Hedge funds and Private Equity - PES

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Restructurings at the expense of employees were part of the sale agreements. In the first round,
500 jobs were eliminated. A second wave of layoffs will soon take place. However, the employees
do not blame the job cutback only on the financial investor. Rather they are to a greater extent
economically determined by a slump in sales among the auto manufacturers. For that reason
there is a fundamental understanding of the need to back jobs.
2.3 Corporate governance and economics
Since the entry of Cerberus there have as yet been no major changes in the finance structure.
Investments have been carried out according to plan. However, Peguform invest cyclically. Major
investments are only made when there are new orders. At present, the situation is assured until
the end of 2007. Developing new products takes approximately one to two years and Peguform
is unsaleable without assured orders. Only in the case of new orders, major investments would
be made again in 2007.
While Venture Industries was considered to be geared to the market, Cerberus’ attitude seems
to be geared to finance. Cerberus appointed two managers sent from headquarters in New York.
The chairman of the Supervisory Board, also a Cerberus representative, has been very active. The
two managers were characterized as his agents. The investor was said to have expertise on the
industry when it comes to production, but not as regards marketing. Employees are observing
with increase unease that no progress is being made with new products (auto models).
With the entry of Cerberus, the representatives on the Supervisory Board were replaced. All the
members representing the owners now came from the entourage of the financial investor.
Through the chairman of the Supervisory Board they influence the company management. The
situation as regards information and communication in the Supervisory Board is described as
unchanged and good. When the company was sold to Cerberus, the works council and the
union were present at the table. The economic committee continues to have access to internal
reporting. The data are also evaluated centrally the committee.
2.4 Management policies and shareholder activism:
stock option programmes, effects on board and CEO’s,
management fees, employee information
In the Supervisory Board and the works council there have been cultivated a culture of consensus
which have stood the test of time. This is based on the understanding that the Peguform
plants should not be played off against each other. Problems at individual plans have been and
are quickly discussed at the company-wide level. The prevailing belief is that problems of
profitability at individual locations must be solved together by all plants.
3. LBO exit (secondary, LBO, listing)
Despite the good information situation, the various bodies are unclear about the goals, strategies
and long-term plans of the financial investor. Only general information has hitherto been
available. No precise exit is known. Sale on the stock market is a part of the deliberations on exit,
but there are no concrete plans or information concerning that. With Cerberus, Peguform should
become a successful company in the long term, whose yield and market share should increase.
This has so far been true of the yield.