Orora paying $600m to shareholders from fibre sale

ASX-listed packaging business Orora is passing on $600m to its shareholders after selling its Australasian fibre business to Nippon Paper for $1.7bn.

At an extraordinary general meeting held this week, the company said shareholders would receive the payment through a special dividend of $450m (37.3 cents per share), partially franked at a rate of 50 per cent. The remaining $150m will go to shareholders through a cash payment of 12.4 cents per share.

At the meeting, Orora CEO Brian Lowe said the sale of the Australasian fibre business brought in net proceeds after tax and costs of about $1.55bn.

He said completion of the sale “represents compelling value for shareholders and enhances Orora’s strong balance sheet to deliver value creation through growth investment or long-term capital management from surplus sale proceeds and operating cash flows.”

Lowe said after the sale, the company has a more streamlined group of businesses, comprising the Australasian beverage business and North American businesses

Orora’s independent non-executive director and chairman Rob Sindel said Orora is operating now with little or no debt due to the proceed from the sale, “giving the company a strong position in these unprecedented times”.

“The preference of your directors is to pursue potential growth investment opportunities should the right opportunity present itself,” he said.

“In the absence of such an opportunity, directors will of course consider additional return of excess capital to shareholders.”

Orora and Nippon Paper announced the sale in October and finalised the deal in May.

Nippon Paper Group said Orora’s fibre business had been incorporated with its subsidiary, Australian Paper, which is now called Opal. The company said the business is now “a vertically integrated paper and packaging solution business.”