Shares in Melbourne-based Orora rose sharply yesterday after shareholders approved the return of $600 million dollars from the proceeds of the sales of its fibre packaging business to a Japanese company in 2019.
The approval came with a 99% plus vote in favour of the return at yesterday’s AGM (a natural decision) packaging that also heard the company will reveal a new strategic direction later in the year.
The shares closed at $2.69, up nearly 5%.
Orora sold its fibre packaging group in 2019 to a wholly-owned subsidiary of Nippon Paper Industries Co for $1.72 billion, with net proceeds after tax and costs of approximately $1.55 billion.
The return was due to happen earlier this year but was delayed due to a variety of factors, including COVID-19 related uncertainty, tightening liquidity in debt markets, and the terms of Orora’s debt facilities.
The company said that now conditions have started improving the company has more clarity about its outlook so “in light of these factors, directors have determined to return $600 million to shareholders on the following basis:
“A special dividend of $450 million (37.3 cents per share) to be partially franked at a rate of 50%. As this dividend does not require shareholder approval, it is not part of the resolutions for this General Meeting, the AGM was told yesterday by the chair, Rob Sindel.
“To ensure the timely return of proceeds of the sale of the Australasian Fibre business to shareholders whilst utilising the available franking credits, your Directors have already approved the special dividend.
“A capital return of $150 million to shareholders by way of cash payment of 12.4 cents per share. Shareholder approval will be sought today for this capital return.
“The Company is now operating with little or no debt due to the additional proceeds from the Fibre sale, giving the company a very strong position in these unprecedented times.
“The preference of your Directors is to pursue potential growth investment opportunities should the right opportunity present itself. In the absence of such an opportunity, Directors will of course consider additional return of excess capital to shareholders” the meeting was told..
Shareholders also approved the consolidation of the company’s shares with five shares now becoming four.
“Entitlements to the special dividend and capital return will be determined on a pre-share consolidation basis. Payment of the special dividend and capital return (if approved by shareholders today) will be made to shareholders on 29 June 2020.
The meeting was also told that the review of the company’s strategy and direction was continuing with an “Initial focus on existing portfolio, critical success factors, what are the potential, organic and inorganic growth options” shareholders were told
Shareholders were told “an update to be provided later in the calendar year. The company is due to report its full June financial year results in early August, so the update could very well come with the AGM which is held in October.
