DH Corp cuts dividend by 62.5%

Canada's DH Corporation will lower its quarterly dividend from $0.32 to $0.12 per share.

In today's press release DH Corp states that the dividend cut is consistent with its ongoing strategic transformation of D+H into a leading FinTech company.

The reduction in the dividend will provide additional capital for the Company to repurchase shares, reduce debt, and invest in the growth of the business. Since going public in 2001, D+H has paid in excess of $1.1 billion in dividends and distributions to its owners. Including the dividend payable on December 30, 2016, the Company will have paid approximately $124 million in cash dividends to shareholders in 2016.

Cash totaling approximately $85.5 million is anticipated to be available in 2017 through the dividend reduction. The Company currently expects to allocate approximately 45 - 50% towards repurchasing shares, approximately 40 - 45% towards reducing debt and the remaining towards investing in ongoing organic growth initiatives in payments and lending.

"Over the last several years, D+H has been executing on its strategic transformation into a global financial technology provider. The decision we announced today is consistent with that direction and enables us to position our capital structure to support this continued evolution," said Gerrard Schmid, Chief Executive Officer of D+H.  "We are taking a deliberate and thoughtful approach to our capital allocation program and believe it is important that our capital structure reflect the go-forward requirements of the Company.  We believe the decision to reduce our dividend at this time is in the best interest of the Company, and will support our shareholder value and growth objectives by providing additional capital to repurchase shares, reduce debt, and invest in the Company. As we pursue our strategic objectives, our entire organization remains focused on providing our customers with the high-quality solutions they have come to expect from D+H as a leading financial technology provider."

"Today's announcement, together with our November 10, 2016 announcement of amendments to our debt covenants, reflect D+H's commitment to building a company that has the appropriate capital structure for its development as a leading FinTech provider," said Paul Damp, D+H's non-executive Chairman.  "Our intention to implement a share repurchase program in 2017 further supports our view of an appropriate approach to deliver value to shareholders. The Company generated net cash from operating activities of approximately $289 million in the most recent 12 months ending September 30, 2016. We utilized this cash to pay dividends of $115 million, invested $97 million of capital to support growth in the business, and repaid $80 million in debt."

The first regular quarterly dividend of $0.12 per share (equivalent to $0.48 per share annualized) is expected to be declared in February 2017 and paid in March 2017. The previously declared quarterly dividend of $0.32 per share for shareholders of record at the close of business on December 16, 2016, will be paid on December 30, 2016.

Source: DH Corp 

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