Tradingmarkets.com – The Children’s Investment Fund said Thursday that the proposal announced the previous day by Japan’s Electric Power Development Co. (TSE:9513), or J-Power, to distribute a dividend of 70 yen (US$0.67) per share is insufficient.
The British hedge fund said in a statement that J-Power’s financial reasoning for paying a 70 yen dividend for last fiscal year is unclear. Noting that the proposed figure is less than 60 per cent of the average payout among comparable Japanese power companies, John Ho, TCI’s representative in Asia, argued that the firm is neglecting ordinary stockholders while protecting itself through cross-shareholding arrangements.
After TCI urged J-Power earlier to sell its cross-held shares, the firm responded by saying that holding stocks in companies that offer operational synergy is an effective strategy.
TCI refuted this claim, saying there are no highly profitable joint businesses or projects between J-Power and firms such as Nippon Steel Corp. (TSE:5401) and Kajima Corp. (TSE:1812). The reason for cross-shareholdings is to dismiss the legitimate demands of other stockholders, it argued.
