Ukrproduct plans to buy back up to 22% of shares

Ukrproduct (UKR LN) issued a notice of AGM to be held on June 7, 2012 that includes approval of a program to buy back up to 9.0 mln shares out of 40.8 mln outstanding. This amount represents 22% of the total share capital and 3/4 of the company’s free float (29.2%).

Yegor Samusenko: According to the UK Takeover Code, the company has to have the approval of 75% of shareholders to commence a buyback, which means that majority shareholders have to align their interests with only 4.2% of share capital held by minority shareholders, thus approval of the measure is expected. We also do not rule out a delisting following the buyback as the company’s current capitalization of GBP 3.9 mln does not justify the cost of listing on the LSE. The Takeover Code allows companies listed on AIM not to commence a mandatory tender offer even in cases when the buyback amount is significant (unlike the LSE Main Market where a threshold is 15% of share capital).