Hedge funds and Private Equity - PES

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226 2.3 Effects on job creation, investments in training and education of labour force, investments in innovation The comment of the Dutch labour union (FNV Bondgenoten) is as follows: “Centaurus and Paulson have imperceptible increased their shares in Stork. They were able to do that without publicity, because they bought their shares by means of sorts of Ltd.’s. As long as one Ltd. has no more than 5% of total shares in a company, you are not obliged to report your ownership to the authorities. By now, the hedge funds own rather 30% of the shares and use their shareholder power to have Stork splitted up. They want the divisions Food and Technological Services (Prints) to be sold; Stork should specialize on Aerospace. When this happens, FNV Bondgenoten fears that employment will disappear.” Moreover, Dutch labour unions investigate whether Dutch pension funds have shares in Paulson and Centaurus. The pension fund of the metal industry is not willing to sell of their investments in Paulson. 2.4 Corporate governance and economics On the shareholders’ meeting Centaurus and Paulson proposed a motion with the proposal to split up Stork within one year. This motion was supported by 86% of the shares present during the meeting, who represent 40% of total shareholders. Paulson and Centaurus own totally 32% of the shares. The firm Marel owns 8% of Stork-shares and supports the intentions of the hedge funds because Marel wants to buy the Food division. 52% of the shares was represented at the shareholders’ meeting. Therefore, 40% supported the motion, and 12% rejected. This means that 40 / 52 = 86% of the present shareholders at the meeting voted in favour of the splitting up. But in reality, probably only 40% of the shareholders supports the splitting up. 2.5 Management policies and shareholder activism: stock option programmes, effects on board and CEO’s, management fees, employee information. Stork asked for some time for reflection to think about the motion. But everyone knew that the board of directors does not see any prospect in the proposed splitting up. The board of directors indeed rejected the motion. As reaction to this, Paulson and Centaurus asked for a third extraordinary shareholders meeting in which they ask for two measures: 1) To abandon the confidence in the board of commissioners; 2) To have all spendings above 100 million euro approved of by the shareholders. In the meantime, the board of directors of Stork asked the law court of Amsterdam to start an investigation whether the hedge funds complied with the duty to report about their shareholdings. They may have been broken the law. On December 21 and January 17 witness hearings will take place. Also, the board of directors planned to use a so-called poisson pill: Stork would offer new shares to the ‘Stichting Stork’, a organization that has only one goal: protecting Stork from a violent bid. Stichting Stork would then have a majority vote on the shareholders meeting. Dutch judge president Willems of the Law Court decided the following to overcome the impasse: Stork is not allowed to emit new shares to Stichting Stork. The hedge funds are not allowed to send off the board of commissioners. Instead, the Law Court appointed three men to become
special members of the board of commissioners: former president of Akzo Kees van de Lede, former prime-minister Wim Kok and former cfo of Philips Dudley Eustace. They have to find a solution for the conflict. Both Stork and the hedgefunds were happy with this judgement. Also the labor unions were happy. On the one hand, a firm as Stork is not allowed to make use of some protection construction; this means more power to (hostile) shareholders. On the other hand, shareholders have to consider also the interests of employees. On this moment, the three special commissioners are doing their job. The final result is not known yet. In the meantime, Stork announced to do some small and big takeovers this year. Annex – 21 Case studies 227
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HEDGE FUNDS AND PRIVATE EQUITY A CR
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FOREWORD Since the 1980s the financ
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At the same time the PES Group took
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84.57 7 447.586 4789.4785 55 7845 4
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12 The need for long-term investmen
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14 1. Hedge funds and private equit
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16 In a very low interest-rate land
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18 The ECB has highlighted this cro
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20 in the sustainable development o
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22 Coherence, co-responsibility and
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24 Transparency in practise Some ar
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26 Ensuring more and better jobs An
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84.57 7 447.586 4789.4785 55 7845 4
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32 The first era of capitalism took
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34 1. Hedge funds In the following
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36 Hedge funds have a structure sim
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38 Hedge funds have flourished in a
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40 The European hedge fund industry
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42 Institutional investors Current
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44 - Funds of hedge funds (FOHFs) i
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46 If we assume US mutual fund indu
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48 the hedge funds themselves would
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50 management fees? It is a fact th
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52 These data notwithstanding, seve
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54 1.11. Tendency of crowding Despi
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56 Theory of money: “In modern ec
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58 Country France Italy Spain Subje
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60 Considering single strategy prod
