LONDON (Alliance News) - Private equity firm Avanti Capital PLC Thursday wrote to shareholders with details of its proposed capital reduction that it says will enable it to pay the rest of the dividend it declared in December after Eclectic Bar Group PLC, one of its former investments, floated on the stock exchange's Alternative Investment Market.
In the circular sent to shareholders, Avanti unveiled a package of measures to reduce its capital, including the reduction of its share capital, in order to create distributable reserves, while it also wants authorisation from shareholders to buy its own shares from the market. It said it is also acting so that it can make future dividend payments and share buybacks.
The measures would see the creation of Capital Reduction Shares, or B shares, that would be used to distribute capital to shareholders. The shares would then cancelled.
The company declared its intention to pay a 105 pence dividend in the months after Eclectic Bar Group PLC floated on AIM last year, though 62 pence of that amount has already been paid - some GBP5.0 million.
Avanti says the capital reduction will enable it to pay the remaining 43 pence.
It said future profits earned after the capital reduction would enable it to complete share buybacks or pay dividends to shareholders.
Avanti said the capital reduction won't reduce the number of shares it has in issue.
"[Avanti proposes] the share capital of the company be reduced from GBP4,815,451.20 divided into 8,025,752 ordinary shares of 60 pence each, to GBP80,257.52 divided into 8,025,752 ordinary shares of 1 pence each, and that the resulting sum of GBP4,735,193.68 be credited to the distributable reserves of the company.
If the capital reduction is approved by shareholders, it will create GBP8.2 million in realised profits, according to Avanti.
The amount of the dividend will be 105 pence per ordinary share amounting in total to GBP8.4 million.
Avanti shares were Thursday quoted at 46.00 pence, up 1.50 pence, or 3.4%.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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