Veolia Backs CEO Following Reports Proglio Seeking New Chief
Veolia Environnement SA (VIE) Chief Executive Officer Antoine Frerot, seeking to restructure the utility by selling assets and cutting debt, was backed by his board following reports his predecessor was seeking a new chief.
The board of directors “reaffirms the relevance of the strategic plan adopted in December 2011 and renews its confidence in the CEO,” the company said today in a statement.
Les Echos newspaper and other media reported that former CEO Henri Proglio, who heads state-controlled Electricite de France SA and remains a Veolia director, tried to garner support among the board to replace Frerot with former Environment Minister Jean-Louis Borloo, and put the proposal to President Nicolas Sarkozy.
In December, Frerot announced plans to cut the dividend and sell assets worth 5 billion euros ($6.7 billion). The waste and water utility has lost about half its market value since July, when it said it would miss its 2011 net income growth target and take writedowns. The shares rose 2.09 percent to 9.185 euros today.
Veolia board member Augustin de Romanet, who is head of the Caisse des Depots et Consignations, resigned today before his mandate at CDC finishes on March 7, according to a spokesman for the state-owned bank. CDC will retain representation on the board, although it’s not decided who will take de Romanet’s place, he said.
“This chapter is closed,” Alain Minc, an adviser to Sarkozy, said two days ago in an interview on BFM radio when asked about governance at Veolia. “There have been shocks and I think now calm will return.”
Frerot’s restructuring plan is aimed at reducing debt as Veolia exits the mass-transit business to focus on water, waste and energy services. It marks the end of the global expansion started by Proglio, who became chairman and CEO of EDF in 2009 while remaining chairman of Veolia until December 2010.
Veolia will narrow its geographic reach to about 40 countries in a bid to lower debt to less than 12 billion euros by the end of 2013, Frerot said in December. Net financial debt was 15 billion euros at the end of September.
The asset sales will “drive a profound transformation of our company,” Frerot said Dec. 6 at an investor day to unveil details of the turnaround plan. “I am giving myself two years to carry it out.”
The board met today to discuss 2011 results, which will be announced tomorrow, when Frerot is scheduled to give a press conference and presentation to analysts.
“Lots of people will be listening closely to see what he will say about his future,” Atallah Estephan, an analyst at Macquarie Research in London, said by phone. “This is critical in determining whether the company will push ahead with disposals.”
Following asset sales, Veolia plans to focus on central and eastern Europe, China, France, waste operations in the U.K. and energy services in the U.S. The Paris-based utility proposed cutting the dividend to 70 euro cents a share in 2012 and 2013, compared with 1.21 euros for 2010.
“We are preparing the company for difficult times,” Frerot said at the investor day.
Other candidates for the CEO position included former Societe Generale (GLE) SA chief Daniel Bouton and Caisse des Depots et Consignations head Augustin de Romanet, both directors at Veolia, according to Les Echos.
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