Evergreen Marine Corp’s (長榮海運) proposed capital reduction was yesterday approved by shareholders, despite an objection from a major shareholder, Evergreen International Corp (長榮國際).
About 79 percent of the company’s shareholders attending its annual general meeting in Taipei approved the proposal, enabling Evergreen Marine to reduce its capitalization by 60 percent and return NT$31.7 billion to shareholders, or NT$6 per share, the company said.
Evergreen International Corp, which holds a 4.96 percent stake in Evergreen Marine, objected to the proposal, with its attorney, Wu Chu-chun (吳祝春), saying before the vote that if Evergreen Marine thinks its capital is more than sufficient, it should retire its treasury stocks rather than conduct a capital reduction.
Photo: CNA
Taiwan Depository and Clearing Corp (集保) data showed that about 260,000 minor Evergreen Marine shareholders own 516 million shares, with each shareholder owning 1,980 shares on average.
A conservative estimate shows that after the capital reduction, about 130,000 minor shareholders would each own fewer than 1,000 shares, and with this low number of shares, they would find it inconvenient to trade the stock on the market, Evergreen International said.
Evergreen International said that it doubted Evergreen Marine had decided to reduce its capital to benefit major shareholders.
“Is it possible that major shareholders who have purchased Evergreen Marine’s convertible bonds can take advantage of this opportunity and make significant profit from getting their cash back without paying any tax? Is it possible for them to obtain shares through their convertible bonds later and thus obtain a greater share of the profit that belongs to all shareholders?” Evergreen International said in a statement.
In response, Evergreen Marine vice president Wu Kuang-hui (吳光輝) said that the shipper decided to conduct the 60 percent capital reduction because its common stock equity would fall to 7 percent, in line with the ratios of other major global shippers.
“We made profits of NT$238.4 billion last year and NT$109.8 billion in the first quarter, and we will not purchase new vessels in the near term. We are reducing capital mainly to cut idle money,” Wu said.
The capital reduction would not prevent Evergreen Marine from implementing new investment plans and would not increase its capital in the short term, or it would face severe criticism from investors, he said.
At the shareholders’ meeting, Evergreen Marine president Eric Hsieh (謝惠全) said he still holds an upbeat outlook regarding the company’s revenue growth for the whole of this year, adding that inflation and Russia’s invasion of Ukraine should not affect the shipping industry significantly.
In addition, inflation would not stop consumers from buying daily necessities, and since sea liners mostly transport necessities, cargo demand would not slow down, while Russia and Ukraine do not make up a big share of the container market, Hsieh said.
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