KGHM dividend blocked

Europe's largest copper miner, KGHM, told WBJ its lawyers were looking to appeal a court's decision to invalidate the firm's 2006 dividend payouts.

Last week Legnica District Court nullified KGHM's zł.3.39 billion 2006 dividend payout on technical grounds and blocked the second tranche of payments, denying shareholders - including the State Treasury - some zł.1.7 billion. The fate of the first tranche is not yet clear.

The State Treasury, which has a 42-percent share in KGHM, pushed the firm to hand over its entire 2006 profit in dividends. This was challenged, however, by Ryszard Zbrzyzny, head of the largest trade union at KGHM, who brought the case to the courts.

He argued that the dividend should be invalidated because the shareholder vote did not take place within six months from the end of KGHM's financial year. The reason given for the delay was that the firm had miscalculated the amount to be paid out per share in the original dividend proposal.

"The proposal approved at the July extraordinary shareholders' meeting was not simply a correction of a mathematical error, because the division of the profit was changed," said presiding judge Małgorzata Gliwinska.

Analysts were surprised by the ruling, "This is definitely bad news for KGHM shareholders," said Unicredit analyst Tomasz Krukowski. But, after a slight dip, KGHM's shares quickly recovered.