Next proposes £421m capital return with B share scheme

(Sharecast News) - High street retailer Next has upped its proposed cash return to shareholders but will be doing so by way of a B share scheme, as opposed to a special dividend. The firm had announced in October that it would return surplus cash with a 310p-per-share special dividend by the end of January, but has now proposed a 360p-per-share B share scheme, equal to £421m.

Next usually uses share buybacks to return surplus cash - subject to the company achieving a minimum 8% equivalent rate of return on the purchase - but shares have consistently traded above its buyback limit since a trading update in May, having surged 41% so far this year. As a result, Next has only repurchased £131m of shares this financial year.

Next said it spent time considering a number of potential methods for returning cash and concluded that a B share scheme "would be the most effective method for doing so". B share schemes give shareholders to option to redeem the shares for cash of keep them for the future.

"In reaching this conclusion, the board considered in particular the position of both retail and institutional shareholders and the benefits of completing a capital return within a reasonable timescale," the company said.

The scheme is still subject to shareholder approval, with a general meeting to be held on 15 January.