Tribeca’s Share Buy-Back Risks Cash Reserves Amid Aggressive Capital Return Strategy
Tribeca Global Natural Resources Limited announces a fully franked $0.05 final dividend for FY25 alongside amendments to its Dividend Reinvestment Plan designed to protect shareholder value. The company also launches a 10% on-market share buy-back aiming to capitalize on shares trading below net tangible asset backing.
- Declared fully franked final dividend of $0.05 per share for FY25
- Amended Dividend Reinvestment Plan to prevent dilution of net tangible asset value
- On-market share buy-back of up to 7.88 million shares (10% of voting shares) over 12 months
- Buy-back shares to be cancelled, reducing share capital and enhancing earnings per share
- Buy-back aims to leverage shares trading at a discount to net tangible asset backing
Dividend Declaration and DRP Amendments
Tribeca Global Natural Resources Limited (ASX, TGF) has declared a fully franked final dividend of $0.05 per ordinary share for the financial year ended 30 June 2025. This dividend reflects the company’s ongoing commitment to returning value to shareholders, supported by profits derived from dividends, interest income, and realised gains on investments.
Alongside the dividend, the company has amended its Dividend Reinvestment Plan (DRP) to address concerns about dilution of net tangible asset (NTA) backing per share. Under the revised DRP, shares issued or transferred to participating shareholders will be priced at the lower of the average on-market price during the pricing period or the most recent published NTA per share. This adjustment aims to maintain fairness between participating and non-participating shareholders while complying with ASX Listing Rules and the Corporations Act.
On-Market Share Buy-Back Initiative
In a significant capital management move, Tribeca Global announced an on-market share buy-back program capped at 7,879,193 shares, representing up to 10% of voting shares over the preceding 12 months. The buy-back will be funded from the company’s cash reserves and is scheduled to commence no earlier than 10 September 2025, with a maximum duration of 12 months.
The buy-back is designed to be an efficient use of capital, particularly when shares trade at a discount to their underlying NTA. By repurchasing shares below this benchmark, the company expects to enhance earnings per share and NTA for remaining shareholders. Shares acquired will be cancelled, thereby reducing share capital and potentially improving shareholder returns.
Balancing Benefits and Risks
The Board highlights several advantages of the buy-back, including accretion to earnings and NTA, increased liquidity for shareholders, and flexibility to respond to market conditions. However, it also acknowledges risks, chiefly the reduction in cash reserves which could constrain future investment opportunities or operational needs. The buy-back remains discretionary and may be suspended or terminated depending on market dynamics or company priorities.
Importantly, the company confirms that while directors are eligible to participate in the buy-back, none currently intend to sell shares under the program. Shareholders are encouraged to seek independent financial advice regarding the tax and financial implications of participating in the buy-back or DRP.
Shareholder Participation and Next Steps
Eligible shareholders in Australia and New Zealand may elect to participate in the amended DRP for the FY25 final dividend and future dividends. Elections must be lodged by one trading day after the dividend record date. The company has provided detailed DRP rules and procedures on its website and through its share registry, BoardRoom Pty Limited.
As the buy-back unfolds, market participants will be watching closely to gauge its impact on share price, liquidity, and overall capital structure. The Board’s conviction in the natural resources investment thesis is underscored by these capital management initiatives, signaling confidence in the company’s valuation and future prospects.
Bottom Line?
Tribeca Global’s combined dividend, DRP refinement, and share buy-back set the stage for a pivotal year in shareholder value management.
Questions in the middle?
- How aggressively will the Board execute the buy-back amid fluctuating market conditions?
- What level of shareholder uptake will the amended DRP achieve, and how will it affect share liquidity?
- Could the reduction in cash reserves from the buy-back limit Tribeca’s ability to pursue new investment opportunities?
