AutoCanada Inc. plans to buy back up to $100 million in shares from investors, as the publicly traded dealership group weighs its current share price against its assets and outlook.
The Edmonton-based company, which owns 80 franchised dealerships in Canada and the United States, announced the buyback plan June 28.
AutoCanada shareholders, through what is known as a modified Dutch auction, will be able to tender shares for buyback for between $22 and $25. The $100-million limit on the issuer bid represents about 15.5 per cent of the value of the dealership group’s total outstanding shares at the company’s most recent closing price.
Company shares closed at $24.08 June 27, not far off their 52-week low of $22.41 recorded earlier this month. Its shares traded as high as $59.26 last August and ended 2021 at $42.70.
AutoCanada’s management and board said the buyback is a “prudent use of the company’s financial resources given the company’s business profile and assets, the current market price of the shares and the company’s ongoing cash requirements.”
Investors opting to tender their shares, the company said, will have access to liquidity that may not otherwise be available on the Toronto Stock Exchange. Those choosing to hold onto their shares will come out of the buyback with each share representing a larger proportional stake in the dealership group.
AutoCanada said it plans to fund the buyback with cash on-hand and drawings from its senior syndicated credit facility.
Shareholders will be able to tender shares between June 30 and Aug. 4.