Kvaerner Ousts Chief as Debt Pile Grows News Analysis: Anglo-Norwegian Engineering and Shipping Group Plans Massive Disposal Programme
Harrison, Michael, The Independent (London, England)
KVAERNER, the Anglo-Norwegian engineering and shipbuilding group, yesterday ousted its chief executive with a pounds 1.8m pay-off and said it planned to accelerate the disposal of unwanted businesses.
Erik Tonseth, who joined the group in 1988 and became chief executive two years later, has been forced out after presiding over a 75 per cent plunge in the share price and failing to reduce Kvaerner's pounds 1bn debt mountain fast enough.
He was paid pounds 586,000 a year and was on a three-year contract which the group confirmed would be met in full. Mr Tonseth's successor is tipped to be Kjell Almskog, the head of ABB's oil, gas and petrochemicals division. Mr Tonseth was the architect of a hugely ambitious expansion programme, which culminated in the pounds 904m acquisition of Trafalgar House in February 1996. But the strategy began to fall apart as several of Kvaerner's businesses, notably its Norwegian oil and gas business and pulp and packaging operations, ran into trouble and the group could not offload businesses fast enough. The shares reached a peak of NOK480 in August last year but have since slumped to 114 crowns, having been as low as 70 crowns at one point, reducing Kvaerner's value from pounds 1.5bn to pounds 400m. Although it has disposed of assets worth NOK15bn since the Trafalgar takeover, it still has debts of NOK12bn and has been forced to issue denials that it is facing a liquidity crisis. The Kvaerner chairman Christian Bjelland, who has taken over temporarily as chief executive, denied yesterday that it had been forced to act by irate investors: "The decision was taken by the board, not as a result of any pressure brought to bear by shareholders." But one large shareholder made plain his unhappiness, saying: "Tonseth took some big bets with our money and these have not all paid off so it was inevitable he would go." Mr Bjelland said the group, which has its headquarters in London's St James, would now concentrate on shrinking the business, not expanding it. The biggest business so far disposed of is the Cunard cruise line, which Kvaerner inherited as part of the Trafalgar takeover and sold to carnival of the US in April this year for $500m. Some fish processing, paper and property businesses have also been sold. Among the non-core businesses being lined up for sale are Trafalgar House Residential, its US housebuilding division, a plastics machinery business, also in the US, and a ship equipment division based in Singapore. The company has also earmarked properties in Oslo and London for disposal and has agreed a conditional sale of its development site at the Baltic Exchange in the City. But other businesses, including its cargo airline, Heavylift, are also likely to be sold off. Mr Bjelland also announced a review of the group's three core businesses, engineering and construction, oil and gas and shipbuilding, which could result in further disposals. He declined to say how many of Kvaerner's UK businesses could be affected or how many jobs could be involved. …