Idemitsu To Issue New Shares, Diluting Founding Family Stake

Idemitsu To Issue New Shares, Diluting Founding Family Stake
Japan's Idemitsu Kosan Co plans to issue new shares to raise $1.2 billion.


TOKYO, July 3 (Reuters) - Japan's Idemitsu Kosan Co plans to issue new shares to raise $1.2 billion, in a move that would dilute the stake held by the refiner's founding family that is locked in a fierce battle with the management over a merger plan.

The founding family will seek court injunction to block the share issue, a lawyer for the family said in a statement.

Last week, Idemitsu Kosan said its CEO, Takashi Tsukioka, and several other board candidates who have been pushing for a full merger with smaller rival Showa Shell Sekiyu, were re-elected to its board at an annual shareholders' meeting.

The founding family opposes the merger plan and with control of over one-third of the oil refiner, it has the right to veto special items such as a merger.

Idemitsu Kosan said it will issue 48 million new shares, or about a third of its outstanding shares, to raise up to 138.5 billion yen ($1.23 billion).

The purpose of the new share issue is to raise necessary funds and not to dilute the founding family's stake, a company spokesman said, adding Idemitsu Kosan had no plans to hold a shareholders meeting to vote on the merger after the issuance.

The company said it plans to use part of the money raised from the share sale to repay 159 billion yen of loans taken to fund the acquisition of a stake in Showa Shell.

In a regulatory filing, Idemitsu Kosan said it would take counter action in case shareholders take legal action to block the new share issue, but warned the sale would be cancelled if court injunction is granted and stays beyond the pay-in date.

"It's obvious that it will dilute the founding family's stake and we are planning to apply for court injunction to block the share issue," Yohei Tsuruma, the lawyer who represents the founding family, said in a statement.

Daiwa Securities and JP Morgan are joint global coordinators for the share offering.

(Additional reporting by Osamu Tsukimori, Reporting by Taiga Uranaka; Editing by Himani Sarkar)


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