The board of directors of Converge ICT Solutions Inc. yesterday approved its share buyback program with commitment to acquire up to P6.5 billion shares of Coherent Cloud Investments (Coherent Cloud), an affiliate of Warburg Pincus.
In a disclosure at stock exchange, Converge said the buyback approval is concurrent with the announcement by Coherent Cloud it will launch a placing of 288.7 million shares, representing approximately 3.8 percent of the company’s outstanding share capital, at a price of P25 per share through an accelerated book build offering (ABO).
The price of the share buyback will be at the same price as the ABO.
Converge ICT has sufficient unrestricted retained earnings to cover the buyback.
The buyback will be funded by a drawdown of existing debt facilities.
Converge ICT’s financial position after this buyback remains well within its debt covenants.
The buyback program, if utilized fully, is expected to increase return on equity to shareholders by approximately 1.5 percentage points to approximately 24 percent.
Upon completion of the ABO and the buyback, Converge ICT’s public float will increase to over 30 percent, up from approximately 20 percent at the time of its initial public offering in 2020.
Coherent Cloud will also distribute within 30 days, its remaining shares in Converge ICT to certain parties as part of existing arrangements. This distribution will also be effected at the same price as the buyback and ABO, and will include a lock-up on these shares until the end of 2022.
Saurabh Agarwal, Warburg Pincus managing director, will continue to remain on Converge ICT’s board following the completion of the transactions.
