Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Samsung and Wireless -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (38)	2/26/2002 6:24:17 PM
From: elmatador	Respond to of 374

Investors vent anger at Samsung plan By Andrew Ward in Seoul and Doug Cameron in London Published: February 26 2002 17:50 \| Last Updated: February 26 2002 22:53 Samsung Electronics is facing allegations that it misled a group of overseas investors, the latest controversy surrounding corporate governance at the flagship South Korean technology company. A group of institutional fund managers and hedge funds alleges that Samsung plans to rush through changes without proper consultation to its statutes to prevent them from converting preference shares to ordinary stock. The investors, which include Deutsche Bank, HSBC, Invesco and Elliott Associates, a US-based hedge fund, have launched a campaign to prevent the rule change at Samsung's annual meeting in Seoul on Wednesday. Shareholders said they had been in talks with the company for over a year to clarify the conversion rights, only for Samsung to announce less than a month ago that it would table a resolution at its annual meeting to remove the conversion option. Simon Waxley, an analyst at Elliott, said investors were disappointed that Samsung had refused requests for meetings about the rule change. However, Samsung dismissed the charges as "outrageous". It argued that the campaigners were pursuing their own narrow agenda against the interests of the company's wider shareholder base. Samsung's position was independently backed by analysts at UBS Warburg. "We cannot but believe that [Samsung] is being singled out unreasonably by a small group of shareholder activists keen to make profits on the current steep discount of preference shares versus common shares," said the bank. The preference shares had traded at a 50 per cent discount to ordinary stock, but this has since widened to more than 60 per cent when Samsung gave notice of the proposed change. The core of the dispute revolves around the status of 24m preference shares issued between 1989 and 1996. Holders maintained that a literal interpretation of Samsung's articles of incorporation would see these automatically converted to common shares when they reach maturity after 10 years. Samsung maintained that the rights only applied to preference shares issued after 1997, though no shares in this class have been issued since then. Samsung said the rule change was intended to simplify the company's share structure and was in line with South Korean law and best practice. "It would have been against the law and against most shareholders' interests for us to do what [the campaigners] are asking," said the company. Mr Elliott pledged to continue the fight against the rule change even if it is approved on Wednesday. Shareholders have long complained of a lack of rights and transparency in Korean companies, although Samsung is considered an example of a new breed that have improved corporate governance and adopted global standards. However, Samsung faced criticism from shareholder groups ahead of last year's annual meeting for using a corporate governance award to exaggerate improvements it had made in its standards and block the appointment of an independent director. The company, the world's largest memory chipmaker and fourth-largest mobile phone manufacturer, is majority owned by foreign investors, who have forced it to become more accountable. Earlier this month, Jang Ha-sung, a South Korean shareholder rights' activist, said: "If Samsung started at minus 10 on a [corporate governance] scale on 0-100, it's at about 30 now."