Doğan shares slide further following hefty tax fine
Posted by meb at September 10th, 2009
Shares in Doğan Yayın Holding, the media subsidiary of the Doğan Group, fell 10 percent on Wednesday in the first trading session of the İstanbul Stock Exchange (İMKB), following Tuesday’s 20 percent decline on news of a $2.53 billion fine.
Investors are now jumping ship from the media mogul for a second straight day after it was hit with a record fine for unpaid taxes. Doğan Yayın traded down 10.7 percent at TL 1.17. Hürriyet Gazetecilik shares tumbled 10.4 percent while Doğan Holding shares plummeted by 8.3 percent. The main share index was off 1 percent.
Doğan Yayın Holding, the Doğan Group’s publication wing, which runs newspapers such as Hürriyet and Milliyet, numerous magazines and TV stations, was hit by a TL 3.76 billion ($2.53 billion) fine on Tuesday. The Finance Ministry said they levied the fine on the company for evading taxes during a time period covering 2005, 2006 and 2007.
It was the second major fine this year for Doğan Yayın, which controls more than half of the non-state media market. The sum, which Doğan said it would appeal against, is just under the $2.67 billion combined market value of the firm and its parent company, raising concerns about the impact on the group’s finances. Doğan Yayın will need to raise collateral during the long appeal process, something it found difficult when it appealed a separate $500 million fine in February.
When asked about the tax fine on Doğan, Foreign Minister Ahmet Davutoğlu said on Wednesday in Ankara that this was a routine legal process, declining to make further comments. Earlier this year, Erdoğan rejected accusations that he influenced a tax probe into Doğan.
“Billions of dollars in fines cannot be explained with any tax law. It is very clear that this is aimed at intimidating Doğan,” Deniz Baykal, leader of the main opposition Republican People’s Party (CHP), told a news conference in Ankara on Wednesday.
“The uncertainty will continue for Doğan Group shares as the legal process will last for many months. In the short term, the key event to watch is whether the tax office will request further collateral,” Ekspres Invest said in a research note. An analyst at a major Turkish investment bank who declined to be named said Doğan will be able to overcome this latest challenge but will have difficulty raising collateral if the ministry demands a full payment.
source: Today’s Zaman
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