The US parent company behind the hugely popular Candy Crush Saga mobile game has petitioned the High Court in Dublin to reduce its share capital by $6.8 billion to pave the way for it to pay a dividend to shareholders.
King Digital Entertainment plc, a company that floated in New York this year but is domiciled in Ireland, presented the petition to the High Court on June 10th. It is seeking to cancel the company's share premium, which arises from a reorganisation of its corporate structure around the time of its IPO.
No comment was available from King yesterday but it is understood this move is a technical one and designed to clear the way for the company to use its cash reserves to either pay a first dividend as a public company, purchase its own shares or possibly pursue acquisitions.
The $6.8 billion figure corresponds to the US entertainment company’s market capitalisation on the first day of trading. It had cash reserves of $678 million at the end of March.
The High Court is due to hear the petition on July 17th with Irish law firm William Fry representing King. In a legal notice published yesterday, any person intending to appear at the hearing has been asked to inform William Fry if they intend to support or oppose the petition by July 14th.
Irish-domiciled
King was originally incorporated in the UK in 2002 as Midasplayer.com Ltd. Four years later, it set up a holding company in Malta. On March 25th this year, King became the holding company, domiciled in Ireland, following a share swap with Midasplayer.
In its IPO prospectus, King said its registered office was located at Fitzwilton House in Dublin but gave a UK telephone number as a contact.
The document also stated that King’s ability to pay dividends on ordinary shares was limited by restrictions under Irish law.
“As a matter of Irish law, the ability to pay dividends will depend on the extent of any profits available for distribution . . . which require Irish companies to have profits available for distribution before they can pay dividends and, in the case of cash dividends, cash resources available for this purpose.”
