Connection Group shareholders have given the group permission to implement an odd lot offer, share buyback and a consolidation of the share on a one-for-five basis.
CEO Pierre Joubert says the consolidation is necessary to create a more meaningful share price and reduce speculative trade.
"With a share price of 40c, a 4c move is easy, but that`s 10%. The logic is that with a higher absolute price, movements won`t be as significant."
He says the share buy-back, set at 40c a share, is being implemented to clean up the shareholder base.
About 37% of the group`s shareholders own just less than 424 500 shares, or less than 1 000 shares each.
These small shareholders cost Connection R200 a year each, as they have to be sent annual reports, circulars and other documents.
"A thousand shares is R400, but if they try to sell them in the market, they`ll have to pay R300 in brokerage [fees]," Joubert says.
"So we look at it and one, R400 is not material. Two, the realised value net of brokerage is minimal. We are offering to buy those shares at no cost, so they can realise the full value.
"The way we look at it, we`re spending R170 in the first year to save R200 a year after that."
All shareholders who hold in aggregate less than 1 000 shares at the close of business on 25 October will be given the opportunity to participate in the odd lot offer.
The shareholders are not being forced to sell and can increase their holdings to at least 1 000 shares by buying more shares. If they choose not to participate in the odd lot offer or not to increase their holdings, their shares will be sold.
The share buyback involves an offer to buy back, for 40c each, up to 10% of the shares held by each shareholder, up to about 23.44 million shares.
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