special dividend of $15 a share
Cabot Microelectronics Corp.'s CCMP +20.37% board agreed to provide a $15-a-share special dividend funded by cash on hand and new debt and boosted its share repurchase program, in an effort to buoy shareholder value.
Cabot makes chemical mechanical planarization polishing slurries and pads, which are used to smooth surfaces, such as semiconductor wafers.
Chief Financial Officer William Johnson said the plan for the special dividend is to return a significant portion of the company's cash balance not required for day-to-day operations back to shareholders. He added that the company has no debt outstanding and believed the new debt was a modest and prudent level of leverage.
Chief Executive William Noglows said he was pleased the company will be using its strong financial position to pay back shareholders and added that the new programs don't change the company's investment and growth strategies.
Cabot plans to pay a special dividend of $15 a share, about 37% of the Monday's closing price. The payout is expected to cost the company $345 million. Half the dividend will be funded from cash on hand and the other from new debt. The company said it plans to enter into a new $175 million term loan facility and a new $100 million revolving credit facility. It plans to declare and pay the special dividend during the first three months of 2012. Cabot doesn't provide a regular dividend.
The company also raised its stock buyback program to up to $150 million, from about $83 million. Cabot's market capitalization, as of Monday's close, was $922 million, according to FactSet.
In October, Cabot said its fiscal fourth-quarter earnings fell as softness in the semiconductor industry weakened revenue.
Shares closed Monday at $40.21 and were inactive premarket. The stock is down 3% year to date.
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