The headquarters of South Korea’s top steelmaker POSCO in Seoul. (Yonhap)
SEOUL, Jan. 24 (Korea Bizwire) — South Korean steelmakers are looking into the feasibility of increasing dividends as a way to appease shareholder concern about their switch into a holding company system.
Seah Besteel Corp., which announced that it would be converting into a holding company system last Friday, is reviewing the idea of increasing its per-share dividend to the highest level in its history as well as providing interim dividends.
After maintaining dividends within the range of 20 to 25 percent of its net profits, Seah Besteel, the special steel producer decided to increase its dividend further.
The primary factor behind Seah Besteel’s latest decision to boost dividends is market concern about its spinoff plan.
POSCO, the world’s fifth-largest steelmaker by output, also announced shareholder-friendly policies last week, including a 13.3 percent retirement of its own stocks (11.6 million shares), as market concerns persisted over its plan to shift into a holding company structure.
The shareholders of the two steel companies have concerns about the potential that they could attempt to list their core subsidiaries after spinning them off.
In such a scenario, the value of the parent companies could decline, dealing a blow to existing shareholders.
To address such concerns, the two steel companies pledged not to list their subsidiaries when they announced their shift into a holding company system.
Kevin Lee (kevinlee@koreabizwire.com)
