Paramount $57m in red
PARAMOUNT Printing has plunged into the red with a $57.69 million loss for the year to March 31, after paying out $8 million as a golden handshake to a former director.
Another $2.45 million was paid to staff of magazines, shut down at an additional cost of $8.46 million.
Another $4.53 million was lost on an interest rate derivative agreed with a subsidiary of a finance company in which Paramount holds a 12.5 per cent stake.
A total of $23.43 million in exceptional payouts added to woes of the companies operations. Operating losses of $29.87 million were made on turnover down from $418.54 million last year to $377.03 million this year.
The company did not declare a dividend after paying shareholders one cent a share last year.
The $8 million golden handshake was made to Albert Cheng Jing-han for waiving a put option over Paramount on shares he owned in Capital Communications.
Mr Cheng was managing director of Paramount until he was ousted in a board-room war between Paramount parent company Seapower International's chairman Choi Sai-leung and former Hong Kong stock exchange chief executive Francis Yuen Tin-fan.
The payout led to a stock exchange investigation after it was reported in Business Post. No one was available for comment at Paramount last night.
The interest rate derivative payout came after a subsidiary of Po Leung Holdings, in which Paramount holds a 12.5 per cent stake, acquired US$25 million in exchangeable five-year notes, maturing December 1997.
The notes were issued by an undisclosed party.
To buy the notes Paramount borrowed US$25 million with the same maturity. The company undertook to pay the difference in interest rates between the interest payable on the loan and receivable on the notes.
The loan interest was 0.75 per cent above the London interbank offer rate (LIBOR) and the receivable was two per cent over LIBOR the first two years and 1.5 per cent over thereafter.
The company acquired the note-holder using a $1 option and the note-holder redeemed the notes.
The interest differential had cost them $4.53 million during the financial year.