Re: TUI/H-L Rivals step up combat before TUI annual meeting
Wed May 7, 2008 3:37am IST
By Arno Schuetze
FRANKFURT (Reuters) - Pressure mounted on TUI AG (TUIGn.DE: Quote, Profile, Research) on Tuesday to axe its supervisory board chief after Norwegian shipping tycoon John Fredriksen said he would not take a seat on the board if Juergen Krumnow did not quit.
"We don't want to work with a supervisory board that would continue the cronyism of (TUI Chief Executive Michael) Frenzel and Krumnow," said a spokesman for Fredriksen, who is TUI's biggest shareholder with an 11.7 percent stake.
TUI's biggest shareholders are at loggerheads with each other and management before Wednesday's annual meeting at Europe's biggest tourism group, whose Hapag-Lloyd unit is the world's fifth-largest container shipping company.
Another TUI shareholder, activist U.S. investor Guy Wyser-Pratte, who holds a 1 percent stake in TUI, told Reuters Frenzel and Krumnow should step down.
In an e-mailed response to questions, Wyser-Pratte said Frenzel had "accomplished nothing in 14 years except destruction of shareholder value of 25 percent, vis a vis a 256 percent increase in the (German blue-chip index) DAX."
"Everything he sold has tripled in value and everything he bought, he bought at the top. For all this 'superb performance', his salary has quadrupled. It is time for him to go."
Wyser-Pratte added that he did not "trust Frenzel to act in the interest of the shareholders. He and Krumnow never have. I expect them to attempt a 'politically soothing' solution at under fair market value" for the sale of Hapag-Lloyd.
TUI declined to comment on the shareholder criticism.
It denied, however, a Financial Times Deutschland report that it planned to use proceeds from selling Hapag-Lloyd to buy the rest of its TUI Travel (TT.L: Quote, Profile, Research) tourism unit.
"We see this as targeted speculation against TUI to unsettle investors before the annual meeting." TUI said in a statement.
"We remain committed to our statement to shareholders last week that shareholders will participate in an appropriate way in proceeds from the divestment process," it said, adding details could only be decided once the divestment was completed.
Under pressure from activist shareholders, Frenzel has abandoned his twin-pillar strategy of tourism and shipping and is seeking now to sell or spin off Hapag-Lloyd.
Fredriksen sees synergies of 300 million euros ($464.6 million) if Hapag-Lloyd's container shipping business merged with rival Neptune Orient Lines (NEPS.SI: Quote, Profile, Research), a spokesman for Fredriksen said.
The spokesman also said if Fredriksen lost a vote on the composition of TUI's supervisory board at the AGM, he would either sell his stake completely or build it up further to bring a new vote.
Fredriksen, Norway's richest man, and Russian steel tycoon Alexei Mordashov, the country's second-richest man, are also expected to tussle at the meeting on Wednesday.
Fredriksen wants two seats on TUI's supervisory board, but last week TUI appointed a Mordashov ally to its supervisory board, hampering Fredriksen's plans.
Mordashov, with 10 percent of TUI shares, supports Frenzel and wants to launch a strong tourism business in Russia and the Commonwealth of Independent States with TUI's help.
He and Spanish hotel group Riu, which owns about 5 percent of TUI shares, have said they do not support Fredriksen's ambition to win two seats on TUI's supervisory board.
(Reporting by Arno Schuetze; editing by Elaine Hardcastle)
