The Cardno Limited (ASX: CDD) share price is having a very eventful day.
At the time of writing, the infrastructure and environmental services company's shares are down 87% to 22 cents.
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Is the Cardno share price really down 87% today?
The Cardno share price is in fact down a massive 87% on Tuesday afternoon.
However, this isn't necessarily a bad thing for shareholders. The reason for the decline is that Cardno shares are trading ex return of capital today.
Earlier this month, Cardno completed the sale of its Americas Consulting Division and Asia Pacific Consulting Division to Stantec Inc for a total aggregate cash consideration of US$500 million (A$667 million).
Following the sale, the company revealed that it would distribute the vast amount of the proceeds to shareholders. A total of A$582 million or A$1.49 per share will be returned, comprising a capital return of A$360 million or A$0.92 per share and an unfranked dividend of A$222 million or A$0.57 per share.
As the Cardno share price is now trading without the rights to these capital returns and new buyers won't be entitled to them, it has dropped to reflect this. After all, why would you pay yesterday's share price of $1.63 if you were not going to receive this return?
What next?
Eligible shareholders can now look forward to receiving these payments next week on 22 December, just in time for some last minute Christmas shopping.
As for the company, the sale of the Americas Consulting Division and Asia Pacific Consulting Division to Stantec means that Cardno is left with just its International Development Business and Latin American group companies.
Though, that could yet change. Last month Cardno appointed Greenhill & Co as its financial adviser and Gilbert + Tobin as its legal adviser in relation to the strategic review of the International Development Business. This will include an assessment of acquisition, merger or sale options with a view to enhancing value for Cardno shareholders.
