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MaruEnergy JPSCO cuts share capital

Published:Friday | March 21, 2014 | 12:00 AM
The JPS headquarters in New Kingston also displays the marquee of top shareholders Marubeni of Japan and EWP of Korea. - File
The JPS headquarters in New Kingston also displays the marquee of top shareholders Marubeni of Japan and EWP of Korea. - File
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Avia Collinder, Business Reporter

MaruEnergy JPSCO III Limited has reduced its share capital by US$98 million and transferred the funds to retained earnings, the company disclosed earlier this month.

The sum, the company said, is "not represented by any of the company's realisable assets". Realisable value is the gain through sale of existing assets.

Marubeni Corporation, a top shareholder in Jamaica Public Service Company, said the MaruEnergy transaction has nothing to do with JPS nor does it affect its equity share - 40 per cent - in the power utility, after attempting to scold the Financial Gleaner for querying the transaction through JPS' communications unit.

"We must first make it clear that MaruEnergy JPSCO III is a separate entity from Jamaica Public Service Company Limited with separate and different operations and personnel and, therefore, questions in relation to MaruEnergy JPSCO III are improperly directed to JPS's communications personnel," said Marubeni.

"We make the further point that MaruEnergy JPSCO III is a private company and, therefore, has no obligation to publicly disclose (even to JPS) the reasons for decisions taken by the company internally. The fact is that the company has taken a decision to restructure its balance sheet in a particular manner and has published a notice of reduction of capital in accordance with the requirements of the Companies Act," said the Japanese company in responses channelled through JPS' communications unit.

"Finally, in respect of any legitimate concern regarding the effect of this exercise on the JPS, we are prepared to say that this exercise will have no effect on the JPS in any way."

Marubeni acquired JPS and other Caribbean assets from Mirant Corp in 2007, but subsequently sold half of its holdings. MaruEnergy JPSCO III was initially called Mirant JPSCO I Investment Limited.

Companies Office records identify the sole shareholder of MaruEnergy JPSCO III as MaruEnergy JPSCO IV, which is located at JPS headquarters in New Kingston. The documents also name lawyer Milton Samuda as holder of 199 of 200 shares in MaruEnergy JPSCO IV. However, Samuda told the Financial Gleaner that he is no longer associated with the entity and has not been for a long time.

No annual returns beyond 2006 for MaruEnergy IV has been posted by the Companies Office. The last annual returns found for MaruEnergy JPSCO III disclosed share capital of J$200 in 2010.

Seiji Kawamura, whose address is Tokyo, is now listed as company secretary. Marubeni directed requests for comment to local law firm, Vaccianna and Whittingham, but efforts to reach the responsible attorney were unsuccessful, as he was said to be ill.

Marubeni did not say why it was shifting around capital in MaruEnergy, but accounting experts to whom the Financial Gleaner reached out said such transactions may signal an imminent dividend payment or a realignment of capital to conform with regulatory requirements.

"A company's shares generally have what's called a face value. If the actual cash received is greater than face value, then this gives rise to a premium which is recorded or credited to the share premium account," said one risk management expert.

"I can't speak about the reason why MaruEnergy would do a transfer from a share premium account to retained earnings. Some companies - for example, financial-sector companies that have capital adequacy requirements - usually will do this to increase their qualifying capital to meet their regulatory capital limit," he said.

JPS is an integrated electric utility company and the sole distributor of electricity in Jamaica. The large shareholders of the utility are: Marubeni 40 per cent, Korea East-West Power, 40 per cent; and the Jamaican Government, 19.9 per cent.

avia.collinder@gleanerjm.com