Hawaiian Air working to increase stock value
Hawaiian Airlines, in an effort to increase the value of its stock, said late Thursday that it will buy back 17.46 percent of its outstanding shares at $4.25 a share, a dollar per share more than yesterday's closing price.
The company will spend $25 million of its $94 million cash reserves to buy back the shares. In trading yesterday, Hawaiian's share price rose 24 cents, 7 percent, to $3.49.
"We believe the company is currently undervalued," said Hawaiian spokesman Keoni Wagner. "It is a one-time transaction designed to enhance shareholder value."
A share buyback reduces the total number of shares outstanding and increases the portion of the company that each remaining share represents.
John W. Adams, Hawaiian's chairman, said earlier this month that he wanted to increase Hawaiian's value and stock price, and will consider selling the company after he accomplishes those goals. "We believe there is a lot of value inherent in Hawaiian Airlines, and it's not reflected in the stock market today," Adams said in an interview with The Advertiser on May 16.
Adams, a Manhattan private investment specialist, announced earlier this month that he was taking over the role of chief executive officer and president from Paul Casey.
Adams' company, Airline Investors Partnership L.P., is the majority shareholder in Hawaiian and will continue to hold more than 50 percent of the airline following the share buyback, the company said in a statement.
The company said the number of shares that shareholders tender for sale will exceed the 5.88 million shares the company is offering to buy. How many shares each shareholder can sell will be determined by "applicable proration procedures," the company said.
"This tender offer allows shareholders the opportunity to realize a portion of their investment in Hawaiian Airlines while retaining a continuing equity interest in our company," Adams said in the statement. "Shareholders who choose not to tender their shares may also benefit from this offer because they will own a larger interest in our company with fewer shares outstanding."