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Carpathian Payout

Dan Tebbutt - A Shareworld Contributor

Those who have been following my portfolio will know that I hold a small number of shares in Carpathian, a holding company for commercial property in Eastern Europe. This morning Carpathian announced (http://www.investegate.co.uk/article.aspx?id=200912170700092645E&fe=1) an interim dividend of 4.5 euro cents per share – pretty meaty considering they have recently been trading at about 20 cents.

Following the announcement CPT immediately jumped 20%. You might think that this was a surprising move, entirely unexpected by the market. And yet, it has been repeatedly flagged by the company in their earlier market updates.

On the 1^st of May, their preliminary results (http://investegate.co.uk/Article.aspx?id=200905011735406349R) said:

As an outcome of the Strategic Review, as soon as feasible and in any event within the next 12 months, Carpathian intends to make special distributions in aggregate of not less than 8 pence per share in cash to shareholders, subject to satisfactory discussions with the Group's lenders and shareholder approval to effect a capital reduction to create sufficient distributable reserves to allow dividend and other distributions to resume.

On the 21^st July, at their AGM, shareholders approved the capital restructuring (http://investegate.co.uk/Article.aspx?id=200907211709290509W):

In addition to the usual business conducted at an Annual General Meeting, the following changes have been approved … £150,000,000 of the paid up share capital will be cancelled and re-classified as a distributable reserve

In their interim results on the 21^st September (http://investegate.co.uk/Article.aspx?id=200909280700097287Z) they announced sufficient uncommitted cash to make the dividend payments:

Group uncommitted cash of approximately €28 million as at 31 August 2009, equating to €12.1 euro cents per share

They even gave a timetable for the distribution:

As stated at the time of the latest preliminary results announcement, a continued intention to make aggregate dividend distributions of not less than 8 pence (€9.2 euro cents) per share in cash to shareholders prior to May 2010 with an expectation that the first part of this distribution will be announced prior to 31 December 2009.

To anyone following the company's RNS announcements, therefore, today's news was eminently predictable - and yet it has apparently caused a wild lurch in the company's share price. Further evidence, in my view, that markets are far from perfectly efficient.