eAccess calls foul over ACCA buy-back

11 Mar 2008

Japanese telecoms group eAccess has submitted a complaint to the country’s financial regulators alleging that a block trade of shares in smaller rival operator ACCA Networks broke the rules, the Financial Times reports. eAccess, which itself owns 13% of ACCA, says the buy-back highlights the lack of transparency in Japan’s capital markets. It recently launched a proxy fight proposing management changes at its smaller rival, a situation that resulted in the resignation of two ACCA board members.

The newspaper writes that on 6 March ACCA revealed a share buy-back plan with a fixed price of JPY150,000 (USD1,473), and the following day acquired the shares it was after from Mitsui, one of the company’s largest stakeholders with 10.3% of the operator and a place on the ACCA board. The transaction apparently took place in out-of-hours trading on Japan’s Jasdaq market for start-up firms. However, eAccess alleges any move to purchase its own shares at a fixed price from a large shareholder with a representative on its board must raise questions concerning the levels of transparency of the deal. It is also unsettled that the share buy-back may be in breach of company law which is designed to ensure that any pre-planned block sale must have shareholder approval before it goes ahead. eAccess contends that ACCA was able to do this without its consent due to a loophole in Jasdaq’s rules and further complained that its own efforts to buy Mitsui shares was rejected by the bourse. ‘This is a serious issue. No value investors are coming into the market because this kind of thing goes on and so nobody can trust the market,’ Sachio Senmoto, chairman of eAccess, told the FT yesterday.