Norwegian investor Christen Sveaas had come down hard on fellow tycoon Kjell Inge Røkke over the recent refinancing deal of offshore shipping company Solstad Offshore.
Sveaas’ investment vehicle Kistefos is demanding an extraordinary general meeting to consider lawsuits against the board of Solstad Offshore, and chairmen and general managers of the Kjell Inge Røkke-controlled Aker Capital and AMSC for discriminatory treatment of shareholders.
Solstad Offshore struck a refinancing deal for its fleet of NOK9.7bn ($879.5m) worth of loans with Aker, AMSC, DNB and Eksfin in October. As a result, Solstad NewCo is being set up in which NOK4bn of new equity will be raised, with Aker contributing at least NOK2.25bn and guaranteeing a further NOK750m, while Aker-dominated AMSC, will contribute the owning entity for the CSV Normand Maximus in exchange for NOK1bn of new shares in Solstad NewCo.
The transaction gives Aker, together with the Røkke group, about 60% of the new Solstad, where 35 of Solstad Offshore’s 43 ships will be transferred. The existing Solstad Offshore will retain around 27% ownership of the new company, while its existing shareholders, excluding Aker, will receive subscription rights to participate in the NOK750m private placement of new shares, corresponding to around 13.6% stake.
“This is one of the wildest transactions we have seen on the Oslo Stock Exchange. The restructuring plan involves gross discrimination of shareholders and enriches Aker at the expense of the shareholder community. Kistefos believes the restructuring plan is a breach of integrity and morality and a clear breach of normal market practice. Those responsible for the plan must replace this. Kistefos wants to find a solution that treats all shareholders equally, something the current board has emphatically demonstrated that they do not do,” said Sveaas, chairman of Kistefos. (translated from Norwegian).
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Kistefos currently, directly and indirectly, owns nearly 16.2% of the shares in Solstad Offshore and wants other shareholders to consider a compensation lawsuit against those responsible for the restructuring plan.
The company claimed that Aker, together with AMSC, would increase its shareholding from 22.9% in Solstad Offshore to at least 65.3% of Solstad NewCo, where the largest assets in today’s Solstad Offshore will end up.
Kistefos said that under equal treatment, the other shareholders should have had the opportunity to subscribe for 77.1% of the issue of NOK4bn, considering the current Aker group’s holding is Solstad Offshore, instead of the 13.6% stake, noting that Aker would also take full control over what are today the biggest assets in Solstad Offshore by electing all the board members in the new company.
“Aker will triple its shareholding and upside potential at the expense of Solstad Offshore and its other shareholders. We perceive this as a gross breach of the management’s and the board’s duty to properly manage Solstad’s values and to look after all the company’s interests and treat the shareholders equally,” noted Bengt Rem, chief executive of Kistefos, adding: “We have not received any explanation as to why Aker chose to refinance the debt in the back room, instead of talking to other shareholders. Kistefos and other large shareholders have repeatedly approached to contribute to refinancing solutions, but have been flatly rejected.”
Sveaas investment firm, which amongst other companies owns Western Bulk and Viking Supply Ships, stressed that the remaining Solstad Offshore, with seven AHTS and CSV vessels and 50% ownership in the Normand Installer vessel, “appears to have been deprived of the most important part of its business, without satisfactory compensation being provided” and that the move should have major negative business and market effects for the company, beyond the transfer of value to Aker.
“It is a disgrace for Oslo Børs and Norway as an investment country that a dominant player such as Aker is allowed to discriminate against and mistreat fellow shareholders. We do not understand why the board of Solstad has allowed itself to be misled by Aker to mistreat shareholders through such a dirty transaction,” added Sveaas.
Other minority shareholders, including Bjarte Brønmo, who was also involved in the DOF restructuring drama have reacted to Solstad’s scheme. Brønmo wrote to the Financial Supervisory Authority of Norway – Finanstilsynet, earlier this year, complaining that the refinancing in Solstad Offshore only favors Røkke-owned Aker.