DTY.L Share News (DTY)

Funeral services provider Dignity has proposed an unexpected capital return of £54m, saying that it expects to save money after refinancing its debt.The company said that it has announced a proposal to holders of its securitised debt, "which if approved, is expected to result in the group materially increasing the quantum and extending the duration of its debt obligations".Given the low interest-rate environment and the narrow spreads implicit in the market value of its debt, Dignity said it has an opportunity to extend the lift of its debt and raise new funds. The company said the move will also maintain a structure that protects it against increasing interest rates and refinancing risk.The move should lower its annual debt service obligations from £40m to £34m per annum. As such, the group wants to return 100p per share to shareholders, equal to around £54m.Chief executive Mike McCollom labelled it as an "excellent transaction for both our shareholders and bondholders".He said this is Dignity's fourth return of cash since its flotation in 2004.The stock was up 2.1% at 1,462p in morning trade on Wednesday.