Industry Updates

Laxey finally gives up most of stake in troubled Swissmetal

Thursday, December 29, 2011

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Opalesque Industry Update - We heard in July 2011 that British activist hedge fund Laxey Partners Ltd had rejected a financing plan for Swissmetal (see article here). The troubled manufacturer of copper products saw its shares tumble and was then trying to find a white knight. Laxey, which owned 29% of the group this summer, rejected the proposed plan without explaining why.

According to various reports in the Swiss press, it was announced yesterday at SIX Swiss Exchange that the hedge fund had got rid of most of its shares in Swissmetal, which fell by 20% at closing time to the value of CHF1.15. Those shares had apparently lost 80% of their value since the beginning of the year.

The hedge fund, which had already reduced its stake to 24% by December, had been trying to offload it for several months, reported Romandie.com. So when the Swiss-based metallurgic group announced last week that it had received several takeover offers (without supplying any names), the share price thus went up a bit – to CHF1.90 (by CHF0.41), and Laxey took this window of opportunity to divest.

According to Swiss daily Le Temps, the Isle of Man-based fund became a shareholder in 2005 when shares cost between CHF15 and CHF20. It lost tens of millions of Swiss francs from this investment. Laxey also lost from an investment in a Swiss retailer called Charles Vögel in which the fund acquired a 10% stake in 2007 at CHF100 a piece. Another Swiss investment in a construction company called Implenia, however, was more beneficial, due to options which protected against down markets. But Laxey’s best Swiss investment was in Oerlikon Saurer, a textile machinery producer, where the fund took advantage of rumours to make a 40% profit.

Laxey now owns less than 3% of Swissmetal, reports RFJ.ch today. And the new shareholders have not yet been identified, says Le Temps.

The fund had put German-born Martin Hellweg at the head of the Swissmetal this summer (he had already run the group between 2003 and 2009), who may not hang around.
B. Gravrand

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