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Fred's Cancels Dividend; To Explore Alternatives For Certain Non-core Assets

While reporting its third-quarter financial results today, Fred's, Inc. (FRED) said its board of directors has canceled its quarterly cash dividend and is considering various strategic transactions and alternatives for certain non-core assets. The company also announced an update to its share repurchase program.

Fred's said it has canceled its quarterly dividend in order to retain free cash flow for debt reductions, share repurchases and other general corporate purposes.

The company noted that the declaration of future cash dividends will be subject to the discretion of the Board based on a number of factors, including the company's financial performance, its available cash resources, capital requirements and its investment opportunities.

In connection with the cancellation of the dividend, Fred's board has amended the company's previously disclosed 2012 stock repurchase program. The amended program will allow for the repurchase of up to 3.8 million shares of the company's outstanding Class A voting common stock.

The repurchase program is valid for up to two years and may be modified, extended or terminated by the Board at any time.

Fred's intends to finance the repurchases with available cash and with funds drawn from the credit agreement dated as of April 9, 2015, as amended, by and among Fred's, certain of its subsidiaries, the lenders named therein and Regions Bank, as the administrative agent.

Further, Fred's board is considering various strategic transactions and alternatives for certain non-core assets, including real estate and the specialty pharmacy business.

According to Fred's, the decision to consider and explore these strategic alternatives is not in response to any third party proposal and no decision has been made to engage in any of these particular transactions.

by RTT Staff Writer

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