Enero’s share price jumped 12% yesterday to $1.20 in an unexpected spike in the Australian network's trading.
It marks the highest trading price Enero stock has seen since October 2016. Shares plunged to 82 cents in December last year and have been broadly flat since. Enero is the home of agencies BMF and Naked, technology PR specialists Hotwire and consultancy business The Leading Edge.
The spike comes as the group issued shareholders a dividend for the first time in seven years. Earleir this week it issued a special dividend which gave shareholders 5 cents per share. It's the first time Enero has been able to release money back to its shareholders following the removal of a set of restrictions.
The restrictions were put in place in 2010 as part of a recapitalisation.
There are a number of shareholders that have invested in the group for a long time without seeing any return because of the restrictions. The moves are part of the group’s effort to release value to shareholders, and the removal of those restrictions is likely to make Enero stock more appealing, after a difficult period.
Skuttlebutt in the market is that Enero could be gearing up for a potential sale.
The highest share price Enero has reached in the past five years is $1.30 in july 2016.
CEO Matthew Melhuish said the announcement is another step in the group’s three-phase strategy.
“While we now have more ability to freely manage our capital, the focus within the group remains building strong businesses in key service offerings – insight and strategy, creative agencies and public relations across our core geographies. We will implement a balanced approach between returns to shareholders, funding acquisition and investment opportunities as well as maintaining adequate cash reserves for our existing businesses.”
Enero chairman John Porter said: “The release of the capital restrictions allows the directors to put capital management back on the agenda and enhance shareholder value. The special dividend is recognition to our shareholders of their long-term and ongoing support and the directors believe a return of some of the capital accumulated over the capital restriction period, coupled with the ability to distribute franking credits, is appropriate at this time.”
The company directors have resolved to reduce the share capital of the company by $397.2 million, which a spokesperson said is a an accounting adjustment to strengthen the balance sheet.
It has no impact on Enero's net assets, financial results, cash flow or funding, and the number of shares.
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