Green­core may re­think div­i­dend af­ter back­lash

Irish Independent - Business Week - - FRONT PAGE - Gavin McLough­lin

GREEN­CORE may al­ter the way it dis­trib­utes the $16bn pro­ceeds from the sale of its US busi­ness, af­ter con­sid­er­able dis­sat­is­fac­tion was ex­pressed by share­hold­ers yes­ter­day.

In­vestors have over­whelm­ingly backed the com­pany’s plan to sell its US busi­ness for more than $1bn, but there was a size­able re­bel­lion of al­most 20pc of share­holder votes against an as­pect of the cap­i­tal dis­tri­bu­tion plan.

The com­pany wants to dis­trib­ute the bulk of the sale pro­ceeds as a spe­cial div­i­dend – but this will in­cur an in­come tax li­a­bil­ity for share­hold­ers.

At a share­holder meet­ing yes­ter­day, mul­ti­ple re­tail in­vestors voiced frus­tra­tion with the com­pany’s plan.

One in­sti­tu­tional in­vestor, Po­laris, went pub­lic last week, say­ing that it thought a share buy­back would be bet­ter, cit­ing the tax is­sue as one rea­son for that.

Speak­ing to re­porters af­ter the meet­ing, Green­core CEO Pa­trick Coveney said the cap­i­tal dis­tri­bu­tion plan could change.

While the sale is due to com­plete this month, the pro­ceeds are not due to be paid out un­til Jan­uary.

“We’re not deaf to the com­ments of share­hold­ers ... it would be com­pletely re­miss of us not to re­flect on the sen­ti­ment that a lot of share­hold­ers have [ex­pressed],” he said.

But he added that all the ad­vice the com­pany had was that the spe­cial div­i­dend was the ap­pro­pri­ate mech­a­nism for re­turn­ing the money.

Green­core chair­man Gary Kennedy told the meet­ing that the div­i­dend would mean all share­hold­ers were treated equally. For ex­am­ple, if the com­pany made an of­fer to buy back shares at a cer­tain price, the of­fer may be over­sub­scribed and not all share­hold­ers would be able to par­tic­i­pate.

Af­ter the sale, the com­pany will be fo­cused on the UK mar­ket.

Mr Coveney said he didn’t think the com­pany would look at any ac­qui­si­tions be­yond that mar­ket.

Though he de­clined to give specifics, Mr Coveney ac­knowl­edged that the com­pany will have to cut costs to re­flect the smaller size of the busi­ness.

“We know we have to take out all of the costs that were al­lo­cated against our US busi­ness pre­vi­ously, such that we don’t have a dis­pro­por­tion­ate level of cor­po­rate costs al­lo­cated against our UK busi­ness.

“So that’s go­ing to have im­pli­ca­tions for ev­ery­thing in terms of the num­ber of peo­ple, the na­ture of the fi­nan­cial ar­range­ments we have, the size of the board, the size of the cor­po­rate of­fice, the way in which we or­gan­ise func­tions.”

Green­core CEO Pa­trick Coveney said it would re­flect on share­holder sen­ti­ment

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