Kitchen and bathroom fittings supplier GWA Group (GWA) will make a capital return of $88.3 million and undertake a partial share consolidation as the company continues to sell off unwanted assets.
The company yesterday said a general meeting of shareholders has been set for May 29 to approve the two-part capital return.
GWA plans to return $69.9 million, or 22.8¢ per share, to investors and to pay a partly franked special dividend of 6¢ per share, worth $18.4 million.
Then the number of shares will be partially consolidated from approximately 307 million shares at the present, to around 279 million shares.
News of the capital management moves failed to have a positive impact on GWA’s share price in yesterday’s indifferent market.
The shares dipped 1.1% to $2.52.
GWA 1Y – GWA to return $88 million to shareholders
The capital management plan had been expected by investors following GWA’s sale of its Dux Hot Water and Brivis air conditioning businesses for a combined $95 million.
Last week, GWA said it has called on boutique investment bank Greenstone Partners to sell its unprofitable Gliderol garage doors business, potentially adding to its cashpile.
GWA told the ASX yesterday, "The distributions will be the subject of a Class Ruling from the Australian Tax Office (ATO) on the tax treatment of the payments, and the return of capital is subject to approval by GWA shareholders at a General Meeting.
"Provided the proposed capital return is approved by shareholders GWA intends to implement an equal and proportionate share consolidation, in a ratio of 0.9100 ordinary shares for every one GWA ordinary share currently held such that a holding of 100 shares will be consolidated to 91 shares. Where the consolidation calculation results in a fraction of an entitlement, fractions will be rounded up.
"If shareholders approve the capital return and share consolidation, the capital return and special dividend will be paid on 15 June 2015, and the dividend reinvestment plan remains suspended and will not be offered to shareholders for the special dividend.
"GWA has received a draft Class Ruling from the ATO in relation to the taxation treatment of the capital return for its shareholders. The ATO ruling is expected to be agreed ‘in principle’ with the ATO before the General Meeting, and finalised by the ATO after that meeting, such that it may be relied on by shareholders,” the company said.
"General explanations of the tax treatment of the capital return and special dividend are set out in the Explanatory Memorandum accompanying the Notice of Meeting.”
"The combination of the capital return and the share consolidation is intended to provide an earnings per share outcome similar to a share buy-back, while ensuring that all shareholders receive an equal cash distribution per share. The share consolidation is also expected to neutralise any expected share price reduction relating to the return of capital,” the company told the ASX yesterday.