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62 2. Private Equity Funds Private
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64 Buy-outs are typically majority
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66 2.3 The legal frame The investme
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68 What could you do with 72 billio
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70 And it highlights the comparativ
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72 The figures provide a substantia
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74 2.8 When targeting a company Whe
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76 Domicile of the fund The choice
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78 Specific economic function of Ve
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80 Mortgaging the future to capture
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82 Main conclusions: The total Euro
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84 3. The European response - curre
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86 Article 49 Within the framework
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88 The purpose of this Directive is
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90 As far as the hedge fund and Pri
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92 The following are regarded as se
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94 3. A Member State may entrust ma
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96 Article 93 The Council shall, ac
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98 Primarily, however, society must
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Social Europe versus capital market
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1. Economic viability of private co
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as a rule without any influence fro
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Here is a quite well known “flow
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2. Decent work and workers’ parti
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The pension funds of companies bein
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usiness plan for Kion to employee r
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The combination of increased indebt
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The EU has in the past tried to com
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3.1 The attractiveness of public ut
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fulfilment of public service respon
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The importance of Europe’s transi
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4. Employees, pension fund investme
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unit of Tremont Capital Management)
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contractual issues e.g. Lock-in per
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As many jurisdictions require benef
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Expert Group claims - with striking
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The rising number of hedge funds ap
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time peak in 2005.” It is importa
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Box 2: The Amaranth case (2006) In
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gies, size and age. For instance, i
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Box 3: Complex leverage arrangement
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force a hedge fund to default on it
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Private equity - especially in the
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finance infrastructure through long
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154 But if we in Europe - and hopef
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156 2. Market transparency - a comm
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158 Considering the fact that a lar
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160 Furthermore investment banks ar
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162 3.3 Transparency and supervisio
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164 Recently in most European count
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166 The European Commission should
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168 The EC should also create a fra
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170 4. Private Equity Funds - focus
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172 to create incentives for longer
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174 policy are not being met. This
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Page 189 and 190: AA 1. Company description The Autom
Page 191 and 192: Autoteile Unger 1. Company descript
Page 193 and 194: Bulgarian Telecommunications Compan
Page 195 and 196: Deutsche Börse 1. Company descript
Page 197 and 198: DIS 1. Company description The DIS
Page 199 and 200: DT-Group 1. Company description DT
Page 201 and 202: share alternative. At that time the
Page 203 and 204: Frans Bonhomme 1. Company descripti
Page 205 and 206: Friedrich Grohe AG 1. Company descr
Page 207 and 208: their relations with TPG and CSFB a
Page 209 and 210: Gate Gourmet 1. Company description
Page 211 and 212: ISS Denmark 1. Company description
Page 213 and 214: 2.2 Debt structure, alteration of c
Page 215 and 216: References Süddeutsche Zeitung 09.
Page 217 and 218: 2.3 Management policies and shareho
Page 219 and 220: would have unlocked hidden reserves
Page 221 and 222: Peguform 1. Company description The
Page 223 and 224: Picard 1. Company description Picar
Page 225: Stork 1. Company description The in
Page 229 and 230: EUR 5.1 billion private equity fund
Page 231 and 232: Telecom Italia Group 1. Company des
Page 233 and 234: 2.3 Management policies and shareho
Page 235 and 236: from the tourism business, which is
Page 237 and 238: The consequences for jobs in Hambur
Page 239 and 240: 2.4 Corporate governance and econom
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Page 244 and 245: 244 Bond A debt investment with whi
Page 246 and 247: 246 Investment vehicle This term is
Page 248: 248 of a security borrowed by the s
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