Phoenix hikes dividend and pays off debt

Shares in Phoenix Group, the consolidator of closed life assurance funds, jumped after it announced a big hike in its dividend and suggested there was more on the way.

Shares in Phoenix Group, the consolidator of closed life assurance funds, jumped after it announced a big hike in its dividend and suggested there was more on the way.

The company boosted its final dividend by 27% and said it would amend existing dividend conditions, giving it the flexibility to increase future payments.

The board now expects to declare a 2012 final dividend of 26.7 pence per share, subject to market conditions and trading performance.

"The board believes that this is a sustainable level at which to rebase the dividend as the business executes its stated strategy and is pleased that the amended dividend conditions provide the flexibility to increase future dividend payments as the business performs," the statement said.

Phoenix also announced it had raised £250m through a combination of a placing and an open offer of 50m new shares at 500p per share.

The issue price was a 10.5% discount to the 30 day volume weighted average share price and a 15.4% discount to the closing share price on January 29th.

The new money would allow it to repay £450m of its Impala bank debt facilities early, the firm said, reducing total bank debt from £2.37bn on June 30th 2012 to £1.86bn.

The news pushed the company's shares up 8.3% to 640p by 09:00

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