LONDON (Alliance News) - Dignity PLC Wednesday announced a proposal to return GBP54 million to shareholders as it restructures its debt obligations in order to cut its annual debt servicing costs.
The FTSE 250-listed funeral services provider said its overall balance sheet liability would increase to GBP580 million under the deal, but said its debt service costs would fall by GBP6 million to GBP34 million per year from GBP40 million at present.
As a result of the exchange offer to secured notes holders, the company would generate net new proceeds of GBP70 million, of which GBP54 million, or GBP1 per ordinary share, would be returned to its shareholders.
"These proposals, if approved and implemented, will give the group the opportunity to lock its debt into the current favourable low interest rate environment for the longer term, whilst maintaining a structure that protects against increasing interest rates and refinancing risk," said Dignity Chief Executive Mike McCollum.
Dignity shares were sitting amongst the top performers on the FTSE 250 in early trade on Wednesday, rising 2.4% to 1,466.00 pence.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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