Cambrex Corporation ("Cambrex" or the "Company") (NYSE: CBM) announced today that its Board of Directors approved a one-time payment of $14.00 per share to shareholders through a special cash dividend. This dividend, which will total approximately $400 million, will be financed by approximately $300 million of cash on hand, principally from the remaining net proceeds from the recently completed sale of Cambrex's Bioproducts and Biopharma businesses, and approximately $100 million of borrowings under a new five year, $200 million credit facility entered into today with a commercial bank group led by JPMorgan Chase Bank, N.A.
James A. Mack, Chairman, President & Chief Executive Officer commented: "In early 2006, we announced our plan to evaluate strategic alternatives to enhance shareholder value. I am very pleased to announce that as a result of this process, the Company will make this significant one-time distribution of $14.00 per share to our shareholders."
Mack continued, "In addition to the dividend, our shareholders will retain their ownership interests in Cambrex, a focused provider of pharmaceutical products and services to both branded and generic pharmaceutical companies worldwide. Given our strong market position, experienced management team, sharp strategic focus, current momentum and positive market conditions, we are excited about our shareholders' ability to also participate in the Company's future performance and growth."
The special dividend is payable on May 3, 2007 to shareholders of record as of April 20, 2007. The dividend is subject to satisfaction of customary conditions to the drawdown of funds under the new credit facility on the dividend payment date. Because of the magnitude of the special dividend, the New York Stock Exchange has determined that the ex-dividend date will be May 4, 2007, the business day following the payment date. Shareholders of record on the April 20, 2007 record date who subsequently sell their shares of common stock prior to or on the payment date of May 3, 2007 will also be selling their right to receive the special cash dividend. Accordingly, shareholders are advised to contact their financial advisors before selling their shares.
For U.S. federal income tax purposes, the distribution will be a dividend to the extent it is paid out of the Company's current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Based on these rules, the Company currently estimates that 55%-65% of the payment will be treated as a dividend for tax purposes, with the balance being a return of capital. This estimate is preliminary and subject to change based upon a comprehensive review and analysis of the Company's history as well as actual results for the entire 2007 taxable year. Shareholders will receive a Form 1099-DIV in early 2008 notifying them of the portion of the special cash dividend that is treated as a dividend for U.S. federal income tax purposes. Shareholders are encouraged to consult with their own tax and financial advisors regarding the implications of this special distribution.
The Company also announced that, effective immediately, the Board of Directors is discontinuing its quarterly dividend payment and will instead allocate these cash outlays to support its growth initiatives.