Issue depends on Canadian deal

Press, 13 November 1982, Page 21

Issue depends on Canadian deal

PA Auckland Although the Fletcher Challenge one-for-three rights issue is not directly related to its Canadian acquisition project, it is unlikely the issue will proceed if the acquisition falls through. After the company's annual meeting in Auckland the company’s directors confirmed that the issue would not proceed unless the Canadian acquisition went ahead. Should the issue proceed, the total issue price of 140 c a share will be payable in five instalments beginning in March. The rights trading period, which has still to be set. will be for the total issue.

The meeting approved a

special resolution empowering the board to introduce a dividend reinvestment scheme for shareholders, something the company has been considering for some time. But the chairman, Mr R. R. Trotter, said that, in view of the cash issue, a scheme would not be introduced for at least two years. He said the cash issue terms represented a compulsory dividend reinvestment in any case. The directors, however, projected that the amount to be raised would be significantly less than the dividends received.

Fletcher Challenge dividend policy was that the proportion of net tax-paid

earnings to be paid to shareholders was likely to be not less than 30 per cent and not more than 50 per cent. A dividend for the present June, 1983, year of not less than 18c a share was expected, with the interim limited by the freeze to 7.5 c.

Mr Trotter said that the new shares were expected to provide an effective dividend yield of not less than 15 per cent in the year after application. Dividends would be assessed pro rata to the amount paid on the issue at each stage. The issue would extend the present tax-free dividend reserves to cover a further two years dividends. It had been fully under written in New Zealand, he said.