Laporte's B share scheme will stave off pounds 25m tax bill

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The Independent Online
LAPORTE, THE speciality chemicals group, is planning to issue new shares to investors instead of paying an interim dividend, in a move that will save the company pounds 25m in Advance Corporation Tax.

Laporte's move is thought to be the first time a UK company has used this mechanism in order to reduce its tax liability. However accountants said itwas unlikely that there wouldbe an avalanche of copycat measures as only a limited number of companies have a similar tax position.

Laporte will issue nine redeemable B shares nominally valued at 1p for each regular Laporte share. The B shares will be redeemed later in the year. The payment of 9p compares with last year's 9.25p interim dividend and will take several weeks longer to be paid. But Laporte denied the scheme was a way of reducing the pay-out to shareholders.

Laporte will make an interest payment to cover the delay which will increase the pay-out to the equivalent of 9.1p. "We are not doing this to con shareholders, " said Jim Leng, Laporte's chief executive. "It is about saving the company money which can then be re-invested in the business for the benefit of shareholders.

Despite initial confusion about the new B shares, analysts said they are just a vehicle for Laporte to pay its dividend to shareholders in the most tax efficient manner. "The dividend is not in question." said Philip Morrish of Paribas. The news accompanied a dip in Laporte's half- year profits from pounds 67m to pounds 63.4m which has been caused by problems in the company's electronics division which has been affected by weaker Asian markets. Mr Leng declined to comment on a takeover approach for the company in April.

The approach, thought to have come from Clariant, was abandoned the day after the interest was made when Clariants's 45 per cent shareholder Hoechst objected. "The global chemicals market is consolidating and we would expect to play a part in that process," Mr Leng said. "But we are concentrating on running the business." Laporte, which acquired the Inspec chemicals business for pounds 611m last year, remains on the look-out for bolt-on deals of up to pounds 100m.

Investment, page 19