LINCOLN — The parent company of Twin River Casino Hotel and Tiverton Casino Hotel announced Tuesday an offer to buy back up to $75 million in shares of its common stock for cash.
The price per share should not be less than $29.50 per share and not higher than $33, according to Twin River Worldwide Holdings, Inc., which also owns a casino in Mississippi, another in Delaware and a Colorado horse race track.
The company, which went public in March, has a market capitalization of about $1.28 billion.
“This has no impact on any of Twin River’s operations in any state,” said Twin River spokeswoman Patti Doyle in an emailed statement.
“Rather, it’s indicative of a very strong balance sheet, high levels of free cash flow, and a balanced approach to the allocation of capital between shareholders and growth initiatives.”
The announcement comes two days after the opening of Wynn Resorts’ $2.6 billion Encore Boston Harbor in Everett, Massachusetts, a competitor expected to dig into Twin River’s net revenue from its two Rhode Island properties by the third quarter of this year.
“That is a rather small buyback of stock,” said Father Richard McGowan, an associate professor in the Finance Department at Boston College’s Carroll School of Management and the author of three books on the gambling industry, in an email to The Daily News.
But McGowan said Twin River could have chosen instead to invest in its two Rhode Island properties in response to the big splash Encore Boston is making as the country’s most expensive resort development of 2019. The resort features a 210,000-square-foot casino, 15 dining and lounge venues and 671 guest rooms and suites including New England’s largest standard hotel rooms.
“One wonders if they have already given up any notion to compete with Encore Boston,” McGowan said. “They will offer gambling but no additional entertainment. Encore seems to want to become a full scale entertainment center not just a casino.”
Public companies may look to buy back shares to boost profitability by reducing the amount of low interest earning excess cash on hand. With fewer shares trading, a company’s earnings per share number usually will rise and typically so would its stock price. Stock buybacks can benefit company managers who hold stock options and whose bonuses could be tied to hitting market performance measures.
Twin River said it would repurchase stock through a modified “Dutch auction” tender offer with cash on hand, beginning Tuesday and expiring at 5 p.m. on July 24, unless it chooses to extend or terminate the plan. In a Dutch auction public offering, the price of the shares is lowered in increments until there are enough bids to sell all shares. The price of the offering is then lowered to this lowest bid.
Twin River’s stock price on the New York Stock Exchange has ranged from $27.90 to $33.98 per share over the past year. It closed Tuesday at $30.38.
The company initially announced that its board of directors approved a capital return program of up to $250 million for a stock repurchase program and payment of dividends. The board approved a quarterly cash dividend in the amount of $0.10 per share, payable on July 23 to shareholders of record as of July 9.
That same day it had filed a registration statement with the Securities and Exchange Commission for a possible underwritten secondary offering of its common stock by Twin River shareholders, but the plan was canceled on June 20 after selling shareholders withdrew.
The company is expected to complete the move of its corporate headquarters from Lincoln to the 10th floor of 100 Westminster Street in downtown Providence soon.