ID :
12549
Tue, 07/15/2008 - 16:00
Auther :
Shortlink :
https://oananews.org//node/12549
The shortlink copeid
TCI accepts gov't order not to buy more J-Power shares
TOKYO, July 15 (Kyodo) - The Children's Investment Fund said Monday it has decided to accept a Japanese government order barring the British hedge fund from acquiring a larger stake in Electric Power Development Co.
With the acceptance, the fund's six-month fray with Japanese authorities over its attempt to buy additional shares in the country's No. 1 power wholesaler is likely to come to an end.
In January, the fund sought government approval for raising its stake in the utility company, commonly known as J-Power, to a maximum of 20 percent from the current 9.9 percent.
But the government on May 13 ordered the fund to scrap its plan, citing energy security concerns. It was the first such order by the Japanese government against an overseas investor.
Despite the acceptance, the fund, known also as TCI, stressed that it does not agree with ''the conclusion or logic used in arriving at the order.''''It is disconcerting that legitimate investors who want to improve corporate governance of privatized and listed companies can be so hastily characterized as threats to public order,'' John Ho, who heads the fund's Asian operations, said in a statement.
TCI, the largest shareholder of J-Power, said it has decided not to contest the order as it believes that the government is unlikely to change its stance and it is not in the fund's interest to engage in a lengthy judicial process.
Ho, however, said TCI ''does not abandon the possibility of reapplication for additional investment in the future,'' expressing hope that next time the government would better understand ''the long-term benefits provided by legitimate investors like TCI to Japan's energy sector.''The Ministry of Economy, Trade and Industry, committed to blocking TCI's investment plan, has said the block is an ''extraordinary'' case and that there is no change in the government stance to keep the Japanese market open to investments from overseas.
But the TCI and J-Power issue has sparked a debate within the government over how Japan should treat foreign investment in businesses sensitive to Japanese national security, according to sources close to the matter.
Japanese law requires overseas investors seeking to obtain a stake of 10 percent or more in firms deemed critical to national security and the maintenance of public order, including utilities and arms makers, to secure government approval in advance.
Despite scrapping its bid for a higher stake in J-Power at least for now, TCI said it will continue to seek improvement in corporate governance at J-Power, suggesting a possible continuing battle against the utility's management over how to boost the firm's corporate value.
TCI's announcement Monday came the same day as the deadline for the fund to file a complaint against the government order.
The decision follows the rejection by J-Power shareholders late last month of TCI's proposal for a dividend hike for a second straight year.
In June, at J-Power's general shareholders meeting, TCI proposed J-Power double its annual dividend payout for fiscal 2007 to 120 yen, or at the very least 80 yen. But J-Power shareholders supported the company's plan to raise it to 70 yen.
All of TCI's other proposals, including a scaling down of cross-shareholdings, were also turned down at the shareholders meeting.
With the acceptance, the fund's six-month fray with Japanese authorities over its attempt to buy additional shares in the country's No. 1 power wholesaler is likely to come to an end.
In January, the fund sought government approval for raising its stake in the utility company, commonly known as J-Power, to a maximum of 20 percent from the current 9.9 percent.
But the government on May 13 ordered the fund to scrap its plan, citing energy security concerns. It was the first such order by the Japanese government against an overseas investor.
Despite the acceptance, the fund, known also as TCI, stressed that it does not agree with ''the conclusion or logic used in arriving at the order.''''It is disconcerting that legitimate investors who want to improve corporate governance of privatized and listed companies can be so hastily characterized as threats to public order,'' John Ho, who heads the fund's Asian operations, said in a statement.
TCI, the largest shareholder of J-Power, said it has decided not to contest the order as it believes that the government is unlikely to change its stance and it is not in the fund's interest to engage in a lengthy judicial process.
Ho, however, said TCI ''does not abandon the possibility of reapplication for additional investment in the future,'' expressing hope that next time the government would better understand ''the long-term benefits provided by legitimate investors like TCI to Japan's energy sector.''The Ministry of Economy, Trade and Industry, committed to blocking TCI's investment plan, has said the block is an ''extraordinary'' case and that there is no change in the government stance to keep the Japanese market open to investments from overseas.
But the TCI and J-Power issue has sparked a debate within the government over how Japan should treat foreign investment in businesses sensitive to Japanese national security, according to sources close to the matter.
Japanese law requires overseas investors seeking to obtain a stake of 10 percent or more in firms deemed critical to national security and the maintenance of public order, including utilities and arms makers, to secure government approval in advance.
Despite scrapping its bid for a higher stake in J-Power at least for now, TCI said it will continue to seek improvement in corporate governance at J-Power, suggesting a possible continuing battle against the utility's management over how to boost the firm's corporate value.
TCI's announcement Monday came the same day as the deadline for the fund to file a complaint against the government order.
The decision follows the rejection by J-Power shareholders late last month of TCI's proposal for a dividend hike for a second straight year.
In June, at J-Power's general shareholders meeting, TCI proposed J-Power double its annual dividend payout for fiscal 2007 to 120 yen, or at the very least 80 yen. But J-Power shareholders supported the company's plan to raise it to 70 yen.
All of TCI's other proposals, including a scaling down of cross-shareholdings, were also turned down at the shareholders meeting.
