Investors in Auckland International Airport will forego the usual interim dividend in March, as the company plans to return $454 million in capital to shareholders.
The move comes as the company looks to improve its debt and equity balance.
Auckland Airport was seeking court and shareholder approval to return the capital to shareholders by cancelling one in 10 shares at a price of $3.43 per cancelled share, the company said today.
Chief financial officer Simon Robertson also told investors they should not expect the final dividend payout for 2014 to reflect the loss of the interim dividend because of the timing of the capital return.
"It has been pointed out these investors will be receiving the equivalent of an interim dividend of around 34 cents a share, substantially higher than any interim dividend we have paid out," Robertson said.
Returning capital to shareholders, instead of pushing forward with development plans, was a complex decision but it was important to stage the airport's 30-year, $2.4 billion redevelopment plan in line with passenger growth.
"Building ahead of demand doesn't make sense from an efficiency perspective ... we need to make sure aeronautical developments are in line with passenger and airline demands," he said.
Auckland Airport chairman Sir Henry van der Heyden said the company needed to effectively manage its operating costs and capital expenditure, and have an efficient mixture of equity and debt to be efficient.
"The company's strong performance over the past five years, including our successful property development and retail businesses, and our investments in other airports, means we currently have a less-efficient mix of equity and debt than we had in the past," he said.
Auckland Airport would remain well placed to deliver on planned infrastructure upgrades and its "30-year vision" after the return of capital, he said.
The capital return requires High Court and shareholder approval. Shareholders will vote on the on the issue in February, with 75 per cent approval required.
Final High Court approval was expected in March, van der Heyden said.
Forty per cent of the payment would be treated as a capital return for tax purposes, with the remaining 60 per cent treated as a fully imputed taxable dividend.
The capital return would not alter shareholders' proportionate shareholding in the company or future voting and distribution rights, it said.
The company said its debt to enterprise levels had shrunk from 35.7 per cent in 2009, to 22.8 per cent in the 2013 financial year.
In that timethe company's market capitalisation has grown from $1.9b to $3.9b, so the gearing ratio had been affected.
Robertson said: "In effect, shareholders now hold a significantly higher percentage of the company's funding."
The company's shares last traded at $3.45, valuing the company at $4.52 billion.
- Fairfax Media