Sangoma Announces Intention to Repurchase Stock to Increase Core Value

Canadian-based Sangoma Technologies Corporation, a leading provider of hardware and software components that enable or enhance IP communications systems, has announced its intention to make a normal course issuer bid. For those unfamiliar, this action which is subject to regulatory approval is done when a company decides that instead of holding shares, which fluctuate day-to-day, it buys back the shares on the open market to increase its core value.The announcement says that pursuant to the terms of the bid, Sangoma may purchase its own common shares for cancellation through the facilities of the Toronto Venture Exchange (TSXV) at the prevailing market price of the common shares.

Details are as follows:

• The number of common shares purchased will in not exceed 5 percent of the issued and outstanding common shares at the date the bid commences, being 1,491,890 common shares of the 29,837,809 currently issued and outstanding common shares.
• They may also not purchase  more than 2 percent in any 30 day period.
•  Sangoma may undertake purchases at varying times commencing on December 19, 2011 and continuing until no later than December 18, 2012.

The reasoning behind the action is that Sangoma believes that periodically the market price of its common shares do not fully reflect the value of its business and its future prospects.  As such, Sangoma believes the repurchase will, in appropriate circumstances, provide a worthwhile investment and that such action is an appropriate and legitimate use of its available funds.

Sangoma is, as noted above, publically traded on the TSX Venture Exchange. The member and broker that will be conducting the normal course issuer bid is GMP Securities L.P.

 It should be noted that Sangoma had a previous normal course issuer bid which expired December 13, 2011. Under it, the company purchased 505,000 common shares at an average price of $0.50, and all purchases were cancelled.

Given the growth in Sangoma’s markets, it is not surprising that it is using this common practice to address what it sees as an under valuation of its business. This is not only common, but is a strong statement by management about its confidence about the future.

Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya, Alcatel-Lucent, Telcordia (News - Alert), HP, Siemens, Nortel, France Telecom, and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.

Edited by Jennifer Russell