KEY POINTS:
CanWest MediaWorks will pay a special cash dividend before the company moves to private equity ownership, providing a windfall for investors regardless of the success of the full takeover.
At the time of the takeover announcement the CanWest board said it was considering the payment of a special
dividend of up to 11c a share and yesterday said it would pay 10c a share.
"The dividend declared has the objective of unlocking the value of imputation credits built up by the company over the last several years ahead of the takeover by HT Media [Ironbridge Capital] and the consequent change of control of the company," CanWest MediaWorks said yesterday.
The cash dividend, payable on June 8 to all shareholders at June 1, will have 4.9 cents per share of imputation credits attached.
Ironbridge Capital launched a $386 million takeover of MediaWorks at the beginning of the month, securing the 70 per cent stake held by CanWest Global.
Ironbridge will now adjust down the $2.43 a share offer for MediaWorks to $2.33 as flagged in its takeover offer - but investors who are eligible to use the tax credits will get an extra 4.9c.
The dividend will be paid regardless of whether Ironbridge achieves a full takeover of CanWest or the company has to remain listed on the NZX.
That success largely depends on Brook Asset Management, which with 8.56 per cent of the company is in a strong position to stop Ironbridge getting the 90 per cent of shares it needs.
Brook's Paul Glass said it welcomed the "sensible" decision by the MediaWorks board but reiterated that it would wait for the independent report on the Ironbridge offer before making a decision on the takeover.
Shares in Canwest MediaWorks closed unchanged at $2.40.
Rob Mercer of Forsyth Barr said for New Zealand investors subject to capital gains it meant a better price through getting the special dividend, but for many it would not make any difference to the takeover offer price.
"Shareholders, in particular those that pay capital gains tax, get an uplift in value through that distribution of those imputation credits of 4.9 cents," said Mercer.
He said the special cash dividend payment was best practice for companies wishing to pass on the benefits of imputation credits to shareholders before an ownership change.
What it means
* CanWest to pay 10c special cash dividend.
* As a result, Ironbridge drops takeover offer to $2.33 a share from $2.43.
* Shareholders also get a 4.5c per share tax credit.