Orica Limited (Orica) today announced the resumption of its $250 million on-market share buy‑ back. 

Managing Director and CEO, Graeme Liebelt, said that following the sale of its stake in Incitec Pivot Limited (IPL), the company’s balance sheet remains under-geared and that, as a result, it would resume its on-market share buy-back program.

The company’s current share buy-back program commenced in November 2004. However, due to the acquisition of the European, African, Asian and Latin American businesses of Dyno Nobel, no shares have been bought back since May 2005.   Approximately 2.9 million shares have been bought back so far under the current program, at an average cost of $18.24 per share, leaving approximately $197 million worth of shares to be bought back under the current program. 

Mr Liebelt said that the resumption of the on-market share buy-back reflected the company’s continued focus on active capital management.

“The Dyno Nobel acquisitions were funded by a rights and hybrid issue, but the recent sale of a large part of our stake in IPL and the anticipated sale of the remainder of that stake means that our balance sheet remains under-geared and the right response is to return capital to our shareholders.

Our target gearing range is 35% to 45%, with gearing measured as net debt over net debt plus equity.  This gearing range strikes the best balance for Orica in terms of the optimal weighted average cost of capital and our BBB+ Standard and Poors credit rating, which enables us access to a diverse source of well priced debt funding.

The scarcity of franking credits available to us at this time means that an on-market buy-back remains the most tax effective way of returning capital to our shareholders.”

END