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Sonic Corp.'s board of directors increased its share repurchase authorization from $40 million to $55 million.
The company has repurchased approximately $25 million of the original $40 million authorized in August 2012. The increased authorization leaves approximately $30 million of unspent authorization.
Since September 2011, the company has expended approximately $55 million for the repurchase of 6.6 million shares representing approximately 11 percent of its outstanding common stock. The authorization expires Aug. 31, 2013 and share repurchases may be made from time to time in the open market or in negotiated transactions depending on share price, market conditions and other factors.
On Dec. 31, 2012, the company completed the sale of certain real estate that had been leased to a franchisee. The company realized net cash proceeds of approximately $30 million and received a 24-month note of approximately $9 million as a result of the sale. In conjunction with the transaction, the company announced it will use $20 million of the $30 million cash proceeds to pay down debt on Jan. 22, 2013. This will result in a reduction in interest expense of approximately $700 thousand during fiscal year 2013, partially offset by a charge of approximately $500 thousand to write-off the pro-rata portion of debt origination costs in Q2 FY 2013.
"Effective use of cash is an important part of our multi-layered growth strategy. We believe the use of proceeds from the sale of real estate to reduce our leverage, as well as the goard's decision to increase our share repurchase authorization, will maximize shareholder value," said Cliff Hudson, chairman and CEO.
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