Shares of the large news publisher Gannett (GCI 3.00%) rose as much as 11.5% at one point Tuesday morning after the company announced a share repurchase plan and an amended credit agreement.
Gannett announced that its board of directors had authorized a $100 million repurchase plan between now and the end of the year. That represented more than 15% of the company's market cap before the recent run this morning.
Gannett also announced a change to its five-year senior secured credit agreement in order to change the interest rate on the credit from LIBOR (London interbank offered rate), which is being phased out as a benchmark loan rate, to its replacement, SOFR (secured overnight financing rate).
"We remain confident in our strategy and believe that our current stock price represents a significant discount to the intrinsic value of the company and its operating units," Michael Reed, CEO and chairman of Gannett, said in a statement.
Reed added: "Over the last year we have significantly improved our capital structure and the stock repurchase program announced today provides us with additional flexibility to create long-term value for investors. We remain committed to a disciplined capital allocation strategy, including investments in our strategic priorities, continued debt paydown, and return of capital to our shareholders."
As I've written in the past, Gannett looks like a turnaround story in the making with significant upside. The company, which owns large newspaper and content brands like USA Today, has been diversifying its revenue and leveraging content to get into more profitable businesses like gambling, ticket sales, and events.
Additionally, the company has been paying down its large amount of debt and building its paid digital subscriber base. Trading at just 0.3 times current revenue, I see a good opportunity here.