KGHM to Pay 1.96 Billion Zloty Dividend on State Demands

KGHM Polska Miedz SA shareholders approved paying out 1.96 billion zloty ($616.7 million) in dividends, higher than proposed by the management, as the government looks for ways to cut the widening budget deficit.

Shareholders approved a motion by the Treasury Ministry, the controlling shareholder, to pay out 9.8 zloty a share, compared with management’s proposal of 1.6 billion zloty, or 8 zloty a share, Shares fell 4 percent as the dividend was the lowest approved in three years. The government proposed paying the dividend in two parts.

Poland’s Cabinet may raise more in dividends from state-controlled companies than the planned 5 billion zloty, Deputy Treasury Minister Pawel Tamborski told PAP newswire this month. As Poland faces the slowest economic growth in more than a decade this year, its budget deficit stood at 87 percent of the annual target at the end May as tax revenue decelerated.

“It’s quite a good compromise between the ability to secure the future of the company and expectations of the owner” said Chief Executive Officer Herbert Wirth at the shareholder meeting in Lubin, southern Poland.

The decision on a higher dividend is in line with the government’s previous policy. KGHM paid a record dividend of 28.34 zloty a share last year, accounting for 23 percent of all budget revenue from payouts by publicly owned companies. The government approved management’s proposal for the size of a dividend only once in the last eight years.

Before KGHM, the ministry decided on higher dividends at utilities Tauron Polska Energia SA and Energa SA, fertilizer maker Grupa Azoty and gas company Polskie Gornictwo Naftowe i Gazownictwo SA.

PGE SA, PKO Bank Polski SA, PKN Orlen SA and Grupa Lotos SA still have to decide on payouts by the end of the month.

The dividend may push KGHM to debt markets for the first time in a decade. The approved dividend means the company would have to raise a similar amount in debt to finance the dividend and unrelated investments, Wirth said today.

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