Isetan to pay out $1.50 a share to use tax credits

RETAILER Isetan (Singapore) yesterday showed that it was not deaf to minority shareholders' plea by announcing that it will pay dividends of $1.50 per share to use up some of its tax credits.

The payout is less than the around $7 a share Isetan's Section 44 tax credits of under $60 million can translate to, but may go some way to break the 'dividend deadlock' with disgruntled minority shareholders.

These investors have been clamouring for Isetan to use up its tax credits by paying dividends before they expire at the end of this year.

About 200 minority shareholders tried, but failed, to oust the retailer's independent shareholders last year.

Their drastic action prompted Isetan to look into the matter, together with controlling shareholder Isetan Japan.

Yesterday, the retailer said it had initiated but abandoned plans for a rights issue exercise as its parent is, 'for its own reasons, not able to support a proposed rights issue exercise'.

Instead it will pay the $1.50 cash dividend as a final and special dividend for the year ended Dec 31.

'The company has always maintained that the board is supportive of an effort to return to shareholders its available Section 44 tax credits as far as it is able, given business and financial constraints,' it added.

The Singapore-listed company has been in active discussions with professionals, it said. Isetan Japan has also been in consultation with its own advisers in Tokyo over the proposed rights issue.

Isetan Singapore has even written to the Inland Revenue Authority of Singapore, obtaining a favourable ruling on the tax treatment of a proposed dividend payment and rights issue. Under this proposal, shareholders would have been paid a cash dividend, with the option of using this to subscribe for the rights.

However, despite its 'strenuous efforts and serious discussions' with its parent, it was recently informed of Isetan Japan's decision not to support the rights issue.

Section 44 tax credits allow investors whose tax rate is lower than the corporate rate to get a refund on the tax they incurred on dividends. Companies were given until the end of this year to make use of the tax credits they chalked up under the old tax system, after the new one-tier system came into effect at the start of 2003.

Isetan also announced a 48.3 per cent jump in net profits for the year ended Dec 31, to $14.4 million yesterday.

Sales rose 7.6 per cent to $309.2 million. Earnings per share rose from 23.5 cents to 34.8 cents. Net asset value rose from $4.71 to $4.87.

Isetan shares yesterday closed unchanged at $6.

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Champions League

Wednesday

Barcelona 1

Liverpool 2

Porto 1

Chelsea 1

Inter Milan 2

Valencia 2

Roma 0

Lyon 0

Becks to promote U.S. 2018 bid?

ENGLAND'S Football Association suffered a potentially damaging blow, when it learnt that David Beckham may be used to promote a rival bid by the United States to host the 2018 World Cup Finals.

The United States Soccer Foundation president, Sunil Gulati, confirmed his intention to market the US as an alternative for the 2014 tournament, should a South American country not come forward.

Their real target is reportedly the 2018 edition.

The US' Major League Soccer grabbed the media spotlight last month, when Beckham signed a five-year US$250 million (S$384 million) deal to join the Los Angeles Galaxy.

The FA is expected to announce it is entering the race later this year, with the £800 million (S$2.4 billion) Wembley Stadium key to its hopes of success.

The 1994 Finals hosted by the US was regarded as a big success by Fifa. With China also potential bidders, the FA could face stiff competition.

AGENCE FRANCE-PRESSE

Zenden knows Barca pressure

BOUDEWIJN Zenden believes the pressure is all on Barcelona, when Liverpool step out at the Nou Camp for the first leg of their Champions League tie today.

Having spent three years at Barcelona, the Dutchman knows the unique demands of playing for the Catalan giants, reported the Liverpool Daily Post.

He is one of three current Liverpool players to have plied their trade at Barcelona. The other two are goalkeeper Jose Reina and midfielder Luis Garcia.

Barcelona will be given fervent backing today by the majority of the expected 98,000 capacity crowd.

'I was at Barcelona for three years, and it's a club where the only thing that counts is a result. And a result to them is always a win,' said Zenden.

'Sometimes even that is not enough, because you need to play good football as well.'

Barcelona defender Lilian Thuram has also stressed the importance of Barcelona winning, reported Soccernet.

He believes the Catalan club need a good lead to take into the second leg, because of Liverpool's impressive home record.

He said: 'They are a strong team, and we have to return to their stadium, where it is very difficult to win.'

Thuram is fighting to be fit for today's game. He stayed behind after the regular training session on Monday for an extra workout.

Taiwan bank in talks with DBS, seeks top partner

TAIPEI - FAR Eastern International Bank, a Taiwanese lender, said it seeks a strategic alliance with a world-class financial company.

It added that it has been in talks with Singapore's DBS Group Holdings.

While discussions with DBS have been taking place for the past two to three years, 'no conclusion has been reached', the Taipei-based company said in a statement to the Taiwan Stock Exchange yesterday.

Far Eastern is the banking arm of Far Eastern Group, which controls the island's largest textile company and has units in shipping, mobile-phone services and retailing.

Far Eastern did not define 'strategic alliance' or say if it seeks partnerships only with overseas banks. Neither did it provide more details on its talks with DBS.

The government encourages mergers and acquisitions (M&As) in the financial sector to reduce the number of banks on the island.

Far Eastern said last June that it was in initial talks with potential buyers, and in October said it may sell a majority stake for the right price.

The bank's shares surged by the daily limit on Jan 25 after a news report said it may sell a 51 per cent stake to ABN Amro, which Far Eastern denied.

The Chinese-language Economic Daily News reported last November that Far Eastern might sell a 60 per cent stake to HSBC within a year in three phases.

This came after Far Eastern chairman Douglas Hsu said the month before that the lender could be willing to sell a majority stake for the right price.

The Taiwanese market has been speculating since last year that the local lender would form a strategic alliance with foreign investors, or sell a stake to the latter.

The company's statement yesterday came after the Chinese-language Commercial Times reported that DBS may buy a stake in the Taiwanese lender after completing due diligence on Far Eastern Bank.

'It's our policy not to comment on market speculation or M&A activity,' DBS spokesman Jenny Lee said in a phone interview.

Far Eastern, one of 16 lenders established in the early 1990s after the government liberalised the banking industry, is Taiwan's 18th-largest listed financial company by market value.

It has 35 branches on the island, according to its website.

BLOOMBERG NEWS

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