Nation Media Group (NMG) has announced plans to buy back 10 per cent of its own shares from shareholders in a share buyback programme that will give its investors a chance to cash in on their investments.
The media house, which embarked on a digital transformation journey with the recent launch of its flagship digital brand, Nation.Africa, told its shareholders and investors on Thursday that its board had resolved to propose to its shareholders the purchase of up to 10 per cent of its issued and paid-up share capital, in accordance with the provisions of the Companies Act.
"The Buyback Programme is subject to regulatory and shareholder approvals," NMG said in the notice which also advised shareholders and investors to exercise caution when dealing in the company's securities as required of listed companies.
A share buyback occurs when a company purchases a portion of its issued shares from its shareholders. It is one of the ways for a company to return funds to shareholders, effectively reducing the number of issued shares and increasing the proportional rights of any single share.
NMG Chief Executive Officer Stephen Gitagama explained that the company accelerated its investment in digital transformation with the onset of the Covid-19 pandemic. The company’s performance in the first half of 2020 was adversely impacted by coronavirus, in addition to the challenging business environment. As a result of the uncertainty in the operations landscape and the company’s extensive digital investment plans, NMG did not declare an interim dividend when it announced its half year results in 2020. The company's share price at the stock market has therefore remained suppressed.
"The share buy-back offers the shareholders an alternative option of taking cash thereby realising a return on their investment" Mr Gitagama said.
NMG declared a bonus share of one for every 10 ordinary shares held last year and the share buyback gives shareholders an opportunity to cash out on their investments. The company closed Tuesday‘s trading at Sh13.40 per share.
The share buyback comes weeks after NMG launched the premium section of its digital platform, Nation.Africa, marking another milestone in its digital transformation journey. The premium section with exclusive, in-depth, incisive and well-researched content is available to millions of readers across the world at a fee.
Currently, NMG publishes the Daily Nation, Taifa Leo, Business Daily and The EastAfrican newspapers in Kenya. It also has investments in the broadcasting industry in the region with television and radio operations in Kenya and Uganda, in addition to several newspapers among them The Daily Monitor in Uganda, Mwananchi, Mwanaspoti and TheCitizen in Tanzania.