NEW YORK — With cash burning a hole in its pocket and its stock price sagging, Harvey Entertainment Inc. will buy back 10% of its stock at a likely cost of $2.6 million, the company said Monday.
Harvey, which owns the rights to “Casper” and “Richie Rich,” fattened its bank account last year when it received a $3.3 million advance for signing a direct-to-video production and distribution deal with Saban Entertainment and 20th Century Fox for the characters.
Harvey now has $7.2 million cash in the bank with no debt, and CEO Jeff Montgomery said, “We don’t think there is a better investment to make than in our own stock today.” Harvey’s stock price has dropped from a high of $12 last summer to its recent price of around $6, although it jumped 75¢ to $7.25 Monday on news of the buyback.
Montgomery owns 12.63% of Harvey, and he noted that he would “like to own more of the company.” As the buy-back shrinks the outstanding capital, shareholders who keep their stock automatically increase their percentage ownership.
Harvey’s board authorized the company to buy back up to 380,000 shares, or 10%, “from time to time.”