DTY.L Regulatory News (DTY)

3 Feb 2006 12:43

Dignity PLC03 February 2006 For Immediate Release 3 February 2006 Dignity plc ('Dignity' or 'the Group') Proposed Issue of Further Notes and £80m Return of Value Dignity plc, Britain's largest single provider of funeral-related services,announces that its subsidiary, Dignity Finance plc (a subsidiary of Dignity(2002) Ltd, the holding company of the securitised sub-group of Dignity plc)intends to issue Further Notes under its existing whole business securitisation. Dignity Finance plc has issued a Preliminary Offering Circular relating to theissue of £42.5 million Class A Fixed Rate Notes due 2023 and £32.5 million ClassB Fixed Rate Notes due 2031. The proceeds of the issue are expected to beapproximately £85 million net of expenses and fees. It is envisaged that thefund raising, arranged through lead manager and sole bookrunner to thetransaction, The Royal Bank of Scotland plc, will be completed in the weekcommencing 20th February 2006. Dignity plc intends to return approximately £80 million (£1 per share) toshareholders by way of the issue and redemption of B shares. Under the terms ofthe existing Notes the transfer of funds from the Dignity (2002) Ltd securitisedsub-group cannot be made until August 2006. It is planned that an ExtraordinaryGeneral Meeting will be convened immediately following the Annual GeneralMeeting on 8th June 2006 to approve the necessary changes to the authorisedshare capital and the Articles of Association to allow the B shares to be issuedand redeemed. In order to aid comparability of the financial record it isplanned that a share consolidation will accompany the return of value. Acircular containing full details of the proposals, including a detailedtimetable, will be sent to shareholders in due course. Given this intended substantial return of value the directors do not propose topay a final dividend for 2005, which would otherwise have been payable in June2006 but expect to resume dividend payments with the 2006 interim dividendpayable in October 2006. Upon completion of the fund raising Dignity currently intends to payapproximately £10 million into its final salary pension schemes thereby largelyeliminating their deficits under FRS17. Commenting on the issue of the Further Notes and the proposed return of value,Peter Hindley, CEO said: 'Dignity is a business that produces a strong and stable cash flow, which hasincreased significantly since the original securitisation in 2003. This growthallows the Group to sustain and service a higher level of gearing. As aconsequence of this and current attractive long term interest rates thedirectors have decided to issue Further Notes, raising approximately £85 millionnet of expenses and fees. This will increase the annual interest expense byapproximately £5 million per annum. It is our intention, subject to shareholderapproval, to return the vast majority of the funds raised (£80 million or £1 pershare) to our shareholders. We will use the remaining amount, together with someexisting cash resources to largely eliminate the Group's FRS17 pension deficit.The Directors believe that the return of value is consistent with maximisingtotal shareholder returns through an efficient balance sheet, which neverthelessleaves sufficient flexibility to continue to grow the business. I am pleased to report that the Group has continued to make further progress andis trading in line with expectations.' Dignity will announce Preliminary results for the 52-week period ended 30thDecember 2005 on Tuesday 21st March 2006. For further information please contact: Dignity plc 0121 354 1557Peter Hindley, Chief ExecutiveMike McCollum, Finance Director Buchanan Communications 0207 466 5000Richard Oldworth/Suzanne Brocks This information is provided by RNS The company news service from the London Stock Exchange