GBL Increases Payout Ratio to 10-Year High as Income Drops

Groupe Bruxelles Lambert SA, the investment firm controlled by billionaires Albert Frere and Paul Desmarais, increased its distribution of cash earnings to the highest level in 10 years after a 50 percent reduction in dividend income from Lafarge SA and higher debt-servicing costs.

GBL proposed raising its dividend 2.4 percent to 2.60 euros a share, the Brussels-based company said today in a statement. That’s the smallest increase since 1997 and missed the 2.67 euros projected by Bloomberg research and analysis. GBL’s planned distribution of cash earnings, which declined 7.6 percent to 522.3 million euros ($685 million) last year, equals 80 percent, the most in 10 years.

The investment firm spent more than 1.2 billion euros last year, turning its cash surplus into net debt of 694 million euros by the end of last year. GBL’s biggest transaction was with Pargesa Holding SA, taking over the Imerys SA holding from its Swiss parent for 1.09 billion euros in cash. The additional dividend income GBL got from didn’t offset the 50 percent cut in Lafarge’s distribution and the increase in interest expenses GBL faced last year.

“GBL anticipates dividend earnings in 2012 that will cover its own dividend,” the investment firm said in the statement. “GBL has a solid financial structure and significant liquidity and is therefore well positioned to take advantage of rebound opportunities.”

Frere’s sole publicly traded Belgian investment firm said it has 850 million euros of undrawn credit facilities available for at least another four years, as well as 790 million euros of cash and own shares at hand.

GBL made a 11 million-euro profit from selling most of its shares in Iberdrola SA shares and used the proceeds of more than 90 million euros to increase its stake in Arkema SA to 10 percent, the company said.

Its Iberdrola holding fell to 0.2 percent at the end of December from 0.6 percent a year earlier. GBL spent a further 95 million euros on private-equity investments last year and bought back 92 million euros of its convertible notes maturing at the end of next month, the company added.

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