Eredene Capital to return surplus cash to shareholders

Eredene Capital, an investor in Indian infrastructure, leapt after unveiling plans to return 15.3m pounds of surplus cash to shareholders and isproposing an 18p per share tender offer for 19 per cent of shareholdings - a pro-rata return of 3.42p per share.

Eredene said the move was part of its decision to embark on a new phase to concentrate on its existing investments in India, and that having negotiated its commitment to a new container terminal at Ennore Project down from £29.5m to £14.2m, it will return £15.3m of the £29.5m raised through a placing that was made to fund the original sum.

Shareholders are to be invited to tender up to 19% of their shareholding for repurchase by the company at 18p per share, equal to the aforemention pro-rate return of 3.42p per share.

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The company believes it is likely the concession will be terminated and so has taken the decision to write down the full £0.9m value of its investment in the consortium's special purpose vehicle, but said it will continue to work with its consortium partners to try to enable the Ennore Project to proceed.

The firm also said its stake in low-cost housing development company, Gopi Resorts, is up for sale and net disposal proceeds will be returned to shareholders. Furthermore, no additional investment in new projects is planned.

The company reported a loss for the year ended March 31st of £6.0m (2011: profit £1.9m), but stressed that £5.0m of that loss relates to unrealised currency movements on fair value of Indian Rupee denominated investments.

The net asset value (NAV) attributable to equity shareholders of £87.4m (2011: £65.4m) representing 19.6p per share (2011: 23.3p).

NAV per share fell by 3.7p per share during 2012. Of the total fall, 2.1p was due to the dilutionary effects of the placing while a further 1.5p was due to the negative movement in the Indian rupee exchange rate against sterling which declined 14.3% over the year.

Following the proposed return of capital to shareholders, the group would have cash balances of £26.5m at March 31st on a pro-forma basis.

The share price rose 12.04% to 15.12p by 11:47.

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