Matthews South advised a large cap industrial company on its first Enhanced Open Market Repurchase (“eOMR”). The eOMR is an open market program intended to maximize the discount to VWAP. The program does this by using an algorithm to determine the daily purchases.
Our client had considered the eOMR in the past but never transacted because of the high fees charged by the investment banks for the service. Matthews South provides the “low cost” eOMR by using its own software algorithm to create the daily instructions for the open-market broker. This service is included in our standard engagement. The issuer pays the broker the normal OMR commission.
The eOMR can be an interesting solution for many issuers. It has the flexibility and simplicity of traditional 10b-18 or 10b5-1 programs while capturing VWAP economics commensurate with ASRs. The eOMR can be terminated at any time and customized to include limit prices, variable sizes, and more.