GT Advanced Technologies Inc. (NASDAQ: GTAT) announced that it has entered into an agreement with UBS AG to repurchase $75 million of GT common stock under an accelerated stock repurchase program. This accelerated share repurchase is part of the company’s recently announced $100 million share repurchase authorization.
Under the agreement, GT will pay $75 million to UBS and will receive approximately 7.8 million shares of its common stock, currently estimated to be approximately 80% of the total shares to be repurchased under the agreement. The number of shares is based on GT’s closing share price of $7.67 on November 18, 2011. The company will make the payment from its available cash on hand.
The total number of shares ultimately repurchased under the agreement with UBS AG will be determined upon final settlement. GT’s effective per share repurchase price will be based on the volume-weighted average share price of its common stock, less a discount, during a period of up to four months and the settlement amount will be equivalent to the $75 million payment divided by the average share price, minus the number of initial shares.
Separately, the company indicated that it anticipated entering into a new credit facility by the end of the current quarter, replacing the credit agreement with Credit Suisse AG that was terminated on November 18, 2011. The company indicated that the terminated facility did not meet the needs of its growing business.
The company will immediately retire the shares purchased through the ASR. This will have an impact on EPS for the fiscal 2012 year, as the weighted average share count will be reduced. The company will factor the new share count into the updated FY 2012 guidance it provides on its next quarterly conference call in early February. The increase in EPS for Q3 fiscal 2012 due to the reduction in shares outstanding is expected to be offset by the cost related to the early termination of the credit facility.