What is an Accelerated Share Repurchase (ASR) agreement?

An Accelerated Share Repurchase (ASR) agreement is a way for a company to buy back its own stock quickly. The company pays a sum of money to an investment bank (like Goldman Sachs in this case), which then delivers a portion of the shares immediately. The final number of shares repurchased is typically determined later based on market prices during a specified period, ensuring the company repurchases shares effectively while also managing the speed of the buyback.

Why is Ciena repurchasing its stock?

Ciena is repurchasing its stock as part of a broader initiative to return capital to shareholders and potentially increase shareholder value. Share repurchases can signal management's confidence in the company's valuation and future performance. It also reduces the number of outstanding shares, which can potentially boost earnings per share (EPS).

How will the final number of shares Ciena repurchases be determined?

The final number of shares Ciena will repurchase is based on the average of the daily volume-weighted average prices (VWAP) of its common stock during the repurchase period, less a discount. There are also provisions for adjustments and potential additional share deliveries or cash payments from either party at final settlement, depending on specific circumstances outlined in the agreement.

When will this share repurchase be fully completed?

The final settlement of the transactions under the ASR Agreement is expected to occur during the fiscal quarter ending April 30, 2022. This means Ciena will have fully completed this $250 million repurchase within that timeframe.

CIEN 8-K: Material Agreements & Regulation FD

Summary

Ciena Corporation (CIEN) announced on December 14, 2021, its entry into an Accelerated Share Repurchase (ASR) agreement with Goldman Sachs & Co. LLC for $250 million. This ASR is part of Ciena's previously announced $1.0 billion share repurchase program, underscoring the company's commitment to returning capital to shareholders and managing its share count. The agreement involves an initial delivery of approximately 2.7 million shares, with the final number of repurchased shares to be determined by volume-weighted average prices during the repurchase period, subject to certain adjustments and discounts. This strategic move signals management's confidence in the company's financial health and future prospects, as it actively repurchases its own stock. Investors should note that the final settlement is anticipated by the end of the fiscal quarter ending April 30, 2022. The terms of the ASR agreement, including how the final share count is determined and potential adjustments, are detailed, and Ciena has also provided a press release as part of its Regulation FD disclosure.

Key Highlights

1Ciena entered into a $250 million Accelerated Share Repurchase (ASR) agreement with Goldman Sachs.
2The ASR is part of Ciena's existing $1.0 billion share repurchase program.
3The company will make an initial payment of $250 million for the ASR.
4An initial delivery of approximately 2.7 million shares is expected from Goldman Sachs.
5The final number of repurchased shares will be based on volume-weighted average prices during the repurchase period, less a discount.
6Final settlement of the ASR is expected during the fiscal quarter ending April 30, 2022.
7The filing includes the ASR agreement and a related press release as exhibits.

CIENA CORP 8-K Report, Material Agreement (Dec 14, 2021)

Summary

Key Highlights

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