Recruitment firm wants to buy back shares and de-list
Oct 31 2008 by Graeme King, The Journal
THE North East’s biggest recruitment company NRG has announced its intention to buy back shares at a cost of £2.72m and de-list from the stock exchange.
The company, based on Grey Street in Newcastle, first listed as a stock market company in 1997 and its shares rose to over 220p at their height in late 2005.
But the business, headed by chief executive Lorna Moran, has not proved so popular in recent times, as demand for its recruitment services has waned, and its share price has not performed at all well – dropping to a low of just over 30p this year.
Yesterday NRG announced a proposal to buy back its shares at a price of 40p per share, a premium of 23% to Wednesday’s closing mid-market price. The company said the £2.72m cost of the proposed buyback would be more than covered by its existing resources. Mrs Moran, managing director Therese Liddle and finance director Wayham Moran currently control around 57% of the business. They have said they will not participate in the buyback.
Mrs Moran said: “We believe these proposals are in the interest of the company and its shareholders. Since NRG came to the market in 1997, there has been a significant reduction in institutional interest in investing in small capitalisation stocks.
“This lack of institutional demand combined with current market sentiment toward the recruitment sector has impacted on our share price.
“The business is financially strong and we have, therefore, concluded that the best way forward is to offer our shareholders the opportunity to exit the company at a premium to the recent market price.”
Mrs Moran added that she believed the benefits of a high profile on the stock market were now being outweighed by the costs of maintaining the company’s listing.
NRG’s non-executive directors, Leo Finn and Richard Hutton, have said they are fully supportive of the company’s proposals and will resign from the board at the conclusion of the de-listing.
Andrew Miller, of Barclays Wealth stockbrokers in Newcastle, said: “The NRG share price has been very, very weak, which I guess is part of the issue here. One presumes that another part of it is they (NRG directors) see an opportunity to move while the business is depressed. There has not been a lot of interest in the stock for some time, and from that point of view, we have seen the share price slip.”
The NRG share price has been very, very weak, which I guess is part of the issue here
