LONDON — Richemont has nailed down the details of a financial loyalty scheme announced earlier this year by chairman and company founder Johann Rupert as a way to reward shareholders for accepting smaller dividends in fiscal 2019-20, and sticking with the luxury giant through the COVID-19 crisis.
On Wednesday, Richemont, parent of brands including Cartier, Van Cleef & Arpels and Dunhill, said the scheme’s warrants will be distributed to shareholders on Nov. 27. The A warrants, which relate to A shares, will be listed on the SIX Swiss Exchange on the same day.
The exercise price of the A warrants is 67 Swiss francs, which is the volume-weighted average price of Richemont’s shares on Swiss exchange between Oct. 19 and Nov. 13.
Looking ahead, Richemont’s shareholders can trade the warrants or, subject to the terms and conditions, or wait three years and swap them for new Richemont shares at a potentially beneficial exercise price.
The company said it plans to issue separate warrants with respect to its A Shares and its B Shares. Richemont’s A Shares are listed and traded on the SIX Swiss Exchange, while the B shares are not listed, and are held instead by Rupert and his family.
Richemont is funding the warrants through the creation of conditional capital, the issuance of a maximum of 22 million new A shares (and an identical number of B shares) upon exercise of the warrants.
During an extraordinary general meeting in Geneva earlier this week, shareholders approved the creation of the conditional capital required for the loyalty scheme.
As reported, the company slashed its cash dividend to 1 Swiss franc per registered A Share, and 0.10 Swiss francs per registered B share.
Richemont followed in the steps of many companies, which downsized their dividends or withheld them altogether due to the pressure on balance sheets during the pandemic.
Rupert said over the summer that in light of the COVID-19 disruption to business, he wanted Richemont “to remain prudent and retain as much flexibility as possible,” due to limited visibility about the prevailing economic situation.