Micro Focus To Return £83m To Shareholders
Despite a tough comparison quarter last year due to a large one-time contract, Micro Focus's management maintains its guidance for revenue this year to be relatively flat (+1% to -3%) from last year after backing out currency movements. Earnings before interest, taxes and depreciation and amortisation (EBITDA) margin guidance was also maintained at 37%-42%.
Complicated cash return
Until then, management is keeping the shareholder base happy with capital returns.
Similar to a transaction the company did earlier this year, it plans to return 50p per share to shareholders through a relatively complicated B/C share scheme. Essentially, shareholders decide whether they'd like to receive payment in the form of dividend (C shares) or share buyback (B shares). Then these non-tradable shares are issued and instantaneously redeemed. Then the outstanding tradable shares will be subject to a split, which reduces their number so as to leave the share price relatively unaffected.
A lot of moving parts, but in the end Micro Focus (LSE: MCRO) will be returning 50p per share to shareholders. It will be funding this at least partially through its existing debt facility.
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