Kirkcaldie & Stains has today filed applications seeking orders from the High Court to approve a scheme of arrangement under Part 15 of the Companies Act 1993 to return approximately $19.354 million of capital to its shareholders.

The company is seeking court approval to cancel four in five of its shares (with the number of shares to be cancelled rounded down to the nearest whole share) and return an amount of $2.3602 per share cancelled.

Incidental to these orders, the company is also seeking approval to cancel the remaining shares held in respect of the company’s employee share scheme and wind that scheme up.

The orders sought are subject to final completion of the agreement for sale and purchase with David Jones, which has taken place. The return of capital can now proceed.

The agreement with David Jones was conditional on David Jones obtaining any consent required under the Overseas Investment Act, which too has taken place.

Orders were sought sought in advance of the agreement becoming unconditional in order to allow the company to move quickly following completion to release the surplus cash to shareholders.

Shareholders will be well aware that the company has been working on plans to distribute its surplus capital for some time since the sale of the Harbour City Centre in 2014, and shareholders approved a special resolution to return capital of an amount up to the company’s available subscribed capital of $19.354 million at the special meeting held on July 31. The court applications have proceeded on the basis of that shareholder approval.

Settlement under the agreement will occur on 1 February 2016.

The return of capital will not alter shareholders’ proportionate shareholdings in the company or their proportionate voting and distribution rights.

Likewise the return of capital will not alter shareholders’ proportionate entitlement to share in the residual value in the company. In that respect shareholders should note that the cancellation of four in five shares and the return of $2.3602 per share cancelled were calculated by reference to the company’s available subscribed capital and a convenient proportion of shares to be cancelled. $2.3602 is not necessarily an indication of the price or value to be attributed to the company’s remaining shares after the return of capital.

Kirkcaldie & Stains has written to the Commissioner of the Inland Revenue seeking confirmation that the return of capital will not constitute a dividend for tax purposes. That confirmation is expected prior to the scheduled completion date of February 1.

The exact amount of capital returned to each shareholder will depend on rounding of the number of shares to be cancelled.