The independent shareholders of Ardagh plc voted overwhelmingly yesterday in favour of a share buyback by the company instead of a paid dividend for the current year.
Trading in the shares by tender offer will begin in about 12 days and up to 6.8 per cent of shares in the company are being offered at €1.61 per share. Yesterday's quoted price was €1.60 and €4 million (£3.15 million) has been allocated for the purchase.
Ardagh's chairman, Mr Paul Coulson, told the a.g.m. in Dublin - which was followed by an e.g.m. that approved the buy-back - that the buy-back was an effort to increase liquidity in the market for Ardagh's shares.
He said there were no buyers for Ardagh shares and despite efforts to interest institutions - he had met 30 to 40 in Ireland and London after the Rockware acquisition - he was unable to generate any interest. This was in line with the experience of several small Irish capital stocks.
He said that already shareholders holding over 43 per cent of the group's shares had indicated to the board that they would not be accepting the offer in respect of any of their shares.
Defending the board's decision not to pay a dividend this year, he said a buy-back was more appropriate. He told shareholder Mr Neil Duggan that the share buyback would give an income to shareholders who wanted one this year. He could not accept that the buy-back, announced with the annual results, had been the cause of the weak share price. The buy-back provided some buyers for Ardagh shares, i.e. the company. There would be no compensation for the lack of dividend.
Mr Duggan had complained that it was "unprecedented" that a plc making profits would not pay a dividend. He believed that an insufficient amount of Ardagh shares were on sale to interest institutional investors. The buyback was creating an artificial market in the shares, he said.
Mr Coulson said Ardagh was now the undisputed leader in the Irish and UK glass container markets, with three plants in England, one in Scotland and one in Ireland.
