Swiss Steel shareholders pave the way for restructuring with capital increase
Published: Thursday, Apr 4th 2024, 19:00
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The cash-strapped steel group Swiss Steel can breathe a sigh of relief: the shareholders approved the planned capital increase by an overwhelming majority at the Extraordinary General Meeting on Thursday (today). The fresh money will be used to push ahead with the restructuring of the company.
Specifically, the shareholders voted "yes" with 99.79 percent. The shareholder resolution means that Swiss Steel can issue 3.1 billion new shares as planned. The event at the Swiss Steel plant in Emmenbrücke was attended by 132 shareholders, representing around 90 percent of the voting share capital.
The company aims to raise at least 300 million euros, the equivalent of around 295 million Swiss francs, with the capital increase. In order to achieve this, the company has concluded a currency hedge, as stated in a communiqué on Thursday evening. The gross proceeds will therefore amount to 286.8 million Swiss francs.
Equity melted away considerably
The money will be used to restructure the ailing group. This is urgently needed, as the company made a loss of almost 300 million francs in the previous year. As a result, its equity literally melted away. The equity ratio fell from 22% to around 12%.
Swiss Steel is suffering above all from the global weakness in the steel industry due to low demand. In addition, the group from Central Switzerland was recently unable to sell several loss-making steelworks in France as planned.
The stock markets responded positively to the acceptance of the capital increase. As a result, Swiss Steel shares closed trading up 8.5 percent at CHF 0.078.
Haefner sees company on course
Major shareholder Martin Haefner, who holds almost a third of the shares through his company Bigpoint, made a fiery plea at the Annual General Meeting for the capital increase and the future viability of Swiss Steel. The company is "not a bottomless pit", as one prominent shareholder put it. Rather, he considers the third capital increase since 2019 to be the last important step in making the restructuring and reorganization measures that have been initiated a success.
Haefner went on to say that "Swiss Steel is no longer the same company it was four years ago". It has changed from a rather randomly acquired general store to a company with a clear focus. In this context, he praised the management for overcoming the past crises.
Now, however, the management must also show whether it can manage the renewal of the company in addition to overcoming the crisis. "We will judge you on this, Mr. Koch," said Haefner, addressing Group CEO Frank Koch.
Haefner also emphasized once again that he intends to acquire all shares for which subscription rights have not been exercised as part of the capital increase. Nevertheless, he would welcome it if the other shareholders would also participate if they had a "chunk" or two to spare.
Even if Haefner exceeds the threshold of one third of the shares in the course of the capital increase, it does not have to submit a mandatory offer to the remaining shareholders as is usually the case. In this respect, the Swiss Takeover Board (TOB) has approved an opting-out clause for the restructuring.
Spuhler probably not going along
In contrast, the other major shareholder Peter Spuhler will probably pass. He currently holds around a fifth of the shares. According to media reports, he wants to sell these shares.
Spuhler's decision was preceded by a dispute with Haefner over changes to the Board of Directors. Spuhler had campaigned for his confidant Barend Fruithof as the new Chairman of the Board of Directors, but was unable to get his way. Shortly afterwards, Fruithof and Spuhler's representative Oliver Streuli therefore announced their immediate withdrawal from the supervisory body.
Adjustments to voting rights Board of Directors
At the Extraordinary General Meeting, shareholders also approved various amendments to the Articles of Association regarding the election of Board members. In future, a shareholder or shareholder group will only need 10 percent of the share capital to be able to nominate a person for the Board of Directors. Previously, the threshold was 17.5 percent. On the other hand, the passage that allowed the nomination of two Board members from a share capital share of 35% was deleted.
The adjustments were made as a shift in the majority structure is to be expected in the course of the capital increase. This is because successful refinancing requires the involvement of one or all of the main shareholders and their share of voting rights will increase accordingly. This will be the case for Haefner's Bigpoint stake in particular.
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