Safe Bulkers, Inc. (NYSE: SB) has outlined a plan to repurchase some of its shares, a move that will see the company put money in the pockets of shareholders and improve the value of its stock. But the company didn’t reveal when the buyback program would begin or end or the amount of money it expects to spend on the program. There is also no clarity about how the company intends to raise money for the buyback.
The plan to reduce the number of shares outstanding comes after Safe Bulkers, Inc. (NYSE: SB) recently amended some of its debt covenants to allow it more flexibility in loan repayment. The buyback program also comes at a time when the company is in the middle of an internal efficiency drive. In particular, Safe Bulkers is working to reduce its costs of operations with hopes that doing so would save money and contribute to bottom-line improvement.
2 million shares targeted
Safe Bulkers, Inc. (NYSE: SB) is targeting to repurchase 2 million shares over an undefined period of time. What the management said in a brief press release announcing the buyback program was that the repurchase of the shares will be done from time to time. But there is no guarantee that the company would repurchase all the 2 million shares targeted. In a statement, the management said that Safe Bulkers reserves the rights to terminate or alter the buyback authorization, which is another way of saying that the company could buy back fewer than 2 million shares or halt the program altogether if the environment is not conducive.
What’s the impact?
If Safe Bulkers, Inc. (NYSE: SB) repurchases 2 million shares as targeted, it would have reduced the number of its outstanding shares by 2.4%. But the impact would even be bigger on the public float, which is expected to decline by 5.7%. That should lead to a positive impact on the value of remaining shares.
1Q2016 highlight Safe Bulkers, Inc. (NYSE: SB)
Safe Bulkers, Inc. (NYSE: SB) posted EPS loss of $0.21 on revenue of $24.7 million in 1Q2016. Both EPS and revenue shrank from a year ago quarter and also missed consensus estimates.