AFG to Buy Its Deflated Stock After Debacle

Irvine-based AFG Industries moved quickly Monday to capitalize on the stock market crash by deciding to buy in up to 4 million shares of its common stock at what the company considers bargain prices.

The share-repurchase program, approved by AFG’s board of directors Monday morning, was proposed by management as a result of the market debacle, according to Gary Miller, AFG vice president of finance.

AFG stock, which has traded as high as $31.50 a share during the last year, closed Monday at $21.875, down $3.875 for the day. At that price, it would cost the company about $88 million to buy in 4 million shares.

Miller said AFG did not buy any stock Monday but may begin buying as early as today.

“We’ll be looking tomorrow,” Miller said Monday night. “Our plans are to look as market conditions warrant and use our best judgment. . . . We’ll be monitoring it very closely.”

One of the nation’s leading manufacturers of flat-glass products, AFG recently reported record earnings of $24.7 million for the second quarter, more than double the $9.2 million earned during the same period a year ago.

“The fundamentals of our business are very strong,” Miller said. “We just reported our 27th consecutive quarter of record results. We’re going to finish our year with record results, and the outlook for 1988 is very good. . . . That’s not being reflected in the price of our stock.”

AFG said the share purchases will be made “from time to time” in the open market using cash on hand. The 4-million-share maximum represents 15.7% of AFG’s 25.4 million shares outstanding.

Asked whether AFG executives are convinced that the stock market will rebound from Monday’s record-shattering decline, Miller replied: “I don’t have any comment.”