Head Shareholders Wary of Sporting-Goods Company’s Rights Offer

Head NV, the maker of skis for Olympic champions Bode Miller and Lindsey Vonn, has provoked stockholder ire after threatening to dilute the value of its shares by as much as 92 percent.

Investors have until Feb. 18 to subscribe to a share increase worth “approximately 9.5 million euros” ($12.8 million) or risk seeing their stock’s value cut, Head said in a Feb. 11 announcement. Regulators are looking into possible market manipulation, Kurt Pribil, co-chairman of Austria’s financial-market regulator, said in an interview today.

“This is an attempt to extremely dilute other shareholders in something akin to a legalized raid,” said Wilhelm Rasinger, the head of Austria’s retail shareholders’ association. “This plan is appalling.”

Head, the world’s biggest maker of tennis balls and ski bindings, trades in Vienna and has its headquarters in Amsterdam. Chairman Johan Eliasch, who bought control of the company from Austria’s former tobacco monopoly in 1995, is entitled to buy any subscription rights not taken up by existing shareholders. Cash from the offer will be used to keep the business running, Head said in its announcement.

Eliasch “is proposing a highly dilutive rights issuance where the only person who’s going to benefit is himself,” Marco Elser, a partner at investment bank Advicorp Plc., said Feb. 15 by phone from Rome. Elser owns Head shares and would add to his holding if the offer didn’t prohibit him from doing so, he said.

Eliasch didn’t return calls to his office or his London mobile phone seeking comment.

Underwriting Agreement

Head entered into the underwriting agreement with Eliasch to ensure that the company sold all of the rights, company spokeswoman Clare Vincent said in an e-mail late yesterday. There are no plans to take the company private, she said.

Shareholders in possession of Head stock as of Feb. 10 can buy 2.27 new shares for every security they own. The 200 million new, preferred shares the company is issuing will be converted into ordinary shares within 10 years of being sold, according to the announcement.

“It is worrying,” said Massimo Baggiani, a portfolio manager for Banca Intermobiliare SpA in Turin, Italy, who owns Head shares. “The company should make sure the process of subscribing is assured.”

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