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Spark plans $100 million share buyback to gear up balance sheet

02 Jun 15

Spark New Zealand, formerly Telecom Corp, plans to buy back as many as 40 million shares on market for up to $100 million this year after a series of asset sales left its balance sheet under-leveraged.

The buyback aims to return Spark's gearing to a more appropriate level after the sale of Telecom Rentals and its share of Telecom Cook Islands, the Auckland-based company said in a statement. The telecommunications service retailer seeks to maintain an 'A band' credit rating with Standard & Poor's, and has previously said it intends to keep net debt at a ratio of 1.5 times earnings before interest, tax, depreciation and amortisation.

The maximum value and number of shares Spark plans to buy implies an average price of $2.50, a discount to the $2.765 the stock traded at before the announcement. Spark is rated an average 'hold' based on nine analyst recommendations compiled by Reuters, with a median target price of $2.94.

Spark shares rose 0.5 percent to $2.78 on the NZX today and have dropped 11 percent this year.

First NZ Capital will act as Spark's broker in the buyback.

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