Dubai Ports World will ask its shareholders for approval to buy back up to 581 million of the company's shares pending regulatory approval. It will also seek permission to issue securities "up to an aggregate nominal amount" of $553 million – or one third of its existing share capital.
These are among a series of resolutions on the agenda for DP World's annual meeting of shareholders, which will be held on May 29. However, DP World Chief Executive Mohammed Sharaf said, if approved, the company has no intention of exercising these options within the next 12 months.
"These are normal practices for a listed international company," said Sharaf. "Any listed company in Europe would look to have these options in their hands. There are no plans to do this – it's just in case. Nothing is out of the ordinary and there's nothing for investors to worry about." He refused to speculate on whether any new shares would take the form of bonus or public shares or a rights issue.
"If the share issue isn't acted upon, passing the resolution won't have any effect on DP World's stock price," said Mohammed Ali Yasin, Emirates Securities managing director. "But if it does go ahead, then it's bound to put this under pressure, because it will dilute the holdings of existing shareholders." Yasin said DP World's AGM will be dominated by institutional investors, who will not want to go against the firm's wishes and so these resolutions are likely to be approved.
Sharaf also defended DP World's dividend, which will be a maximum of 13.3 per cent of the nominal value of its shares. This compares to the likes of Emaar, which a paid a 20 per cent dividend for 2007.
"This dividend is being paid on 2007 results, so ask shareholders whether they think getting this dividend for holding the shares for less than two months is disappointing," said Sharaf. "The AGM will decide."
Any buyback would be completed via the DIFX.