Dignity prepares 100p a share cash return

22nd Sep 2010 17:05

Funerals organiser Dignity has finalised the bond issues that will enable it to return 100p a share in cash to its shareholders. As a result of this proposed cash return Dignity is cancelling its 4.43p a share interim dividend which was supposed to be paid on 29 October. Dignity will return a total of £63.9m and it is raising £82.1m net from the bond issues. Dignity will invest £1m of the additional funds in its pension fund and the rest will be available for acquisitions. Dignity is a cash generative business and has the cash it requires to run the existing business. KBC Peel Hunt believes that the bond issue and cash return should enhance next year's earnings by around 3%.The meeting to pass the required resolutions for the cash distribution will be held on 8 October. There will also be a share consolidation to counteract the share price effect of the cash distribution. An original investor in Dignity when it floated will have received nearly all of their original investment back in cash after the latest distribution and still have their shares.