Cogent Communications committed to returning $40 million to shareholders annually

By Lisa Kerner

Charlotte, N.C., Jan. 6 - Cogent Communications Group, Inc.'s board is committed to returning $10 million to shareholders each quarter in the form of share buybacks and dividends, according to chief executive officer Dave Schaeffer.

Schaeffer made his comments during a question-and-answer presentation at the Citi 24th Annual Global Internet, Media and Telecommunications Conference on Monday in Las Vegas.

The company is 1.58 times net levered and has about $310 million dollars of cash on the balance sheet.

"We have set a goal of achieving 2.5 times net leverage, so therefore we have excess liquidity on our balance sheet that we need to give back to shareholders in some form," Schaeffer said.

Cogent also has a current share buyback authorization of about $45 million.

Schaeffer said that historically once these programs have been depleted, the board has re-upped or expanded the programs.

"It makes no sense for us to put a bigger number out there until we spend the 45 (million) we have authorized today."

The board empowered the CEO to make buyback decisions on a quarterly basis.

"If we fail to do a buyback, we are committed to a recurring dividend," said the CEO.

The regular dividend could be supplemented by a special dividend of 20 cents to 22 cents.

Schaeffer said he would be a more aggressive buyer of Cogent stock should there be a "major pullback" in the stock market. Absent that, the company would consider its balance sheet and cost of capital, he said.

Cogent has a 2017 convertible putable this June that is expected to be put to the company or called.

"We could finance that with cash on the balance sheet, or we could use that opportunity to add leverage at today's relatively low cost of capital," Schaeffer said.

Cogent is a Washington, D.C.-based communications services provider.

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