably, National Grid has previously said it would be looking into the possibility of selling another 14% stake in the UK gas distribution business to the same consortium that purchased the 61% stake, on "broadly equivalent terms" to the first deal.
The consortium is comprised of comprised of Macquarie Infrastructure & Real Assets Allianz Capital Partners, Hermes Investment Management, CIC Capital Corp, Qatar Investment Authority, Dalmore Capital and Amber Infrastructure Ltd/International Public Partnerships Ltd.
By Joshua Warner; [email protected]; @JoshAlliance
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