H&R Block Announces $3.5 Bln. Stock Buyback And Capital Structure Plans

(RTTNews) - H&R Block Inc (HRB) on Tuesday announced a $3.5 billion share repurchase program, effective through June 2019.

The company said it is establishing a new capital structure to reflect the capital needs of the business and to enhance shareholder value, and includes a new committed line of credit and incremental debt.

The new structure is intended to enable significant return of capital to shareholders in the form of dividends and share repurchases, it said.

The company intends to take near-term action to take on borrowings and incremental debt and repurchase shares through a "modified Dutch auction" tender offer, which will be contingent upon the company replacing its existing Committed Line of Credit with a new credit facility, among other things.

The company plans to launch a "modified Dutch auction" tender offer to purchase up to $1.5 billion of its stock, at a price per share of not less than $32.25 and not greater than $37.00.

H&R Block also announced intends to replace its existing five-year $1.5 billion Committed Line of Credit.

Also, the company closed its divestment of H&R Block Bank to BofI Federal Bank ("BofI") a full month earlier than expected.

At the time of the closing, the bank made a one-time cash payment to BofI of about $419 million, which is almost equal to the carrying value of the liabilities assumed by BofI.

H&R Block reaffirms it expects the ongoing annual net financial impact to be dilutive by approximately $0.08 to $0.10 per share beginning in fiscal year 2016.

The company also expects to incur one-time charges for transaction and related costs of about $0.02 to $0.03 per share in fiscal year 2016.