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Howard Hughes’ Stealth Buyback
Posted by: Todd Sullivan (IP Logged)
Date: November 16, 2012 08:19AM
You may have notice a whole lot of SEC filings yesterday regarding HHC. Here is what happened.
CIC and BAM exercised their warrants. So, the collectively added 1.5M share of common stock. Now, how did they pay for it?
The Howard Hughes 13D/A (click to open pdf)
Quote:Follow? In order to pay for the exercising of the warrants, they sold warrants representing 2.3M shares of HHC to HHC. That means HHC effectively took 2.3M shares off the market.
Here is the best part….if we do a little math, 2.3M shares divided by the $89M sales price gives us a price of $38/share for the repurchase. They effectively bought back 2.3M shares at 55% of the current market price. JUST FANTASTIC…..
Why would CIC/BAM do this? Well, if they exercised the warrants and sold them they’d only get the difference between $50 and the current price (they also wanted to stay below 10% ownership). So it was a win/win for both sides…..
But for shareholders this is simply wonderful……
Stocks Discussed: HHC, BAM,
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