Bloomberg News

Micro Focus Advances on $320 Million Investor Payout Hope

June 21, 2012

Micro Focus International Plc (MCRO) rose to the highest price in more than four months after Chairman Kevin Loosemore said he’s “not uncomfortable” with an estimate that the U.K. software provider may return as much as $320 million to investors over the next two years.

Micro Focus may return money through share buybacks and one-time distributions, the Newbury, England-based company said in a statement today. It will be financed by increasing debt relative to earnings, Micro Focus said.

Shareholders may get $320 million, or 120 pence a share, David Toms, an analyst at Numis, said in a note today. They may receive a further 47 pence a share over the next two years in dividends after Micro Focus said it would now pay out 50 percent of pre-exceptional net income instead of 40 percent, said Toms, who maintained his buy recommendation on the stock.

“I am not uncomfortable with that estimate,” Loosemore said in a telephone interview.

Micro Focus share have risen 60 percent in London trading since it said 10 months ago it had ended takeover talks with potential bidders and was resuming a share buyback program. In January it returned 45 pence a share to shareholders.

The company, which does about half of its business in the U.S., will let net debt rise to a ratio of 1.5 times adjusted earnings before interest, taxes, depreciation and amortization from last year’s level of 0.6 times, it said in a statement today.

Micro Focus rose 5.7 percent to 477.7 pence, the highest close since Feb. 2. It was the fourth-biggest gainer in the FTSE All-Share Index, which fell 1 percent.

Net income before currency gains rose 25 percent to $120.6 million in the year ended April 30, Micro Focus said in the statement. That beat the average estimate of $116.8 million of six analysts surveyed by Bloomberg.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net.


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