Pipe maker approves buyback of its stock.

Byline: Ilene Aleshire The Register-Guard

Eugene-based PW Eagle has joined a growing number of U.S. companies looking to buy back their own stock.

The company, one of the nation's largest makers of plastic pipe, has authorized a repurchase of up to $40 million worth of its outstanding shares on the open market between now and June 30, 2008. At current prices, that works out to a little over 11 percent of the company's total stock.

The company's chief financial officer, Scott Long, said Wednesday that this was the first such stock buyback the company has authorized, although there had been an earlier "Dutch auction," in which the company bought back some stock from its own shareholders.

Long said the intent of the $40 million repurchase is to enhance shareholder value. The buyback would reduce the number of shares outstanding, which has the effect of increasing the value of the remaining shares, in much the same way that reducing the number of pieces in a pie means that each piece is then bigger.

Standard & Poor's reported earlier this month that S&P 500 company buybacks rose 91 percent during the first quarter of the year compared to last year. Standard & Poor's analysts said the biggest factor in the record number of stock buybacks was companies wanting to reissue shares to cover employee stock options - not a factor in PW Eagle's case, Long said. But there also is a growing tendency to buy back stock to reduce the number of shares outstanding, Standard & Poor's said.

The company has been under pressure from its two largest investors, Caxton Associates and Pirate Capital, to look at ways "to maximize shareholder value," up to and including potentially selling the company. Caxton and Pirate Capital are hedge funds, private investment partnerships that are largely unregulated. Together they own more than one-fourth of PW Eagle's stock.

This spring, the two hedge fund, which bought the company's stock following a run-up in its shares in the past year, demanded that PW Eagle increase the size of its board and include nominees put forth by the hedge funds, or face a proxy fight for control of the company.

The company chose to avoid a proxy fight and, at PW Eagle's annual meeting last month, the board was expanded from five members to seven. The newly expanded board, which included representatives put forth by the hedge funds, promptly formed a "strategic committee" to look at increasing shareholder value. This committee is looking at buying back company stock, an option that Caxton had urged the company to start doing "promptly."

PW Eagle stock closed Wednesday at $29.63 a share, down 29 cents from Tuesday. Late last year, PW Eagle's share price shot up from about $10 share to $24 a share. The company, essentially debt free except for some real estate leases, has reported record profits in recent quarters.