Stanislar. I am not so sure that if they reinstate a dividend, they will cap it at 1c (which would be a $15.8m payout) - for the simple reason that, excluding the Prime Media acquisition, the business will generate a free cashflow (after tax and interest) of around the $200m mark and on my figuring, they will show after tax earnings per share at around the 11.5c mark.
The Prime Media acquisition left them with net debt of about 0.9x EBITDA, so there is no debt problem.
If they went with a 1c dividend (an effective dividend payout rate of not even 9% of after tax earnings), they would need to support such a decision with either an associated on market buy-back or some corporate strategic insight as to why they need to hoard cash (future acquisitions). Otherwise, I would suspect that a 1c dividend would be treated in much the same manner by the market as if they again paid no dividend - it almost becomes a "why bother".
SWM Price at posting:
51.5¢ Sentiment: Buy Disclosure: Held
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