Schmolz Shareholders Approve Capital Increase, Vekselberg Board

Schmolz & Bickenbach AG (STLN) shareholders approved a capital increase and voted in delegates of Russian billionaire Viktor Vekselberg to give his Renova Group control of the Swiss steelmaker’s board.

The 438 million-franc ($481 million) capital increase, which was approved at an extraordinary general meeting in Emmenbruecke, will be used to stabilize the company’s finances and pay back debts. Schmolz said last month that it’s entire board was resigning to make way for Renova.

“The capital increase means more financial stability and the net debt situation is improved,” Martin Schreiber, an analyst at Zuercher Kantonalbank said by phone, adding that the new board members add both risk and opportunity for shareholders. “It’s unclear how the new board will work with the existing management team and support the current restructuring approach.”

Europe’s debt crisis has led to slumping demand for steel among carmakers and other customers which stretched Schmolz’s finances. Vekselberg’s control of the company marks the end of a period of uncertainty over the steelmaker’s ownership. Vekselberg is also, through Renova, the largest shareholder in Swiss pumpmaker Sulzer AG (SUN) and OC Oerlikon Corp. (OERL), a maker of textile machinery and physical vapor deposition coatings.

Shareholders approved the election to the board of former Oerlikon chairman Vladimir Kuznetsov, along with Marco Musetti, Hans Ziegler and Heinz Schumacher, independent board members Michael Buechter and Edwin Eichler, and Oliver Thum, the head of the founding family’s holding company.

Mandatory Offer

Renova said in June that it had become the largest shareholder in Schmolz and had formed an alliance with Schmolz + Bickenbach KG, which represents the founding family, to hold 40.5 percent of the company.

That triggered a mandatory takeover offer of the steelmaker which has outstanding bonds and loans worth 1.1 billion euros.

Schmolz’s formers board, headed by Chairman Hans Peter Zehnder, initially rejected Renova’s advances before announcing an agreement last month with Renova and the family founders to pass over control to avoid potentially damaging uncertainty among banks, suppliers and business partners.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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