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Japan Wind Management Face Investors Questions as Shares Plunge

Executives of Japan Wind Development Co., whose shares have shed two-thirds their value in a month, faced questions from investors amid concerns the stock may be delisted from the Tokyo Stock Exchange.

More than 270 shareholders attended the windpower developer’s annual general meeting in Tokyo today, compared with 120 last year, Hidekazu Yui, a senior manager of the company’s administration department, said by e-mail. The meeting, which was closed to the press, ran an hour over schedule.

“A change in management is essential to revive the company,” Mamoru Kusatsu, 73, said after the meeting. The retiree from Kawasaki City near Tokyo has held the stock for about a year.

Japan Wind, the worst performer on the 88-member WilderHill New Energy Global Innovation Index in the last year, is likely to miss a June 30 deadline to file an annual securities report after changing its auditor, the company said in a June 14 filing. If it fails to submit the report within a month of the deadline, the shares will be delisted, the bourse said in a statement the same day.

“Even if the company overcomes this crisis, I’m still worried that Japan Wind may collapse,” said Michiaki Otani, 62, who has held the shares for a year. “The events made me doubt the company and its business model.”

President Masayuki Tsukawaki’s stake in the company was reduced to 6.27 percent, or 9,420 shares, from 10.99 percent when financial institutions, which were holding it as security against a loan, sold it under the terms of an acceleration clause, according to a company statement June 21. The stake has since been reduced further to 4.95 percent, according to filings to the Ministry of Finance.

President’s Stake

“There is uncertainty in the company’s management, including the possibility of further sales of the president’s remaining stake,” Tomoaki Kawasaki, an analyst at Cosmo Securities Co., said by phone from Tokyo yesterday. Kawasaki stopped covering the company June 23 because of the difficulty in getting sufficient information to estimate earnings, he said.

Japan Wind shares advanced 1.4 percent to 65,900 yen in Tokyo trading today after earlier declining as much as 7.7 percent. The benchmark Topix index retreated 1.3 percent.

Sparx Group Co., whose funds hold a combined stake of 11.09 percent in Japan Wind according to Bloomberg data, has declined 27 percent since the company announced it may miss the filing deadline. Masahiro Sugino, a spokesman for the Asia’s biggest hedge-fund manager, declined to comment.

Idemitsu Kosan Co., which holds a 4 percent stake in the company, isn’t planning to review its partnership with Japan Wind, spokeswoman Makiko Iinuma said by phone yesterday.

‘Contradictory Explanations’

Japan Wind dismissed Ernst & Young ShinNihon LLC after the auditor rejected the findings of an internal investigation, according to the June 14 filing. Japan Wind had set up a committee of outside experts to look into three memoranda an employee wrote to clients undertaking to supply turbines and batteries without the company’s approval.

The committee found that the memos weren’t legally binding and didn’t pose inventory or procurement risks, according to the statement.

“Given changing and contradictory explanations, our doubts about the facts regarding the memos haven’t been resolved,” the auditor said in a statement sent to Japan Wind and released by the stock exchange June 16. “We repeatedly asked the company for explanations and to take appropriate measures, including reviewing its earnings” for the year ended March 2010, it said.

Japan Wind will set up a new committee of external experts to verify whether it took appropriate accounting measures, it said in a statement on June 28.

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