How will the spat play out?
Electric Power Development, Japan's largest power wholesaler, will raise capital spending, rejecting a proposal by a UK hedge fund that it double dividend payouts.
The generator, better known as J-Power, will increase spending on power plants and power lines 53 percent to 172 billion yen ($1.73 billion) in the 12 months starting April 1, it said in a statement. The utility ignored recommendations by its largest shareholder, The Children's Investment Management, in crafting the five-year strategy.
J-Power is moving ahead with a 28-year project to build its first atomic plant, the Oma unit in Aomori Prefecture in northern Japan, with commercial operations slated to begin by March 2012.
The $10 billion fund, also known as TCI, submitted a 127-page business proposal to J-Power's board, including the request that it double dividends.
“We are looking to allocate more than 100 billion yen annually in the years ahead to embark on the nuclear project,”
J-Power Vice President Masayoshi Kitamura told reporters. “We don't accept TCI's 120 yen-a-share proposal.”
J-Power should raise the dividend “to demonstrate to all shareholders goodwill and management confidence of the future,” the fund said in the proposal. It also recommends that the company increase electricity retailing to manufacturers rather than selling most of its output to regional utilities.
“We found nothing new in TCI's plan to affect our five-year business strategy,” Kitamura said. President Yoshihiko Nakagaki is due to announce his company's business plan on March 31.
Listed on the Tokyo Stock Exchange in October 2004, J-Power operates transmission cables connecting Japan's four major islands, Hokkaido, Honshu, Shikoku and Kyushu, in addition to electricity production.
TCI is seeking government permission to double its stake in J-Power to 20 percent. The state can block acquisitions of more than 10 percent of power companies, arms manufacturers and industries critical to national security under a foreign exchange and trade law.
Prime Minister Yasuo Fukuda's government extended its standard 30-day assessment of the request until mid-May after the fund filed it on January 15.
In the proposal, TCI calls on the power supplier to increase electricity sales to manufacturers such as Toyota Motor and depend less on regional utilities as its main sales targets.
“What this plan tries to do is to demonstrate that everything we have said only has one objective,” John Ho, Asia chief of the UK-based activist fund, said in a press briefing in Tokyo. “Our purpose is to create value for our investors by investing in shares in companies that create value -- it's really that simple.”
Japan has deregulated 63 percent of its retail electricity market since 2000. The government liberalized power wholesaling in 1995.
Ho of TCI said J-Power should increase employee salaries and sell its cross-shareholdings. The utility spent 68 billion yen as of March 2007 to buy shares of companies including Nippon Steel and Kajima, according to Ho. The investment translates to more than 10 percent of J-Power's market capitalization and is more than double the company's estimated 32 billion yen net income for the current business year.
“We won't accept TCI's dividend payout policy,” Kitamura said. “We'll submit our five-year plan to the board and expect it to be approved.”
What’s the correct decision in this case?
The generator, better known as J-Power, will increase spending on power plants and power lines 53 percent to 172 billion yen ($1.73 billion) in the 12 months starting April 1, it said in a statement. The utility ignored recommendations by its largest shareholder, The Children's Investment Management, in crafting the five-year strategy.
J-Power is moving ahead with a 28-year project to build its first atomic plant, the Oma unit in Aomori Prefecture in northern Japan, with commercial operations slated to begin by March 2012.
The $10 billion fund, also known as TCI, submitted a 127-page business proposal to J-Power's board, including the request that it double dividends.
“We are looking to allocate more than 100 billion yen annually in the years ahead to embark on the nuclear project,”
J-Power Vice President Masayoshi Kitamura told reporters. “We don't accept TCI's 120 yen-a-share proposal.”
J-Power should raise the dividend “to demonstrate to all shareholders goodwill and management confidence of the future,” the fund said in the proposal. It also recommends that the company increase electricity retailing to manufacturers rather than selling most of its output to regional utilities.
“We found nothing new in TCI's plan to affect our five-year business strategy,” Kitamura said. President Yoshihiko Nakagaki is due to announce his company's business plan on March 31.
Listed on the Tokyo Stock Exchange in October 2004, J-Power operates transmission cables connecting Japan's four major islands, Hokkaido, Honshu, Shikoku and Kyushu, in addition to electricity production.
TCI is seeking government permission to double its stake in J-Power to 20 percent. The state can block acquisitions of more than 10 percent of power companies, arms manufacturers and industries critical to national security under a foreign exchange and trade law.
Prime Minister Yasuo Fukuda's government extended its standard 30-day assessment of the request until mid-May after the fund filed it on January 15.
In the proposal, TCI calls on the power supplier to increase electricity sales to manufacturers such as Toyota Motor and depend less on regional utilities as its main sales targets.
“What this plan tries to do is to demonstrate that everything we have said only has one objective,” John Ho, Asia chief of the UK-based activist fund, said in a press briefing in Tokyo. “Our purpose is to create value for our investors by investing in shares in companies that create value -- it's really that simple.”
Japan has deregulated 63 percent of its retail electricity market since 2000. The government liberalized power wholesaling in 1995.
Ho of TCI said J-Power should increase employee salaries and sell its cross-shareholdings. The utility spent 68 billion yen as of March 2007 to buy shares of companies including Nippon Steel and Kajima, according to Ho. The investment translates to more than 10 percent of J-Power's market capitalization and is more than double the company's estimated 32 billion yen net income for the current business year.
“We won't accept TCI's dividend payout policy,” Kitamura said. “We'll submit our five-year plan to the board and expect it to be approved.”
What’s the correct decision in this case?
posted by Charltonmedia.com @ 7:12 PM
<< Home