Sorry, but its not a done thing -yet. A group of dissident holders have voted together as a block AGAINST the buyback. Currently these votes AGAINST total 4.5 million or 16% of CMIPC. Yes, you can assume it is the same holders that opposed the last buyback. Assuming that 1/3 of holders dont vote, which is typical of these types of votes, that would be effectively 24% of the vote - nearly enough in its own right to block the buyback.
The general feeling amongst holders is that the 95 cents is just simply not enough. Many long term holders bought at $1.20 to $1.40 levels and have not received dividends even though the company is profitable and has cash in bank.
The buyback comes at a time when CMI is increasingly profitable and will clearly be in a position to pay dividends in the near future. In short, in 6 months 95 cents will look very cheap and if they resumed franked dividends of 14 cents the share price for CMIPC would be at least $1.40, probably around $1.80.
The writing down of the Hoffmeister loan has artificially created a nett loss in the past year, but since that is now written down to zero there is nothing holding back profits. It is likely there will be recovery of some of these monies since an administrator has been appointed. They also have a personal guarantee from Hoffmeister to persue. This half year should see at least 6 million profit and CMI has plenty of franking credits, so there will be no justification for blocking dividends. Indeed it is quite possible this coming financial year could see 12+ million profits and recovery of half the loan would result in a 20+ million profit which is a PE of 3 ! The ordinary share price would rise to over $5 most likely making 95 cents for the CMIPC look extremely cheap.
The holders have requested that the board look at ways of getting a better price outcome, such as a franked dividend payment. All CMIPC holders who feel that 95 cents is inadequate are urged to vent their opposition and vote AGAINST via the online voting system which allows CMI directors to see the tally on a daily basis. Dont forget the thumbs up as well please – want to know how many feel the same way!
CMI Price at posting:
$2.25 Sentiment: None Disclosure: Not Held
