SINGAPORE ? Fraser and Neave (F& N) plans to return almost S$607 million in cash to shareholders, or a 42 cents-a-share payout, in its second major capital reduction exercise this year, the conglomerate said yesterday.

?The board is of the view that the capital of the company is in excess of its immediate requirements and the capital reduction will allow the F& N Group to achieve a more efficient capital structure,? the company said in an after-hours regulatory filing with the Singapore Exchange.

The capital reduction, subject to approvals by regulatory authorities as well as F& N shareholders at an extraordinary general meeting to be convened later, will not result in a cancellation of any of the roughly 1.44 billion shares.

?After the capital reduction, the company?s financial position is expected to remain healthy, with a strong cash balance and healthy operating cash flow. The company believes that the continued cash flow generated from its operations and financial resources are able to support all of its foreseeable near-term investment and operational needs,? F& N added.

The distribution will be funded from existing cash and cash equivalents, including the net proceeds received by the company in 2007 from the issue of new shares to Temasek unit Seletar Investments. As at Sept 30, about S$737 million from the net proceeds remain unutilised, F& N said.

The 130-year-old F& N is spinning off its property business and will be left with a food and beverage business as well as a publishing and printing business after the distribution in specie of Frasers Centrepoint shares.

F& N got bondholders? approval on Monday to split itself via a listing of its property arm next month after making an improved early redemption offer. Holders of the notes maturing in 2016 and 2019 agreed to new terms, paving the way for F& N to distribute shares in property arm Frasers Centrepoint to shareholders.

In July, F& N distributed S$4.73 billion in cash, or S$3.28 per share, to shareholders in a capital reduction programme after it booked a gain of S$4.75 billion from the sale of its stake in Asia Pacific Breweries to Dutch brewer Heineken.

The bulk of the money went to the company?s Thai controlling shareholders, TCC Assets and Thai Beverage, which then held more than 90 per cent of F& N shares after winning a takeover battle for the company.

F& N restored the free float of its shares to about 12 per cent earlier this month, ahead of a year-end SGX deadline for it to do so in order to stay listed. Ahead of yesterday?s announcement, F& N shares rose 3.9 per cent to S$6.20 each, compared to the 0.2 per cent gain in the benchmark Straits Times Index.