Schmolz+Bickenbach battle escalates on eve of capital increase vote

Swiss Steel Holding AG

01/12/2019 13:55

* Rival shareholders fight over Swiss steelmaker's future
    * Vekselberg vehicle accuses Swiss billionaire of sowing
panic
    * Shareholders meet on Dec. 2 for capital increase vote

    By John Miller
    ZURICH, Dec 1 (Reuters) - The fight for control of
Schmolz+Bickenbach  STLN.S  flared on Sunday, with Russian
oligarch Viktor Vekselberg's investment vehicle accusing a rival
shareholder of trying to increase its stake on the cheap via a
planned share issue.
    Schmolz+Bickenbach shareholders are due on Monday to decide
on a proposed issue of up to 614.25 million Swiss francs ($616
million) worth of shares, through which Swiss billionaire Martin
Haefner aims to raise his 17.5% stake to 37.5%. 
    The capital increase would be three times Schmolz's market
capitalisation and follows a previous rescue of the company just
six years ago.  urn:newsml:reuters.com:*:nL8N27R1GU
    Haefner contends failure of this latest capital increase
would likely lead to bankruptcy, as the 100-year-old steelmaker
faces a slump in demand from the German car industry.
 urn:newsml:reuters.com:*:nL8N28515P
    But Vekselberg's investment firm Liwet Holding, which owns
nearly 27% of Schmolz+Bickenbach, said in a letter received by
media outlets that Haefner aims to become the dominant
shareholder at a discount by sowing panic over the company's
future.  urn:newsml:reuters.com:*:nL8N2871WR
    "The more dramatically you describe the situation of
Schmolz+Bickenbach, the more favourable the takeover of control
will be, diluting and devastating other shareholders," Liwet
said in its letter addressed to Haefner.
    Haefner's Swiss investment company, BigPoint Holding AG, did
not immediately return a message seeking comment.
Schmolz+Bickenbach could not immediately be reached via email or
phone on Sunday.
    A representative of the Schmolz+Bickenbach founding family
in Germany that still owns about 10% of the shares and which has
 allied with Vekselberg in past campaigns also could not be
reached for comment.   
    Swiss newspaper SonntagsZeitung reported on Sunday that the
factions were in talks over a possible solution, citing people
close to Haefner. 
    In its letter, Liwet pledged to contribute "as much money as
necessary for the company to survive," provided the plan avoids
a change in control, and called for a review of "hidden
reserves," possible shareholder loans and disposal of non-core
assets to help keep Schmolz+Bickenbach afloat.
    "Unfortunately, Liwet has so far not received a transparent
explanation ... as to how large the liquidity requirement really
is," it said. 
    Vekselberg took his stake in Schmolz+Bickenbach in 2013,
during a previous crisis in which he allied with the founding
German family ahead of a 438 million franc capital injection. 
    Vekselberg owns 40% of Liwet, though his ability to
influence its Swiss holdings has been limited after he was
placed in 2018 under U.S. sanctions targeting Russian President
Vladimir Putin's inner circle following alleged Russian meddling
in 2016 U.S. elections. [https://reut.rs/2rEowhR
]

 (Reporting by John Miller; Editing by Mark Potter)
 ((J.Miller@thomsonreuters.com; +41 58 306 7734; Reuters
Messaging: j.miller.thomsonreuters.com@reuters.net))