Toy­ota wins in­vestor vote on con­tro­ver­sial new shares

The China Post - - WORLD BUSINESS -

Toy­ota won ap­proval Tues­day for a con­tro­ver­sial new share sale that it de­fended as a way to lure sta­ble, long-term in­vestors, over­com­ing stiff op­po­si­tion from some in­sti­tu­tional share­hold­ers over­seas.

The world’s big­gest au­tomaker said 75 per­cent of share­hold­ers voted in fa­vor of the plan that would see it sell up to 50 mil­lion of the new shares, which must be held for five years and will not be pub­licly traded.

Largely re­stricted to Ja­panese in­vestors, the new “Model AA” shares carry vot­ing rights and will be priced at a 20 per­cent pre­mium on Toyo- ta’s com­mon shares, which closed at 8,395 yen (US$68) in Tokyo.

Div­i­dends paid on the new shares would rise from 0.5 per­cent to 2.5 per­cent by the end of the five-year hold­ing pe­riod when in­vestors could con­vert them to com­mon shares or Toy­ota would re­pur­chase them, it said.

Later Tues­day, the com­pany said it would buy back as much as 600 bil­lion yen (US$4.9 bil­lion) in stock to guard against di­lu­tion from the new share is­sue.

Toy­ota, which booked a record US$18 bil­lion profit in its latest fis­cal year, said the share struc­ture would lure longer-term in­vestors and help it fund ex­pen­sive re­search work, par­tic­u­larly on next-gen­er­a­tion tech­nol­ogy such as fuel cell cars.

The vote comes weeks af­ter Ja­pan for­mally adopted a cor­po­rate gov­er­nance code that was hailed as ush­er­ing in a new era of trans­parency for in­vestors.

U.S.-based ad­vi­sory In­sti­tu­tional Share­holder Ser­vices said the new shares would re­duce in­vestors’ in­flu­ence over man­age­ment de­ci­sions.

“It is dif­fi­cult to es­cape the im­pres­sion that the com­pany wants to in­crease sta­ble and silent in­vestors by re­plac­ing com­mon share­hold­ers with Model AA added.

The Cal­i­for­nia State Teach­ers’ Re­tire­ment Sys­tem, which an­nounced it would vote against the plan, said it was “not in the best in­ter­ests of all Toy­ota com­mon stock share­own­ers — par­tic­u­larly for­eign share­own­ers.”

We do “not be­lieve that the cre­ation of a dual class of com­mon stock aligns with the ‘one share, one vote’ prin­ci­ple,” it said.

“Toy­ota’s Model AA Class Shares would be un­listed and of­fered only in Ja­pan, thus hin­der­ing in­vestors out­side of Ja­pan from par­tic­i­pat­ing.”



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