Chairman clarifies in-specie distribution of shares to shareholders

THE Credit Corporation board has advised that its current deliberation regarding an in-specie distribution of Bank South Pacific (BSP) shares to shareholders did not guarantee such a distribution would be implemented.
Chairman Syd Yates, pictured, said, while the annual general meeting (AGM) resolution from Teachers Savings and Loan Society Ltd (Tisa) in relation to considering the possibility of an in-specie distribution of BSP shares was carried by shareholders, it was a non-binding resolution and only related to certain preliminary investigations to determine if it was possible to effect such a distribution.
“While we respect the rights of shareholders to put resolutions they feel are important to shareholders, the board must always act in the best interests of the company,” he said.
Yates said the new Credit Corporation board had completed significant work in relation to the matter since it was raised by shareholders at last year’s AGM.
“The distribution involves many complex issues, which are much broader than being just a question of whether it can be done in compliance with solvency requirements as outlined in the Tisa resolution,” he said.
“There are tax, accounting and regulatory issues for both the company and shareholders and we need to ensure that this is considered in a careful, considered way.”
Yates said Credit Corporation was also in discussions with Bank of PNG (BPNG) in relation to a number of key issues related to the proposal, including the financial impact on the company as a deposit-taking institution, the current concentration of shareholders in BSP that are regulated by BPNG and any restrictions on increasing those holdings in BSP and any legal issues that could arise in connection with the proposal.
“The board has also recognises the value of BSP shares in driving forward the group’s future growth strategy,” he said.
“The new board has worked hard to stabilise Credit Corporation, and we now need to focus our attention on driving further improvements in the business. Any decision to divest assets needs to be very carefully considered taking full account of the regulatory, financial and strategic implications and the impact on value for all shareholders.”
Yates said prior to this year’s AGM, the board had determined to appoint an independent consultant to consider whether the distribution of BSP shares was in the best interests of the company and shareholders.
He said expert advice would also be required in relation to related issues arising from the proposal.
“Accordingly, the board will report back to shareholders before the end of 2019 with its considered view after receipt of this advice from the independent consultant and its professional advisers,” Yates said.
“It is not appropriate for the board to delegate consideration of this matter to a separate a committee of representatives of shareholders outlined in the Tisa resolution as this is the board’s responsibility under the Companies Act and the constitution of the company.”
He said the board acknowledged recent disappointment in the company’s share price performance, however, this needed to be viewed in context of the company’s impressive returns to shareholders since listing on Port Moresby Stock Exchange (Pomsox).
Yates said Credit Corp listed on Pomsox in 2000 and with a strong record of dividend payments had delivered an enviable total shareholder return of 40.5 per cent per annum, taking into consideration two share splits.