Orora wipes out debt with sale of Australian Fibre to Nippon Paper

Packaging manufacturer Orora says it has little to no debt left after a $1.55bn sale of its Australian Fibre unit to Nippon Paper.

Fibre group general manager Brian Lowe with the group’s ‘no-crush’ packaging trays. Picture: Zoe Phillips

Packaging manufacturer Orora says it has little to no debt left after the $1.55bn sale of its Australian Fibre segment to Nippon Paper, as it hands $600m back to shareholders in dividends.

Shareholders were asked to approve a capital return of $150m at Tuesday’s extraordinary general meeting, with a $450m special dividend already approved by the board.

As previously flagged, the company said its preference was to keep the rest of the proceeds for growth “should the right opportunity present itself”, but “directors will of course consider additional return of excess capital to shareholders”.

Orora had originally indicated a return double that size after selling the unit to Japan’s Nippon in ­October last year. Paying just half the return was appropriate given COVID-19 uncertainty, tightening liquidity in debt markets and the terms of Orora’s debt facilities, along with retaining a strong balance sheet and growth plans, the company said in May.

Shareholders overwhelmingly backed a consolidation of Orora shares by converting every one share for 0.8 shares, “to adjust Orora’s number of shares for the quantum of the cash return”.

Orora said its teams had performed “extraordinarily well” in response to COVID-19 and that its strategy review was progressing well. Its footprint stretches from China to the US, including more than 44 factories and 90 distribution sites.

Orora closed up 4.7 per cent at $2.69 on Tuesday.