ING OFE, one of Poland’s largest pension funds, is urging a local utility to pay out almost 30% of its annual profits in dividends.
The scheme has tabled a motion for the forthcoming AGM of coal power producer Zespół Elektrowni Pątnów (ZE PAK), in which it holds a 10% stake, calling on other shareholders to support a PLN1.36 (€0.33) per share dividend.
In a statement released to the Warsaw Stock Exchange, ZE PAK said the ING-backed motion argued the proposed payment was consistent with the company’s dividend policy, announced when it listed in late 2012.
The firm reported a nearly PLN232m net profit for 2013, but its management board said in mid-March that it would table a motion during this week’s AGM that the entire sum be retained as capital by ZE PAK.
It said the dividend policy – which proposed a payment of 30% of net profits to allow for the remaining capital to be used for construction of vital infrastructure – had been developed at a time when the price of energy was higher.
“Sales prices currently achieved by the company are significantly lower than those recorded in the time of defining the dividend policy,” the board said in its note from mid-March.
It added that the decline in energy prices would therefore lead to a fall in net profit and worse cash flows for the firm.
ING PTE is urging the company to stick to its dividend policy and pay out PLN69.1m, or 29.81% of net profit, allowing it to keep the remainder for capital expenditure.
The motion will be put to a vote on 25 June.
ING PTE, the management company for the ING open pension fund (OFE) and voluntary pension fund (DTE), is one of the market leaders, accounting for 18% of OFE members.
ING Bank Śląski last month signed a non-binding, PLN242m agreement to sell its 20% stake in ING PTE to Amsterdam-based ING Continental Europe Holdings following the successful implementation of Poland’s reforms to the OFE system that cancelled all Polish government debt holdings, accounting for more than half of second-pillar assets.