MCY Mercury NZ ( MRP Mighty River Power)

[value_investor]

An earnings guidance upgrade and a fall in price?

Interesting movement on this one. Perhaps someone is offloading their shares..

[couta1]

An earnings guidance upgrade and a fall in price?

Interesting movement on this one. Perhaps someone is offloading their shares..

Possible MSCI index removal coming up for the stock.

[Robomo]

Mercury announced today that it will begin an on-market share buyback of up to 20 million shares. They will not be cancelled but will be held by Mercury as treasury stock.

So, what happens to the dividends earned by these shares (@13.8c final+special - 2017 div.) which is likely to be about $2.76 million? Will they be retained as 'earnings' or redistributed to external shareholders or not 'paid' at all or ....?

Could some savvy Accountant or Management guru enlighten me on this and what the effect will be on the small retail shareholder (i.e. like me and thousands of others holding a handful of shares).

[RTM]

Mercury announced today that it will begin an on-market share buyback of up to 20 million shares. They will not be cancelled but will be held by Mercury as treasury stock.

So, what happens to the dividends earned by these shares (@13.8c final+special - 2017 div.) which is likely to be about $2.76 million? Will they be retained as 'earnings' or redistributed to external shareholders or not 'paid' at all or ....?

Could some savvy Accountant or Management guru enlighten me on this and what the effect will be on the small retail shareholder (i.e. like me and thousands of others holding a handful of shares).

Good post...I have the same questions as well ! How does this buyback, where the shares are not cancelled, affect things ?

[777]

My take is that if not cancelled then no affect on the other shareholders as there is still the same number of shares on issue. I assume that they get the same dividend. Having them held as treasury stock enables them to be used for DRP's or performance issues without having to issue more shares.

Any affect would be minor as it is less than half a percent of the total shares on issue.

[Scrunch]

My take mirrors 777 above. It makes it administratively easier to sell or provide someone with shares of this is required at some stage in the future. As they are still on issue there's may be a cash circle whereby Mercury pays itself a dividend.

[fish]

Mercury announced today that it will begin an on-market share buyback of up to 20 million shares. They will not be cancelled but will be held by Mercury as treasury stock.

So, what happens to the dividends earned by these shares (@13.8c final+special - 2017 div.) which is likely to be about $2.76 million? Will they be retained as 'earnings' or redistributed to external shareholders or not 'paid' at all or ....?

Could some savvy Accountant or Management guru enlighten me on this and what the effect will be on the small retail shareholder (i.e. like me and thousands of others holding a handful of shares).

My feeling is that we should see a rise in the sp-after weeks of mcy being sold off at close today we saw a bit of buying pressure at close.
I bought a lot as the sp fell so have a big interest in how much the sp will rise in the next 8 weeks.
My speculation is somewhere between 3.28 and 3.48.
Would be very interested in other opinions

[Snoopy]

My take is that if not cancelled then no affect on the other shareholders as there is still the same number of shares on issue. I assume that they get the same dividend. Having them held as treasury stock enables them to be used for DRP's or performance issues without having to issue more shares.

Any affect would be minor as it is less than half a percent of the total shares on issue.

My take mirrors 777 above. It makes it administratively easier to sell or provide someone with shares of this is required at some stage in the future. As they are still on issue there's may be a cash circle whereby Mercury pays itself a dividend.

The 8th May announcement shows the buyback has started. 130,857 shares bought back. This brings the total treasury stock up to 22,527,129, out of a total no. of shares on issue of 1,400,012,597. Curiously that 1,400,012,597 shares on issue is the same number listed on p51 of AR2017 as the total number of shares back then. There is no talk of the number of shares being reduced in the buyback, which means there is a strong possibility that these 'bought back' shares will be reissued later. That AR2017 'total number of shares on issue' must include the previously bought treasury shares.

So it seems there is indeed a cash circle, with Mercury paying themselves a dividends on all Treasury shares held. As to where we can find that 'dividend to self' in the accounts... Could it all be grouped with 'Other Revenue' as disclosed under note 4?

SNOOPY

[777]

They don't need to do the dividend thing as the cheque written will be balanced by the cheque deposited.

[Robomo]

Mercury announced today that it will begin an on-market share buyback of up to 20 million shares. They will not be cancelled but will be held by Mercury as treasury stock.

So, what happens to the dividends earned by these shares (@13.8c final+special - 2017 div.) which is likely to be about $2.76 million? Will they be retained as 'earnings' or redistributed to external shareholders or not 'paid' at all or ....?

Could some savvy Accountant or Management guru enlighten me on this and what the effect will be on the small retail shareholder (i.e. like me and thousands of others holding a handful of shares).

I emailed Mercury Investor Relations and they advise.....

Shares held by the company as Treasury Stock are not taken into account for dividends and voting.

As per the Companies Act in respect of shares held as Treasury Stock (Section 67B):

“… the company shall not – Exercise any voting rights attaching to the share[s]; or
Make or receive any distributions authorised or payable in respect of the share[s]”

Regards,

TIM THOMPSON
HEAD OF TREASURY & INVESTOR RELATIONS

So this means that the dividend payout will be made to fewer shares (or held as a cash reserve possibly). I'm looking forward to a juicy divvy this year.