BHP Shares Sore High On Share Buyback And Special Dividend Announcement

  • Dec 17, 2018 AEDT
  • Team Kalkine
BHP Shares Sore High On Share Buyback And Special Dividend Announcement

BHP (ASX: BHP) stock bounced back on company’s early morning announcement of exclusive pay-out to shareholders. This involves a combination of USD 5.2 billion share buyback and USD 1.02 per share special dividend program.

BHP shares are currently trading at around AUD 33.530, up by around 3.5% at the close of trading hours. The shares observed huge trading volumes of about 37.5 million today as compared to a daily average of 9 million.

BHP stock performed reasonably well this year, as also represented by the impressive YTD return of around 9%.

The nation’s largest miner BHP has completed USD 5.2 billion (AUD 7.3 billion) off-market buy-back of BHP Group Limited (ASX: BHP) shares. This involved buying back 265.8 million shares, constituting 8.3% of issued share capital of BHP Group Ltd and 5% of the total issued capital of BHP Group Ltd and BHP Group Plc.

The buyback price was fixed at AUD 27.64 per share, a discount from its current market price of around AUD 33.540.

In addition, the Board has also announced the distribution of a special dividend of USD 1.02 per share to all the entitled registered shareholders as of 11th January 2019. This payoff represents the residual USD 5.2 billion of net proceeds from the sale of its Onshore US assets not returned via the Off-Market Buy-Back.

As stated by company’s CFO Peter Beaven, BHP is committed to distributing the proceeds of the sale of US assets to shareholders via off-market buy-back and dividend pay-out. With this effort, BHP’s total distribution to shareholders over the last two years sums up to whooping USD 21 billion.

BHP completed the sales of its interests in Eagle Ford, Haynesville and Permian Onshore US oil and gas assets to BP America Production Company for a gross consideration of USD 10.5 billion, as announced on 31st October 2018.

In order to prevent marginalization of small shareholders during the buyback, a scale back mechanism of 58.7 % has been adopted. As a result, successful shareholders will have 41.3 % of their shares tendered in excess of the priority allocation bought back. For shareholders who have successfully tendered their shares, AUD 27.26 per share of the Buy-Back Price is treated for Australian tax purposes as a fully franked dividend.

As per recently shared financial results, BHP reported revenue of USD43.6 billion for FY2018, a 21% increase from FY2017.

Net finance costs of USD 1.2 billion decreased by USD 172 million (12%) this year, attributable to lower average debt balance following the bond repurchase program and repayment on the maturity of group debt.

Higher average realized prices across most of the key commodities increased underlying EBITDA by USD 4.3 billion in FY2018.

The company reported Net operating cash flows of USD 18.5 billion (up by USD 1.7 billion), Net investing cash outflows of USD 5.9 billion (up by USD 1.8 billion) and Net financing cash outflows of USD 10.9 billion (up by USD 1.8 billion) were noted.


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