Far Eastern to halt local investment as payback for MOEA
Douglas Hsu, chairman of the Far Eastern Group, yesterday announced the temporary suspension of all the group's Taiwan investments to protest the recent government decision to allow an extraordinary meeting of SOGO Department Store shareholders.
“We'll suspend all of the group's investments in Taiwan. We'll also engage in self-help measures and take to the streets,” Hsu said, responding to the Ministry of Economic Affairs' (MOEA) move to grant the request of the interim managers of Pacific Distribution Investment Co. that an extraordinary SOGO shareholders' meeting be held to elect new board members.
The MOEA made the announcement on May 4 and asked that the meeting be held within three months.
Far Eastern Department Store fell 4.35 percent to NT$31.9 on the Taiwan Stock Exchange yesterday, on investors' fears that the retail giant may lose SOGO, one of the island's most profitable department stores.
The Far Eastern Group had injected capital into Pacific Distribution, whose capital stood at NT$4.01 billion. With the capital injection, Far Eastern Department Stores and Far Eastern New Century had stakes of 56 percent and 43 percent in Pacific Distribution, respectively for total ownership of 99 percent of the company.
Pacific Distribution, meanwhile, holds a 78.6-percent stake in SOGO. Indirectly, Far Eastern Department Store has a 44-percent stake in SOGO.
But the MOEA has invalidated Far Eastern's capital injection into Pacific Distribution, leaving SOGO's ownership in limbo. Both Far Eastern Department Stores and Pacific Distribution lay ownership claims to SOGO.
“The ownership dispute of SOGO is still being fought in court, and the legality of the interim managers of Pacific Distribution is in question,” Hsu said. “In granting the request of the interim managers that a SOGO shareholders' meet be held, the Commerce Department of the MOEA has gone beyond its jurisdiction.”
Also yesterday, Far Eastern Department Stores issued a statement protesting the MOEA's move, saying that the election of SOGO's board, headed by Chairperson Huang Ching-wen, has been affirmed in a civil lawsuit and that the MOEA has no right to allow anyone to have it invalidated or changed.
The statement also criticized the MOEA for allowing the SOGO shareholders meeting, since the ministry's invalidation of Far Eastern's capital increase is still being reviewed at the Taipei High Administrative Court.
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