Hire purchase lender Synergy Industrial Credit wants to acquire part of its own shares valued Sh400 million, becoming one of the few non-listed firms to go this route.
The firm, which was incorporated in Kenya in 1994 to offer hire purchase financing, says it will buy back 400,000 fully paid-up ordinary shares in the capital of the company.
The decision was approved by way of a special resolution passed at an extraordinary general meeting of the company held mid-October last year. Synergy gazetted the resolution last Friday.
“The company will buy back 400,000 fully paid-up ordinary shares in the capital of the company Sh1,000 per ordinary share payable in cash for an aggregate consideration and permissible capital payment for the buyback of the shares of Sh400 million,” said the company in a gazette notice.
A share buyback, also known as a share repurchase, is the process where a company buys back its outstanding shares from the market either with its accumulated cash or through debt financing.
The repurchased shares are then cancelled or recorded as treasury stock in the company’s financial statements. Treasury stock refers to the portion of shares of a company that are kept in its own treasury and are not available to the public.
Share buybacks have not been a common phenomenon in Kenya, with the Nation Media Group becoming the first to repurchase its stock since the provision was introduced in the Companies Act, 2015. Centum Investment has since followed up with its share buyback.
Synergy says it has published the board of directors’ statement of solvency and auditors’ report for inspection by any member or creditor.
“Any creditor of the company is entitled at any time within the period of five weeks commencing from date of the gazette notice to apply to the Court under section 479 of the Act for an order prohibiting the payment out of capital in respect of the buyback,” said the firm.