CALGARY, Alberta (BUSINESS WIRE) — Rocky Mountain Dealerships Inc. (RME) announced it has received acceptance from the Toronto Stock Exchange (TSX) of its Notice of Intention to Make a Normal Course Issuer Bid* (NCIB) to purchase certain issued and outstanding common shares of RME. Pursuant to the NCIB, RME may purchase for the purpose of cancellation up to 1,560,907 shares, representing 10% of the "public float" (calculated as at Nov. 14) over a 12 month period commencing Nov. 21. The NCIB will expire no later than Nov. 20, 2019.
RME's Board of Directors believes the underlying value of RME may not be reflected in the current market price for RME's shares and has therefore determined that the NCIB is an appropriate use of RME's financial resources and is in the best interests of RME's shareholders at this time.
The decisions regarding the timing and size of any share transactions under the NCIB will be subject to the discretion of RME's management, and will be based on a variety of factors, including market conditions, available capital and covenant compliance. RME has appointed Raymond James Ltd. as its broker, who will conduct the purchases on RME's behalf. Pursuant to the NCIB, Shares may be repurchased in open market transactions on the TSX and/or alternative trading platforms as permitted under the rules of the TSX and applicable securities laws. For the 6 months ended Oct. 31, RME's average daily trading volume (ADTV) on the TSX was 33,832 Shares. Daily purchases made pursuant to the NCIB (other than purchases made pursuant to the "block purchase" exemption) are limited to a maximum of 25% of RME's ADTV, which is of 8,458 Shares per day. All Shares that are purchased under this NCIB will be cancelled.
*According to Investopedia, a normal-course issuer bid is a Canadian term for a company repurchasing its own stock from the public in order to cancel it. In a normal-course issuer bid (NCIB), a company is allowed to repurchase between 5-10% of its shares depending on how the transaction is conducted. The issuer repurchases the shares gradually over a period of time, such as one year. This repurchasing strategy allows the company to buy only when its stock is favorably priced.