Cresud Inc. (NASDAQ:CRESY, BYMA:CRES), an Argentine real estate company, has disclosed its Board of Directors' decision to acquire up to 10% of its own shares, with a total investment not exceeding ARS 6,500,000,000 (Argentine Pesos).
This repurchase initiative, as reported on Monday, is driven by the current market conditions and the perceived undervaluation of the company's shares relative to their fair value, as assessed by independent appraisers.
The Board, with the support of the Audit Committee, Supervisory Committee, and an independent accountant, aims to stabilize the market price of the shares, which they believe does not reflect the company's actual asset value, thus affecting shareholder interests negatively.
The repurchase terms include a maximum price of USD 12.00 per American Depositary Share (ADS) and ARS 1,500.00 per common share. The daily repurchase volume is limited to 25% of the average daily trading volume over the prior 90 days.
The repurchase period is set for 180 days, starting the day after the announcement is published in the Buenos Aires Stock Exchange's Daily Bulletin, with the possibility of extension. The funds for the repurchase will come from the company's available reserves and earnings, with assurances that the buyback will not compromise Cresud's solvency.
As of June 30, 2024, Cresud had 596,355,320 ordinary shares, and subsequent warrants exercised increased this number to 598,639,142 shares. The company also reported 84,261,280 unexercised warrants remaining after a Board approval on October 22, 2024.
This strategic move is part of Cresud's broader effort to manage its capital structure and deliver value to its shareholders. It is based on a press release statement.
In other recent news, Cresud Inc. has announced a substantial ARS 45 billion cash dividend distribution, approved by its shareholders. The company has also reported an increase in total shares from 596,355,320 to 598,639,142, following the exercise of warrants which collected USD 982,729.
Furthermore, Cresud successfully sold a portion of its "Los Pozos" property, a 3,630-hectare section of their farm in Salta Province, Argentina, for a total of $2.23 million.
In addition, Cresud issued Series XLVI notes, raising an equivalent of USD 28.6 million, strengthening its capital structure and diversifying its financing sources.
The company has also announced an upcoming virtual General Ordinary and Extraordinary Shareholders' Meeting. The meeting agenda includes the approval of financial statements, allocation of a substantial net income of approximately 70.8 billion Argentine pesos, and the distribution of dividends.
Cresud has also proposed the reallocation of existing voluntary reserves and delegated the application and disposition of these funds to the board of directors.
InvestingPro Insights
Cresud's decision to repurchase up to 10% of its shares aligns well with several key financial indicators and market trends. According to InvestingPro data, the company's stock is currently trading at a P/E ratio of 9.88, which suggests it may indeed be undervalued as the Board believes. This is further supported by the fact that Cresud's price-to-book ratio stands at 0.93, indicating that the stock is trading below its book value.
InvestingPro Tips highlight that Cresud is a "Prominent player in the Food Products industry" and has been "Profitable over the last twelve months." These factors may contribute to the Board's confidence in the company's intrinsic value. Additionally, the company "Pays a significant dividend to shareholders," with a current dividend yield of 7.87%, which could make the stock more attractive to income-focused investors.
The company's financial health appears robust, with a revenue of $780.44 million in the last twelve months and an EBITDA growth of 41.61% over the same period. This strong performance may provide the necessary financial flexibility to execute the share repurchase program without compromising the company's solvency, as stated in the announcement.
Investors considering Cresud might be interested to know that InvestingPro offers 7 additional tips for this stock, providing a more comprehensive analysis for those looking to delve deeper into the company's prospects.
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