Pinnacle Holdings is spending R29 million to buy back 2.1 million of its own stock in a move that will bolster earnings per share 0.58%, because it dilutes the shares in issue.
The repurchase, announced yesterday evening, was done under a general authority the directors have to buy back as much as 18.76% of its stock. This purchase represents around 1.24% of shares in issue.
Pinnacle spent between R14.55 and R12.98 on each share it bought, financing the acquisition through "available banking facilities". Pinnacle's share price, which has been under pressure for some time, last traded at R13.52, an improvement on its 52-week low of R10.95 on 6 June.
The stock started declining after news broke that executive Takalani Tshivhase had been charged with bribery. Tshivhase, currently on leave of absence, had been arrested - and released on bail - 20 days previously and is set to appear in court again tomorrow.
Tshivhase was charged on 24 March with attempting to bribe a senior South African Police Service official with R5 million so the company could win a R182 million contract to supply about 3 000 handheld MaxID devices to the police.
Winners and losers
News of the charge sent Pinnacle's shares into free fall, losing 25% on the day from its opening price of R20. On 26 March, its stock continued to slide, losing another 23.67%, to close at R11.45, dropping its market capitalisation to under R2 billion.
On 27 March, executives started buying up stock in the company. In several separate disclosures to the bourse - the last made on 3 April - directors and associated trusts snapped up more than R20 million-worth of stock.
During the 20 days it took Pinnacle to tell the market about Tshivhase's arrest, three separate directors dabbled in Pinnacle stock, selling more than a million shares. Between them, director George Wiehahn, CEO Arnold Fourie and Tshivhase netted R28.6 million from their sales.
These trades are currently being probed by the JSE and the Financial Services Board to determine whether any rules around insider trading were breached.
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