Dawn abandons buyback
DISTRIBUTION and Warehousing Network (Dawn) has abandoned its planned buyback of the 78.1 million shares held by its black economic empowerment (BEE) shareholder Ukhamba Holdings at a significant premium to the share’s trading price.
The listed local plumbing and hardware brands manufacturer and distributor yesterday said discussions between Dawn and Ukhamba to date had failed to produce an agreement on a revised price or quantum for the share buyback.
These discussions followed Dawn shareholders, who collectively held more than 30 percent of the company’s issued share capital, last month, expressing support in principle for the proposed share repurchase, but not the price or quantum that was agreed with Ukhamba Holdings. Dawn had entered into an agreement with Ukhamba, which was subject to shareholder approval, to buy back its 32.25 percent share- holding for R8.50 a share.
This was an almost 18 percent premium on the volume weighted average traded price of Dawn’s shares over the 30 business days prior to the date of the agreement.
Shares in Dawn yesterday rose 0.16 percent to R6.26.
Dawn said it had entered into the share buyback with Ukhamba, which in 2004 acquired a 38.8 percent shareholding in the company, to ensure a controlled exit of Ukhamba from the company.
The major shareholders in Dawn subsequently confirmed in writing they would vote against any resolutions proposed at a general meeting of the company to approve or implement the terms of the share buyback. Dawn said yesterday given these circumstances, the company and Ukhamba had agreed to terminate the repurchase agreement.
The company said it would therefore not be issuing a circular to shareholders or calling a general meeting to propose resolutions in relation to the repurchase.