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Pacific Brands slashes dividend as outlook deteriorates

Tuesday 9th December 2008

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Pacific Brands, Australia's largest clothing maker, slashed its dividend payments to preserve capital and repay debt in the face of the deterioration in economic and retail conditions.

The company plans to pay a first-half dividend of 3 cents a share and a similar amount for the second half, it said in a statement. It paid dividends of 17 cents last year. It will underwrite its dividend reinvestment plan for at least the next two dividends, it said.

"The board's decision to make changes to our dividend policy and introducing an underwriting of our DRP is a prudent and pragmatic response to the continuing decline in market conditions," chief executive Sue Morphet said.

The Company said it will provide details of its progress in restructuring its operations when it releases its first-half results in February.

Shares of Pacific Brands last traded at 58.5 cents on the ASX and have plunged 81% in the past 12 months.

In answer to a share price inquiry from the ASX, Pacific Brands yesterday said recent weakness in its stock price reflected deteriorating economic and retail conditions, volatility of the Australian dollar and speculation the company may raise more capital selling shares. It isn't considering an equity raising, according to the statement.

By Jonathan Underhill

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