Dickson renews connected agreements
Luxury retailer Dickson Concepts (International) has renewed as many as 12 agreements with companies either controlled or wholly owned by its chairman, who will receive up to $328 million over the next three years when the agreements mature.
The announcement came after chairman Dickson Poon reportedly needed to invest as much as Euro50 million ($477.98 million) to rescue his Paris-listed ST Dupont from bankruptcy.
Business dealings between Mr Poon's private company and its listed arms have previously raised concerns over transparency.
In 2000, Dickson Concepts sparked controversy over its failure to disclose a deal to buy hardware and software from Mr Poon's Dickson Management Consultancy at a fixed rate of $130 million.
'There are too many connected transactions in the company. To a certain extent, it will hurt the corporate image,' an analyst said.
According to the announcement, most of the 12 renewal agreements relate to merchandise purchase and the payment of sub-licence fees and promotional and advertising fees to Mr Poon's connected companies.
The biggest deal is an agreement with Dickson Concepts to renew a three-year sub-licence worth up to $113.1 million for the distribution of ST Dupont's products in the mainland.
For the year to March last year, Dickson Concepts paid a sub-licence fee of $15.4 million to ST Dupont. The renewal contract allows ST Dupont to receive a sub-licence fee of up to $31.66 million next year, $37.37 million in 2008 and $44.09 million in 2009.
Dickson Concepts said the maximum annual caps were based on an estimated 18 per cent annual growth of both the retail and wholesale turnover of ST Dupont's products distributed in the mainland.
It said the payment of the sub-licence fees would 'extend the group's geographical reach and strengthen the group's retail network in the mainland'.
The company said all the connected transactions did not require independent shareholder approval.