Shares of US-listed tanker owner Top Ships rose 6.3% in New York on Monday after the company announced a plan to buy back up to a tenth of its own stock.
The share price closed at $1.36 in New York trading, up from $1.28 the previous day.
The market likely reacted to news that Top Ships' board of directors authorised a share repurchase program under which the company may repurchase up to $5.1m of its outstanding common shares, representing approximately 10% of its market capitalisation as of 14 August.
The repurchase programme will run for a period of three months.
“The board will periodically review the company’s repurchase programme, and may decide to extend its term or increase the authorised amount, by another 10% to 15%, that may be repurchased thereunder,” Top Ships said.
Big discount
Management estimates the company's net asset value (NAV) at $180m, translating into a NAV of $4.52 per share, based on the number of its common shares currently outstanding, and $3.55 per share on a fully diluted basis.
Top Ships’ fleet has an average age of just 2.3 years. It consists of ten product tankers of 50,000 dwt each, two of which it part-owns, as well as two 159,000-dwt suezmaxes. It also has newbuilding contracts for three scrubber-fitted, 50,000-dwt product tankers and two scrubber-fitted suezmaxes.
To help finance these newbuildings, Top Ships repeatedly issued new stock earlier this year, boosting the number of its outstanding common shares to nearly 996 million.
To bring that number down, the company effected on 10 August a one-for-25 stock reverse stock split.
