Clarity on dividend hits Dorbyl stock
Larry Claasen
--------------------------------------------------------------------------------
E-Mail article Print-Friendly
Industrial Correspondent
INDUSTRIAL group DorbylÆs share price declined 67,73% to close at R12,75 yesterday after it issued a statement clarifying how the declaration of a special dividend would affect the company.
The R26 special dividend relates to the $158m sale in May of its US-based building products company, Alpine Engineered Products. Dorbyl said it netted R1,016bn from the sale, and the total cost of the special dividend was R993m.
The R26,76 drop in the share price exceeded the R26 dividend.
But the sharp decline in the share price came as no surprise to Dorbyl or analysts, as the price was expected to drop before the special dividend was paid on Friday.
Imara SP Reid senior investment analyst Warwick Lucas said it was more tax-efficient to sell the shares before the dividend was paid.
If sold shares were not delivered to the buyer before the dividend was paid, the seller kept the dividend.
Dorbyl CEO Bill Cooper said he expected the share price to fall more than R26 because the cost related to the sale of Alpine did not form part of the dividend payout.
Cooper said the statement was put out ahead of tomorrowÆs annual meeting as the group had received a number of queries on the implications of selling off Alpine.
The statement said all outstanding share options held by management had been exercised, increasing the number of issued shares to more than 33,9-million.
Cooper said the share options included 800000-900000 shares exercised after the Alpine sale was announced. Holders of the shares would be entitled to the special dividend. Cooper said it was fair for management to benefit from the Alpine sale as some had held the share options for almost 10 years.
As the funds would have been held from July 15 to August 26, Dorbyl would derive only a limited interest benefit from the proceeds, the group said.
While the Alpine sale constituted disposal of its largest asset, there were no plans to delist the group, Cooper said. There were no plans to sell the groupÆs remaining asset ù its vehicle-component manufacturing operations in SA.
In its results for the year to March, DorbylÆs local operating income was R31m, compared with the R122m posted by its US operation.
CooperÆs commitment to keeping the vehicle businesses is despite the group warning that it may have to ôimpairö some of their assets because of problems caused by the randÆs strength.
The group warned it might face a ômaterial liabilityö resulting from claims against its pension fund. Cooper said it was hard to say now how big the liability would be, but it would include all businesses the company has sold since the 1980s.
Dorbyl believed in the strategic importance of black economic empowerment, and was looking to promote it in its automotive businesses.
Soccer boss Jomo Sono took a 40% stake in Dorbyl bus manufacturer Busaf two years ago.
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
