The proposal also involves the cancellation of one in three shares, for a cash payment to shareholders of $1.84 per cancelled share. This will result in the cancellation of approximately 258.3 million of NGC's total 774.9 million currently issued shares.
Company chairman Greg Martin said the return is by way of a High Court-approved scheme of arrangement and that such a process would require both a Court order and NGC shareholder approval.
"The directors believe a scheme of arrangement will provide a more certain outcome. It will apply equally to all shareholders while achieving the objective of returning a certain level of surplus capital to shareholders, and it is in the best interests of the company," said Martin.
The process for the return will begin immediately, with a view to completion by the end of the 2003 calendar year.
Funds raised from the power station sale were initially used to repay all of the company's outstanding bank borrowings. However, bank borrowings will be re-drawn to fund the scheme of arrangement.
As part of its overall capital management program, the board said it is also considering a number of funding alternatives, including a possible issue of fixed interest securities around the time of the proposed capital return.
"As NGC has reported to shareholders previously, the decision on a capital return came after consideration of appropriate levels of debt and debt servicing cover for a company like NGC, as well as future capital requirements as growth-orientated investments are examined," said Martin.
On investment opportunities he added: "At this time, NGC is considering a medium to long-term investment program. The company has identified potential future opportunities to expand its core businesses in natural gas, LPG and energy metering, but no immediate large scale investment opportunities have been identified. The proceeds from the power station sales are therefore considered by the directors to largely represent surplus capital at this time."
The company maintains that NGC retains the balance sheet capacity to pursue appropriate investment opportunities, as and when they arise.
