Zentek Announces Normal Course Issuer Bid

Rhea-AI Summary

Zentek (Nasdaq:ZTEK, TSXV:ZEN) has announced plans for a normal course issuer bid, subject to regulatory approval. The company aims to repurchase up to 5,084,319 common shares, representing approximately 5% of its outstanding shares, over a one-year period from August 16, 2024, to August 15, 2025. Zentek can purchase up to 2,033,727 shares (2% of outstanding shares) in any 30-day period during the bid.

Management believes this strategy will increase long-term shareholder value, as the current market price may not fully reflect the company's business value and future prospects. Purchases will be made through the TSX Venture Exchange at market prices, with Integral Wealth Securities appointed as the broker for these transactions.

Positive

• Potential increase in shareholder value through share repurchases
• Management's confidence in the company's undervalued status
• Flexibility to repurchase up to 5% of outstanding shares

Negative

• Potential reduction in cash reserves or increased debt to fund share repurchases
• Possible decrease in market liquidity due to fewer outstanding shares

Insights

Financial Analyst

Zentek's announcement of a Normal Course Issuer Bid (NCIB) signals a strategic move to enhance shareholder value. The company plans to repurchase up to 5,084,319 shares, representing 5% of its outstanding common shares over a one-year period. This decision typically indicates management's confidence in the company's financial health and future prospects.

The NCIB allows Zentek to buy back shares when they believe the stock is undervalued, potentially boosting the stock price and earnings per share. However, investors should note that while share repurchases can be positive, they also reduce the company's cash reserves. It's important to consider whether this capital could be better utilized for growth initiatives or R&D in Zentek's case, given its position in the nanotechnology sector.

The 2% monthly purchase limit suggests a measured approach, which could help maintain market stability. Overall, this move may be seen as a positive signal by the market, but its long-term impact will depend on Zentek's execution and the prevailing market conditions during the Bid Period.

Market Research Analyst

Zentek's decision to initiate a Normal Course Issuer Bid reflects a broader trend in the nanotechnology and advanced materials sector. Companies in this space often face market valuations that don't align with their perceived intrinsic value, especially given the complex and forward-looking nature of their technologies.

The timing of this announcement is interesting, coming at a period when many tech and materials companies are facing valuation pressures. It suggests that Zentek's management sees a disconnect between their stock price and the company's potential. This move could be interpreted as a signal to the market about the company's confidence in its future prospects and technological developments.

However, investors should be cautious. While share buybacks can support stock prices, they don't directly contribute to technological advancements or market expansion. For a company in a rapidly evolving field like nanotechnology, the opportunity cost of not investing this capital in R&D or strategic partnerships could be significant. The market's reaction to this NCIB will be a key indicator of investor sentiment towards Zentek's strategy and perceived value proposition.

GUELPH, ON / ACCESSWIRE / August 14, 2024 / Zentek Ltd. ("Zentek" or the "Company") (Nasdaq:ZTEK)(TSXV:ZEN) wishes to announce that, subject to regulatory approval, it will conduct a normal course issuer bid (the "Bid"). The Bid will be for up to 5,084,319 common shares of the Company over a period of one year (the "Bid Period"), being approximately 5% of Company's issued and outstanding common shares, with up to 2,033,727 common shares of the Company purchasable over any 30-day period within the Bid Period, being 2% of Company's issued and outstanding common shares. The Bid Period will commence on August 16, 2024, and will continue until the earlier of August 15, 2025, or the date by which the Company has acquired the maximum number of common shares which may be purchased under the Bid.

Management believes that the market price of the Company's common shares may not fully reflect the value of its business and future prospects, and as such it believes that purchasing its own common shares for cancellation is an appropriate strategy for increasing long-term shareholder value. The purchases will be made through the facilities of the TSX Venture Exchange, and the price at which the Company will purchase its common shares will be the market price of the shares at the time of acquisition. The Company has appointed Integral Wealth Securities Limited as its broker to conduct normal course issuer bid transactions.

About Zentek Ltd.

Zentek is an ISO 13485:2016 certified intellectual property technology company focused on the research, development and commercialization of novel products seeking to give the Company's commercial partners a competitive advantage by making their products better, safer, and greener.

Zentek's patented technology platform ZenGUARD™, is shown to have 99-per-cent anti-microbial activity and to significantly increase the viral filtration efficiency for surgical masks and aims to do the same for HVAC (heating, ventilation, and air conditioning) systems. Zentek's ZenGUARD™ production facility is located in Guelph, Ontario.

For further information on Zentek:

investorrelations@zentek.com

Ryan Shacklock
Senior VP, Strategy & Business Development
Email: rshacklock@zentek.com
Phone: 306-270-9610

To find out more about Zentek, please visit our website at www.Zentek.com. A copy of this news release and all material documents in respect of the Company may be obtained on Zentek's SEDAR+ profile at http://www.sedarplus.ca/.

Forward-Looking Statements

This news release contains forward-looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although Zentek believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Zentek disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Zentek Ltd.

View the original press release on accesswire.com

FAQ

How many shares does Zentek (ZTEK) plan to repurchase in its normal course issuer bid?

Zentek plans to repurchase up to 5,084,319 common shares, which represents approximately 5% of the company's issued and outstanding common shares.

When will Zentek's (ZTEK) normal course issuer bid begin and end?

The normal course issuer bid is scheduled to begin on August 16, 2024, and end on August 15, 2025, or when the maximum number of shares have been purchased, whichever comes first.

What is the maximum number of shares Zentek (ZTEK) can purchase in a 30-day period during the bid?

Zentek can purchase up to 2,033,727 common shares, which is 2% of the company's issued and outstanding common shares, in any 30-day period during the bid.

Why is Zentek (ZTEK) initiating a share repurchase program?

Management believes that the current market price of Zentek's shares may not fully reflect the value of its business and future prospects, and that repurchasing shares could increase long-term shareholder value.