14 Nov 2011

Share buy-back by Tenon

8:44 pm on 14 November 2011

Tenon hopes a share buy-back from small shareholders will significantly cut its administration costs.

The US-based wood processor, which is listed on the New Zealand stock market, plans to run a voluntary share buy-back for shareholders who hold 10,000 or fewer shares.

The company says about 6000 shareholders are in that position.

Some 74% of shareholders hold fewer than 1000 shares and removing some of the smaller shareholders will significantly reduce administration costs and may result in a more stable share price.

Tenon's shares have lost 46% of their value this year.

The board is offering to buy up to 1.25 million shares at 65 cents per share, which was Friday's closing price.

Difficult year

Meanwhile, Tenon says the 2012 financial year is proving to be difficult and uncertain.

Its short-term earnings are largely dictated by the housing market in the United States and the uncertain global economic environment - neither of which have turned the corner.

The high New Zealand dollar, which averaged 82 US cents for the first 4½ months of the financial year, is also expected to reduce earnings at its Taupo manufacturing operation by $US7 million this year.

Tenon says it has decided to restructure the site to improve profitability, and is trying to find ways to expand its earnings with new product innovations.