Shares of Tatung Co (大同), the nation’s 90-plus-years household appliances maker, fell 3.8 percent to NT$5.79 yesterday, the biggest drop in two months, after the Financial Supervisory Commission (FSC) on Monday rejected its capital reduction plan because of insufficient disclosure.
The Taipei-based conglomerate, which owns stakes in Chunghwa Picture Tubes Ltd (中華映管), Forward Electronics Co (福華電子) and San Chih Semiconductor Co (尚志半導體), intends to cut its capital by nearly 60 percent by canceling 3.21 billion existing common shares to cover losses accumulated in recent years.
Tatung had incurred NT$32.13 billion (US$1.01 billion) in losses as of the end of last year, mainly because of its investment in Chunghwa Picture Tubes, in which Tatung has more than a 20 percent stake, said Ming Ho (何明芳), manager of Tatung’s public relations office.
The FSC rejected its capital reduction application, citing the company’s failure to clearly account for its real estate assets and the ongoing property dispute with affiliated Tatung University, according to a commission statement released on Monday.
Ho declined to comment on the property dispute, but added that the company would resubmit the capital reduction plan to the FSC soon after consulting with its accountants and lawyers.
Tatung’s sales totaled NT$3.51 billion last month, up 30.48 percent from NT$2.69 billion in the same month last year, while revenue for the period from January to last month amounted to NT$22.71 billion, 33.04 percent higher from NT$17.07 billion last year, according to the company’s filing to the Taiwan Stock Exchange yesterday.
After the planned capital reduction, the firm plans to raise new funds by issuing no more than 1.2 billion shares on the open market or via private placement, Ho said, adding that Tatung may also secure syndicated loans and issue global depository receipts to strengthen its capital structure.
Tatung stock may jump to NT$12 per share after the capital restructuring effort, company secretary-general Wang Lung-chieh (王隆潔) said earlier. That would represent a 107.25 percent upside from yesterday’s closing price.
Established in 1918, the conglomerate also has a stake in Green Energy Technology Inc (綠能科技), Tatung Fine Chemicals Co (尚志精密化學), Elitegroup Computer Systems Co (精英電腦) and Tatung System Technologies Inc (大同世界科技).
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