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Technology Stocks : Ericsson overlook? -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (5145)	3/6/2003 4:26:07 AM
From: elmatador	Read Replies (1) \| Respond to of 5390

Group's investors fail to agree on shake-up By Christopher Brown-Humes in Stockholm Financial Times; Mar 04, 2003 Ericsson said yesterday that its shareholders had failed to agree on how to shake up the company's anachronistic shareholding structure before next month's annual meeting. The announcement is a setback for the Swedish maker of mobile phone equipment, as intensive discussions over the past nine months represent only the latest attempt to resolve an issue that has run for years. Ericsson's A shares carry 1000 times the votes of B shares, an anomaly even in Sweden where different share classes are common. The arrangement has long antagonised other shareholders, who used their negotiating power last year, when Ericsson was seeking to raise SKr30bn ($3.5bn) from its shareholders, to try and achieve change. A working group, set up last May under Michael Treschow, Ericsson chairman, aimed to cut the voting differential to 10:1, while compensating A shareholders for their loss of power. It would still leave effective control with the two main A shareholders - Investor, the holding company for the Wallenberg family, and Industrivärden, a holding company linked to Svenska Handelsbanken. The working group, consisting entirely of Swedish shareholders, has agreed in principle that compensation will be paid, and the mechanism is likely to involve an issue of options to A shareholders. But the amount of compensation has still to be agreed, and legal and tax questions remain to be clarified. Shareholders want to be confident that any agreement can withstand a legal challenge. The aim was to reach agreement before the annual meeting on April 8. Anders Nyren, chief executive of Industrivärden, said: "There are many outstanding issues, the two most important being the ultimate level of compensation to A shareholders and legal issues." Discussions will continue. International investors, who control 38.9 per cent of Ericsson's capital, have not been directly involved in the discussions. However, the issue of compensating A shareholders is controversial given Ericsson's disastrous performance over the past three years, when its share price has fallen by more than 95 per cent and its losses in 2001 and 2002 exceeded $5bn. Some observers feel a system of one share, one vote, and no compensation for A shareholders, would be fairer.