Baycorp announces A$150m capital return

SYDNEY - Credit information provider Baycorp Advantage Ltd is planning to return $A150 million ($NZ162.5 million) to shareholders.

Chairman Glenn Barnes said today that Baycorp had decided on the capital return as part of a review of its capital management strategy.

"The board determined that a capital return to shareholders of up to $A150 million is prudent," he told shareholders at the annual general meeting.

The proposed capital return will involve a 50 cents per share pro-rata capital return to all shareholders valued at around $A114 million and an on-market share buy-back of up to five percent of the company's issued share capital.

"These actions will result in a total capital return of around $A150 million," Mr Barnes said.

Mr Barnes said the formalities required for the on-market share buy-back to take place had now been completed and the buy-back would commence "very shortly".

Shareholders will vote on the proposed A50 cents per share capital return at the annual general meeting today.

The share buyback would allow Baycorp to maintain its existing dividend payment policy of 70 per cent to 90 per cent of available profits, Mr Barnes said.

Mr Barnes said the board had sought and obtained approval from Baycorp's banking syndicate to increase the existing banking facility to a level of A$175 million for a further three-year term on substantially the same terms and conditions as the existing facility.

"This provides for the proposed capital return and appropriate working capital needs at attractive interest rates," he said.

Investment firm Allco Equity Partners Ltd (AEP) launched a hostile takeover bid for Baycorp in July.

Although the bid failed earlier this month, Allco managed to build up a 17 per cent stake in Baycorp to become its largest shareholder.

Baycorp announced yesterday that the two parties had entered "constructive discussions" about its future direction and the appointment of an Allco representative to the board. Looking ahead, managing director Andrew Want said Baycorp's Business Information Services business would experience accelerated top-line growth in 2005/06, as a result of the company's sales and management initiatives.

The Business Solutions operations would also continue strongly this financial year, he added.

Baycorp posted an annual net profit of A$35.46 million in 2004/05, turning around its fortunes after a loss of A$138.25 million in the previous year.

Mr Want said the future ownership of debt recovery business Baycorp Advantage Collection Services (BCS) would be resolved in the coming year.

Baycorp first announced its plans to divest BCS in August.

The B3 programme - Baycorp's growth strategy involving 26 interconnected projects planned for 2005/06 and the following financial year - would present a challenge in its scale and the speed of its implementation.

At 1057 AEST (1257 NZT), Baycorp shares were one cent higher to A$3.63.

- AAP