Suncorp Group Ltd (ASX: SUN) shares are rising on Thursday morning.
At the time of writing, the insurance giant's shares are up 1.5% to $18.65.
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What's going on with Suncorp shares today?
Investors have been buying the company's shares today following the release of an update.
That update relates to its upcoming annual general meeting, which will have a couple of big resolutions for shareholders to vote on following the completion of the sale of its banking operations to ANZ Group Holdings Ltd (ASX: ANZ).
The first is the returning of up to $4.1 billion to shareholders following the aforementioned asset sale. The company's chair, Christine McLoughlin, AM, states:
Subject to the conditions outlined in this Notice, Suncorp plans to return to shareholders proceeds from the Bank Sale in excess of the needs of the business of up to $4.1 billion. We anticipate the Return of Proceeds will consist of two components: the payment of a special dividend and a cash payment for a portion of your shareholding (the second component will be referred to as a Return of Capital). That is, the Return of Proceeds is the Return of Capital plus the special dividend.
McLoughlin points out that although Suncorp is asking for shareholders to approve a $4.1 billion return, it doesn't necessarily mean that the full amount will be returned. She adds:
It is important to note, that as the value of the special dividend is not yet determined, we are seeking shareholder approval for a Return of Capital of up to $4.1 billion. The Return of Capital component will form the majority of the Return of Proceeds. The amount of the Return of Capital component will be reduced by an amount equivalent to the special dividend component (once the special dividend is determined).
What else?
Suncorp is also asking its shareholders to vote on a share consolidation. McLoughlin adds:
To support keeping the share price steady, after the Return of Capital, we plan to proportionately reduce the total number of ordinary shares, known as a Share Consolidation.
As things stand, Suncorp has not revealed what its share consolidation will look like. It has only stated that "the share capital of the Company [will] be consolidated through the conversion of each ordinary share in the Company held at the record date to be determined by the Board, into a lesser number of ordinary shares in the Company."
Let's imagine that Suncorp does a 5:1 share consolidation. This would mean that if you owned 500 shares today, you would end up owning 100 shares after the consolidation.
But don't worry, you haven't been short-changed. What would happen in this scenario is the Suncorp share price would increase five times so your 100 shares have the same market value as your 500 shares had.
So, with Suncorp shares fetching $18.65 today, they would increase to $93.25 if a 5:1 share consolidation took place.
Suncorp's annual general meeting will be held next month on 22 October.
