Two subsidiaries of Yulon Group (裕隆集團) last week announced capital reduction schemes, as the group started to restructure its finances three months after the death of chief executive officer Kenneth Yen (嚴凱泰).
China Motor Corp (中華汽車), which sells Mitsubishi sedans and its own-brand CMC commercial vehicles, on Wednesday last week said its board of directors had decided to cut the company’s capital by 60 percent to increase the return on equity.
The company plans to reduce its paid-in capital by NT$8.3 billion (US$269.5 million) to NT$5.54 billion, while returning NT$6 per share to shareholders, as well as a proposed cash dividend of NT$1.7 per share, it said.
China Motor reported net income of NT$3.59 billion for last year, or earnings per share of NT$2.64, down from NT$4.11 billion in 2017.
Revenue declined 10.37 percent year-on-year to NT$34.87 billion.
The automobile unit’s capital reduction announcement came a day after apparel affiliate Carnival Industrial Corp (嘉裕) said it would undergo a two-stage capital reduction scheme.
Carnival plans to cancel 109.01 million common shares, or 28.6969 percent of the shares in circulation, to pare down accumulated losses.
That would see its capital drop by NT$1.09 billion to NT$2.71 billion.
The company is then to conduct another 29.8768 percent capital reduction to refund NT$2.9877 per share to shareholders, while seeing its capital cut to NT$1.899 billion, Carnival said.
Carnival reported net losses of NT$233.57 million for last year, compared with net losses of NT$458.94 million a year earlier.
The company has posted four consecutive years of losses, with accumulated losses reaching NT$1.09 billion.
Carnival said it would not distribute a cash dividend for last year.
Yulon Group’s business scope includes textiles, automobiles, vehicle parts, vehicle financing and leasing, as well as construction.
Taishin Securities Investment Advisory Co (台新投顧) vice president Huang Wen-ching (黃文清) said that as the group holds a sizeable cash holding and faces no near-term funding problem, returning capital to shareholders would help major stakeholders enhance the efficiency of their fund utilization.
“Yulon Group’s capital reduction exercises are an important step in addressing its responsibility to shareholders,” Chinese-language Wealth Magazine chairman Hsieh Chin-ho (謝金河) said.
“Another major task would be to address the financial problems at Luxgen Motor Co [納智捷汽車], the group’s self-owned automobile brand,” Hsieh said.
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