Sky City moves from cash to shares for dividends

Sky City Entertainment plans to distribute bonus shares rather than cash as dividends from now on.

The company said it will move to a bonus share dividend payment for the period of the half year ended December 31 onwards.

Previously Sky City had paid its twice-yearly dividends in cash, and given shareholders the option to receive shares instead on request.

Now dividends will automatically be paid out by way of bonus shares, with shareholders having the option to have Sky City buy-back the shares for cash.

Sky City said shareholders wanting cash needed to nominate the buy-back option before the bonus shares were issued. The cash amount a shareholder receives after the shares are bought back would be deemed a dividend for tax purposes and will have imputation credits.

The first issue of bonus shares will be made in April and their value will be calculated based on 90 per cent of the company's net earnings for the December half year.

Sky City will announce the value of the bonus shares on February 22, when it announces its half year results.

The company said by changing the dividend scheme it would maintain its equity base and reduce its net cash outflow, as well as reducing the amount of imputation credits it uses.

Shares in Sky City were down 2c at $4.70 in a broadly weaker market this morning, having ranged between $4.05 and $5.39 over the past 12 months.

- NZPA