December 2, 2019 / 5:55 PM / 7 days ago

Rival Schmolz+Bickenbach shareholders agree to capital increase

ZURICH, Dec 2 (Reuters) - Rival Schmolz+Bickenbach shareholders agreed to terms of a rescue plan on Monday, helping conclude a weeks-long power struggle over control of the money-losing Swiss steelmaker.

Liwet, the investment firm linked to Russian oligarch Viktor Vekselberg that owns nearly 27% of Schmolz+Bickenbach, and Martin Haefner, a Swiss billionaire with a 17.5% stake, reached a pact over how to proceed with a capital increase of at least 325 million Swiss francs ($325.9 million), the company said.

The agreement came as shareholders held an extraordinary general meeting in Lucerne to consider how to inject more money into the company that makes precision, acid- and heat-resistant steel.

The two big shareholders agreed that Haefner’s stake would not exceed 37.5% following the capital increase, while Liwet would have a 25% stake, Haefner’s BigPoint Holding said.

Schmolz+Bickenbach said it would provide more information on the capital increase once Swiss financial markets supervisor FINMA has published its decision on whether to suspend a rule that would force a full takeover offer if a shareholder’s stake exceeds 33.3%. FINMA’s decision is expected on Dec. 9.

Liwet and BigPoint said they hoped FINMA would grant them an exception to allow the capital increase.

The Swiss Takeover Commission has already rejected granting an exemption, but Liwet and BigPoint have appealed.

Until Monday’s pact, the two dominant shareholders were at odds over a way forward, with Haefner, a car dealership owner, warning the company faced imminent insolvency and Vekselberg’s Liwet accusing him of raising panic so he could take control on the cheap.

This marks 100-year-old Schmolz+Bickenbach’s second existential crisis since 2013, when Vekselberg joined its founding German family to help rescue the company.

Its latest problems, Schmolz has said, have deepened as trade conflicts and global political uncertainty led to a sharp downturn in steel demand, including among key customers such as the German car industry.

Schmolz+Bickenbach, seen posting its fourth loss in five years in 2019, is struggling under a growing debt pile — net debt totals 723 million euros ($797 million), or more than eight times expected operating profit — after buying troubled French steelmaker Ascometal last year.

($1 = 0.9073 euros)

$1 = 0.9972 Swiss francs Reporting by John Miller and Silke Koltrowitz. Editing by Michael Shields

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