Cabot Microelectronics (CCMP) to Pay Special $15 Dividend, Increases Buyback to $150M; Says Q4 Revs About 5% Lower
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Cabot Microelectronics Corporation (Nasdaq: CCMP), has determined to pursue a significant new capital management initiative, including a leveraged recapitalization, intended to more efficiently allocate the company’s capital and provide additional value to its shareholders.
The company intends to pay a special cash dividend of $15 per share, or approximately $345 million in aggregate, to its shareholders during the first quarter of calendar year 2012. Approximately half of the dividend is expected to be funded from the company’s cash balance, and the remaining amount is expected to be funded with new debt. Payment of the special dividend is contingent upon arranging the associated financing with terms and conditions that are acceptable to the company.
In addition, the Board has authorized an increase in the company’s existing share repurchase program to $150 million, from the previous available authorization of approximately $83 million. The company intends to continue to repurchase its shares from time to time in open market transactions, depending on market conditions, at management’s discretion.
The company last discussed industry and business conditions during its earnings conference call on October 27, 2011, in conjunction with the release of its fourth quarter and full year results for fiscal 2011. At that time, the company cited industry analyst projections that softness in semiconductor industry demand, which the company had experienced during the second half of its fiscal year 2011, was expected to continue through the first half of its fiscal year 2012. Commenting on current business conditions, Mr. Noglows stated, "We traditionally see some seasonal softness in demand during the December quarter compared to the September quarter. However, given the current soft industry environment, we would characterize current conditions as slightly softer than normal seasonality. More specifically, through the first two months of the first fiscal quarter, our revenue is running approximately five percent lower than last quarter. While the strong start to holiday shopping in the U.S. provides some hope for industry strengthening, we remain cautious, particularly given global macroeconomic uncertainty."
The company intends to pay a special cash dividend of $15 per share, or approximately $345 million in aggregate, to its shareholders during the first quarter of calendar year 2012. Approximately half of the dividend is expected to be funded from the company’s cash balance, and the remaining amount is expected to be funded with new debt. Payment of the special dividend is contingent upon arranging the associated financing with terms and conditions that are acceptable to the company.
In addition, the Board has authorized an increase in the company’s existing share repurchase program to $150 million, from the previous available authorization of approximately $83 million. The company intends to continue to repurchase its shares from time to time in open market transactions, depending on market conditions, at management’s discretion.
The company last discussed industry and business conditions during its earnings conference call on October 27, 2011, in conjunction with the release of its fourth quarter and full year results for fiscal 2011. At that time, the company cited industry analyst projections that softness in semiconductor industry demand, which the company had experienced during the second half of its fiscal year 2011, was expected to continue through the first half of its fiscal year 2012. Commenting on current business conditions, Mr. Noglows stated, "We traditionally see some seasonal softness in demand during the December quarter compared to the September quarter. However, given the current soft industry environment, we would characterize current conditions as slightly softer than normal seasonality. More specifically, through the first two months of the first fiscal quarter, our revenue is running approximately five percent lower than last quarter. While the strong start to holiday shopping in the U.S. provides some hope for industry strengthening, we remain cautious, particularly given global macroeconomic uncertainty."
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