First Active will buy its own shares on the market. The move will create a floor price for retail investors and signal to the market that the firm believes its shares are undervalued. The shares closed up two cents yesterday at €2.07. First Active shares are up from their year 2000 low of €1.70 but still well off their closing high for the year of €2.57 and their October 1998 flotation price of €2.86.
The firm has had a difficult year which included several resignations at senior management level, rationalisation and failed merger negotiations with Anglo Irish Bank.
A rolling share purchase programme will start immediately, the company announced yesterday. Davy Stockbrokers will buy for First Active. The company has surplus capital of about €75 million to €80 million. In May shareholders gave the board approval to buy up to 10 per cent of its shares, or just under 14 million shares.
Buying back 10 per cent of its shares at current market prices would cost First Active just under €29 million. The company can go into the market for shares until December 31st when it moves into a closed period before its annual results.
About 80 per cent of the shares are held by retail investors. First Active has about 155,000 shareholders who hold fewer than 1,000 shares each. With a fairly inactive market in the shares small shareholders have found it difficult to sell shares. The firm's move will ensure a buyer for some of these shares.
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