APPLE said yesterday it would consider proposals from US billionaire David Einhorn urging the company to return more of its colossal cash pile to shareholders.
Einhorn’s hedge fund Greenlight Capital, which owns 0.12 per cent of the iPhone and iPad maker, yesterday said it was taking legal action over Apple’s proposals to change its company charter, which would prevent the company from issuing new, high-yield, preferred shares. Einhorn claimed the proposals violated US corporate voting rules.
Einhorn also wrote to other investors, imploring them to vote against the proposal at Apple’s annual meeting later this month. Paying out more of Apple’s $137bn (£87bn) cash pile would be likely to placate investors who have seen the company’s share price fall by a third since its summer highs.
“We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders,” Einhorn wrote to investors. “Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple’s existing shareholders, and would provide an attractive, sustainable dividend while preserving Apple’s financial resources to pursue its business strategy.”
Apple responded by saying it would “thoroughly evaluate Greenlight Capital’s current proposal”, although it said that the contentious changes to its charter would not prevent it issuing preferred stock. Shares in the company rose around three per cent following the statement.
Apple started paying dividends for the first time since 1995 last year, but it has much of its cash overseas and repatriating it would incur a significant tax bill.