Gray Television‘s Q3 earnings beat the Street, and the stock soared on Thursday as investors showed their approval of the broadcast TV company’s strong results.
They can also cheer about the affirmative nod Gray’s Board of Directors gave to Gray for the repurchase of up to $150 million of outstanding common stock and/or Class A common stock through the last day of 2022.
Why is Gray making the move? Debt control.
“Reducing our debt level remains a high priority for Gray, as demonstrated by our recent voluntary pre-payment of $100 million of the 2019 term loan outstanding under our senior credit facility,” said Gray Executive Chairman/CEO Hilton H. Howell Jr. “At the same time, we believe that recent trading prices do not fully value the scale, quality, leadership and
opportunities created through our merger with Raycom, which nearly doubled our size while increasing the depth and breadth of our business.”
As such, he added, “From time to time, these market dislocations may provide an opportunity for stock repurchases, all while keeping a close eye on steadily decreasing our leverage.”
The new stock repurchase authorization supersedes all prior authorizations, including the
plan adopted in November 2016 permitting Gray to repurchase up to $75 million of its
outstanding common stock prior to December 31, 2019.
As of October 31, Gray has 96,633,773 shares of common stock outstanding and
6,881,192 shares of Class A common stock outstanding.
Gray says the shares repurchased will be held as treasury shares and may be used for general corporate purposes including, but not limited to, satisfying obligations under our employee benefit plans and long-term incentive plan.
Despite an initial dip in GTN’s value, investors raced to grab shares after the 10am hour. With 10 minutes before the end of Thursday’s trading session, Gray was up 12.9% to $18.83, the company’s highest trading level since May 7.