Far Eastern Group (遠東集團) appears to have secured its ownership of Pacific Sogo Department Stores Co (太平洋崇光百貨) — for the time being — after the former owner of the department store lost a lawsuit in the second trial yesterday.
The Taiwan High Court ruled that Lee Heng-lung (李恆隆), chairman of Pacific Distribution Investment Co (太平洋流通), which is a holding company of Sogo Department Stores, does not have to return the 60 percent stake in the department store to Chang Min-chiang (章民強), CEO of Sogo’s former owner, Pacific Construction Co (太平洋建設).
Chang claimed he entrusted the shareholdings to Lee and therefore Lee does not own them.
Chang said later yesterday in a statement that he would appeal the ruling.
Pacific Distribution is a member of the Far Eastern Group, which includes the nation’s biggest textile company and Far Eastern Department Stores (FEDS, 遠東百貨).
The lawsuits between the Chang family and Far Eastern Group over the ownership of Sogo has dragged on for years.
“The Chang family does not own shares of Pacific Distribution, and therefore has no say in the company,” FEDS said in a statement yesterday.
In September 2002, Far Eastern Group secured control over Pacific Distribution from Pacific Construction via recapitalization and thus took ownership.
But Chang has not stopped accusing Douglas Hsu (徐旭東), head of the Far Eastern Group, of conspiring with Lee to seize ownership of Sogo. After he lost the first trial, Chang appealed to the High Court, claiming he should have the 60 percent stake back.
In another twist yesterday, Lee said Far Eastern Group has the legal “management rights” to Sogo, but not “shareholdings” in Sogo.
Lee said there are two shareholders in Pacific Distribution: He owns a 60 percent stake and Sogo owns the rest.
Lee told the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) that he “has had enough of working with Hsu, and he is open to collaboration with any third party in running Sogo in the future.”
“Sogo ownership lies with me and Sogo itself, but not Hsu,” he said.
Meanwhile, FEDS said yesterday it was appealing a ruling which said its recapitalization in Pacific Distribution is invalid.
“The recapitalization was done out of good will and does not involve any wrongdoing,” the FEDS statement said.
The High Court’s ruling in late October last year found that Pacific Distribution, which is now 56.6 percent owned by Far Eastern Group, “falsified facts” about the recapitalization and board member changes in a shareholder meeting at the time.
The court asked the commerce department to revoke Pacific Distribution’s recapitalization registration in 2002 and to re-examine the firm’s registrations of board member changes and subsequent recapitalizations from 2003 to 2006.
The High Court’s ruling came before the closure of the local stock market, where shares of FEDS rose near its daily limit to NT$29.75, while Pacific Construction dropped near its daily limit at NT$6.32.
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