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Steelmaker Corus abandons sale
AMSTERDAM, Netherlands (Reuters) -- Anglo-Dutch steel group Corus abandoned the sale of aluminium assets to France's Pechiney on Thursday after a Netherlands court upheld a veto from the firm's Dutch supervisory board. The commercial court of appeal in Amsterdam said Corus's Dutch supervisory board, which blocked the sale earlier this week, had the right to do so. It threw out claims from Corus management that the Dutch custodians had acted irresponsibly. The decision sent Corus penny-stock shares and bonds reeling again and dealt a severe blow to management at the firm, formed from a 1999 merger between British Steel and Hoogovens. Analysts say blocking the deal could lead to extra job cuts on top of 12,000 already announced -- 10,000 of them in Britain -- as the company struggles to stem losses and pay off debt. Corus in London said it regarded the court's decision as final and would abandon the 750 million euros deal it announced last October, paying Pechiney 20 million euros in compensation. It said it would offer Pechiney exclusive negotiating rights until October 23. But Corus supervisory board rebels gave no sign that they would back down over the aluminium assets, with their chairman Leo Berndsen telling reporters he would ask the group's London management to explain what the reference to further talks meant. Pechiney said it was studying the situation. Seeking to draw a line under the internal row, the Dutch supervisory panel backtracked from earlier suggestions that the Anglo-Dutch steelmaker could be broken up. "That has never been our aim," Berndsen said, asked about Wednesday's court testimony in which the company's Dutch custodians had said it would be possible to reverse the merger between British Steel and Hoogovens. "We want to limit ourselves for now to talking about the ruling and not speculate about the future," he told a news conference in Amsterdam. Back to the drawing boardCorus shares fell by a third in London to 4.11 pence after losing more than half their value earlier in the week. A Corus 5.375-percent "junk"-rated bond due in 2006 fell by 10 points to just 36 percent of its face value. Traders said the fall suggested bond investors were beginning to worry about whether they would ever be repaid on their original investment. "It stymies the main board's plans, and from that perspective they clearly need to go back to the drawing board in terms of trying to take the company forwards," said BNP Paribas analyst Charles Kernot. "It raises questions clearly over how much longer the company can sustain its losses within the UK and whether or not it will be able to cover the costs of the restructuring it clearly indicated it needs to take." Under Dutch law, the supervisory board has the final say on Corus's Dutch operations. The panel opposed the sale of profitable operations in the Netherlands to combat losses mainly in Britain and backed workers' calls to throw out the deal. Corus accused the supervisory board of acting irresponsibly. It asked a Dutch commercial appeals judge to overrule the veto and even suggested suspending the supervisory board's three Dutch members for a day to allow the last remaining British member to alter course. "The court does not agree that the supervisory board has acted in an irresponsible way ... I'm not convinced that they only acted in the interests of the Dutch operations," the Dutch judge Huub Willems said in his ruling. Britain's ISTC steel union urged Corus Chairman Sir Brian Moffat to resign, saying he had lost the trust of Dutch management. But it opposed any talk of a breakup, saying it was not in the interests of the British or Dutch workforce. But Dutch unions believe they are tied to a sinking ship and want the local operation to break away from its British partner. "The supervisory board and the management must do their work but there is now a real war between the two camps," a trade union official told Dutch news agency ANP. Corus is due to announce its results on Friday after postponing them to make way for the Dutch court ruling. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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