Shareholders in Suncorp (ASX:SUN) will soon vote on a massive multi-million dollar pre-Christmas present—the sale of their bank to ANZ for $4.9 billion. However, the proceeds won’t be distributed until the New Year.
At the same time, the bank’s board has decided to reduce the size of the bank’s issued capital to accommodate the expected capital return once the transaction is finalized.
The anticipated capital return is expected to be around $4.1 billion, which is the amount that will likely be available for distribution to shareholders.
Shareholders won’t know the exact size of the return and the special dividend until well into the March quarter of 2025, according to Suncorp.
Thursday’s notice of meeting for the AGM, to be held on October 22, confirms that shareholders will receive both a special dividend and a capital return if they approve the company’s plan to distribute the proceeds from the bank’s sale.
Approximately $4.1 billion is expected to be net proceeds from the sale, which is projected to complete in early 2025, according to Suncorp.
In the notice, Suncorp stated that it plans to return to shareholders proceeds from the bank sale in excess of the business’s needs, up to $4.1 billion (Return of Proceeds).
“We anticipate the Return of Proceeds will consist of two components: the payment of a special dividend and a cash payment for a portion of your shareholding (this second component will be referred to as a Return of Capital). That is, the Return of Proceeds includes both the Return of Capital and the special dividend.
“It is important to note that, as the value of the special dividend is not yet determined, we are seeking shareholder approval for a Return of Capital of up to $4.1 billion.
“The Return of Capital component will form the majority of the Return of Proceeds. The amount of the Return of Capital will be reduced by the amount equivalent to the special dividend component, once the special dividend is determined.
“To support maintaining the share price after the Return of Capital, we plan to proportionately reduce the total number of ordinary shares, a process known as Share Consolidation,” Suncorp explained in the notice.
“Shareholder approval is required for both the Return of Capital (Resolution 1) and the Share Consolidation (Resolution 2). We refer to the Return of Capital and Share Consolidation together as the Capital Initiative. These resolutions are interdependent, and one cannot be passed without the other,” the directors emphasized.
“While regulatory completion of the Bank Sale occurred on July 31, 2024, further steps are required before the Capital Initiative can proceed.
“These additional steps include shareholder approval of Resolutions 1 and 2, finalizing the Bank Sale completion accounts, obtaining a draft class ruling from the Australian Tax Office (ATO), and obtaining approval from the Australian Prudential Regulation Authority (APRA).
“Therefore, we estimate the payment of the special dividend (subject to Board approval) and the Return of Capital will take place in the first quarter of the 2025 calendar year.