Top shareholder in Japan's Unizo wants explanation after $1.3 bln U-turn (updated)

HIS Co

09/10/2019 13:04

(Adds details)
    By Junko Fujita
    TOKYO, Oct 9 (Reuters) - The top shareholder in Japan's
Unizo Holdings  3258.T  on Wednesday pressed the hotel chain to
explain its sudden withdrawal of support for a $1.3 billion
buyout, breaking its silence over concerns about disclosure and
governance.
    Unizo originally welcomed the "white knight" bid from
SoftBank-backed  9984.T  Fortress Investment Group but later
back-tracked. The Fortress bid followed an earlier, hostile one
from travel agency H.I.S. Co  9603.T , giving investors the
impression that Unizo had wooed, and then jilted, the
white-knight suitor.
    Elliott Management, the U.S. activist fund, ended weeks of
public silence to ask Unizo's board to address its concerns
about disclosure.
    Previously a relatively obscure hotelier, Unizo is now being
seen by foreign investors as a prominent battleground amid Prime
Minister Shinzo Abe's push for greater transparency and reform. 
    "We are highly concerned about the lack of disclosure and
the risk of conflicts of interest that have appeared in Unizo's
handling to date of the tender offer bids," Elliott, which owns
13.14% of Unizo, said in a letter to the board which it released
to the press.  
    "No answers, or answers that do not directly address
shareholders' concerns, will only deepen the misgivings that
shareholders are starting to have," Elliott said.
    A Unizo spokeswoman said the company had received the letter
but had not decided upon a response. 
    Elliott also asked why Unizo had failed to earlier disclose
a proposal to Fortress that would see the creation of an
"employee share ownership management committee" entity that
would hold Unizo shares and exert veto rights over director
appointments, dividend policy and other issues. 
    Fortress has said that Unizo proposed to raise 98.2 billion
yen ($913 million) by selling its U.S. property assets. The
money would then be used by the Unizo-created entity to buy back
the shares from Fortress after the tender offer.
    Elliott asked why the plan was not mentioned in disclosure
documents and said it "entails an extremely high risk of
conflicts of interest." 

 (Reporting by Junko Fujita; Editing by David Dolan and Elaine
Hardcastle)
 ((david.dolan@tr.com; +81 3 6441 1526; Reuters Messaging:
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