J-Power said Tuesday its auditors won't sue the company's board for ¥6 billion to compensate the utility for lower profits, as demanded by U.K. hedge fund TCI.
"The decision was made based on the result of our internal investigation and is the consensus among auditors," Electric Power Development Co., the official name of J-Power, said in a statement.
The Children's Investment Fund Management (UK) LLP called last month on the independent auditors to probe the 13 board members. The $10 billion hedge fund accused the board of failing in its responsibility to shareholders when it carried out what TCI claims were improper price cuts.
J-Power in September trimmed contract prices by an average of 4 percent for hydroelectricity to the nine regional power utilities, including Tokyo Electric Power Co. J-Power posted a 34 percent decline in operating profit to ¥50.7 billion in the year that ended March 31 from a year earlier, and a 17 percent fall in net income to ¥29.3 billion.
"We made proper price adjustments," J-Power said. "Hydropower price cuts were carried out, reflecting a decline in our finance and sales expenses."
TCI and J-Power are locked in a proxy battle over investor returns and corporate management. The contest will be decided at the annual general meeting in Tokyo on Thursday when shareholders vote on eight agenda items, including five proposed by TCI.