Shares in AVA Risk Group Ltd (ASX: AVA) are on the move today following a company announcement.
AVA says that it intends to return capital to shareholders as previously announced in August 2021. After securing a stockpile of cash, the company has deliberated and come to a decision on how best to reward its shareholders with these funds.
At the time of writing, the AVA share price is trading 3% higher at 41.5 cents apiece as investors respond positively to the company's release.
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AVA Risk Group to return capital to shareholders
Investors might recall that back in August last year, AVA announced that it wanted to redistribute 'excess cash' of around $39 million to shareholders.
The proposal to distribute the funds was contingent on receipt of a favourable class ruling from the Australian Tax Office (ATO) regarding the treatment of the funds, to see if they could be treated as capital or not.
AVA notes that the ATO has responded to its class ruling application, indicating that "it would be willing to treat $7.567 million of the proposed $39.2 million as capital in nature".
The board considered all options of how to return the excess funds to shareholders and came to a final investment decision that sees AVA shareholders benefit from the company's good fortune.
After careful consideration, it decided to make two distributions. The first is a special dividend of 13 cents per share, totalling a distribution of approximately $31.585 million.
Whereas the second payment is set to be a capital return of 3.114 cents per share for a sum of around $7.567 million.
On 28 February 2022 –the special dividend's record date – investors will receive an unfranked dividend of 13 cents per share, to be paid on 10 March 2022, per the release.
With respect to the details of the capital return, AVA remarked:
The Company will seek shareholder approval to reduce the ordinary share capital of the Company by approximately $7,567,000 and such reduction in capital to be effected by the Company paying to each registered holder of a fully paid ordinary share the amount of $0.03114 per share. Shareholder approval will be sought at an Extraordinary General Meeting on 22 April 2022. Further details relating to Capital Return, Record Date and timetable will be provided within a Notice of Meeting which will be issued to shareholders in the near future.
AVA Risk Group share price snapshot
In the last 12 months, the AVA share price has faltered over 32%, however has spiked almost 3% since trading recommenced this year.
