Tokyo Broadcasting sets June vote on activist proposal to cut crossholdings

TOKYO (Reuters) - Shareholders of Tokyo Broadcasting System Holdings (TBS) will vote next month on a proposal from a London-based investor to sell down the company’s crossholdings and return the resulting proceeds to investors.

Asset Value Investors, which has a 1.7 percent stake in TBS, has proposed the broadcaster sell 40 percent of its holdings in Tokyo Electron Ltd. But TBS has opposed this, saying it sees no risks given the low book value of the shares of the semiconductor manufacturing equipment maker.

The vote on the proposal is on the agenda for TBS’ annual shareholders meeting in June, according to the company’s notice of convocation and a representative of Asset Value Investors.

The vote comes at a time when activist investment is gaining momentum in Japan, backed by the government of Prime Minister Shinzo Abe that sees active engagement between firms and shareholders as a valuable spur to economic growth.

Asset Value Investors (AVI) wants to particularly “convince Japanese financial institutions that are shareholders of TBS to support” the proposal, Stephen Givens, a Tokyo-based lawyer who represents the activist fund, said at a media briefing.

Japanese financial institutions have pledged to reduce their crossholdings in part to minimize the potential impact of shares on their balance sheet due to market swings.

“If they don’t agree with our proposal, that contradicts with what they have been saying,” Givens said.

Sumitomo Mitsui Banking Corp [SUMFGI.UL] and Nippon Life Insurance Co [NPNLI.UL] are among TBS’ top 10 shareholders, owning a combined 6.14 percent of the broadcasting company.

TBS’ biggest cross-holding is in Tokyo Electron, shares of which account for 35 percent of TBS’ securities portfolio, AVI’s Givens said.

TBS is Tokyo Electron’s third largest shareholder, with a 4.7 percent stake worth 158 billion yen ($1.45 billion) based on the share price at Thursday’s close.

According to Japan’s governance code that came into effect in 2015, firms are required to explain to investors their rationale for crossholdings.

Reporting by Junko Fujita; editing by Malcolm Foster and Himani Sarkar