Replies to post #6608 on Arcam AB fka AMAVF

[charlie T colton]

CITY OF RIVIERA BEACH POLICE PENSION FUND

It'll be interesting to see how this plays out. This might be one of GE's "non-operational headwinds". I wonder how many others are out there.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE - CITY OF RIVIERA BEACH POLICE PENSION FUND, Plaintiff, v. W. GEOFFREY BEATTIE, GREGORY BRENNEMAN, CLARENCE P. CAZALOT, JR., MARTIN S. CRAIGHEAD, LYNN L. ELSENHANS, JAMIE S. MILLER, JAMES J. MULVA, JOHN G. RICE, LORENZO SIMONELLI, and GENERAL ELECTRIC COMPANY, Defendants, -andBAKER HUGHES, A GE COMPANY, Nominal Defendant

INTRODUCTION

1. This case arises from exploitation of a controlled company to address the controller’s desperate need for liquidity.

2. GE controls Baker Hughes. GE holds a majority of the Company’s voting power and five of the nine members of the Baker Hughes Board are current and/or former GE executives, GE directors or employees of GE-controlled companies.

3. GE is in the midst of a highly-publicized multi-year crisis. GE’s stock price plunged approximately 60% in 2018, GE stock was removed from the Dow Jones Industrial Average and the conglomerate is scrambling to sell assets to address
its liquidity problems. However, pursuant to a stockholders agreement (the “Stockholders Agreement”) entered into in connection with the 2017 merger of GE and the Company’s predecessor (the “Merger”), GE was contractually prohibited
from selling any of its Baker Hughes stock until July 3, 2019 (the “Lockup Period”).

4. On November 13, 2018, the Baker Hughes Board agreed to terminate the Lockup Period (the “Termination”) and to, among other things, (a) repurchase $1.5 billion in Baker Hughes stock from GE (the “Repurchase”) and (b) permit GE to sell $2.5 billion in Baker Hughes stock through a secondary offering (the “Offering”). At the same time, Baker Hughes and GE also entered into a series of other agreements and amendments that will govern the relationship between the two
companies going forward (collectively, the “Master Agreement Framework,” and together with the Termination, Repurchase and Offering, the “Transactions”).

5. Through the Transactions, GE was able to immediately terminate the Lockup Period, sell a large amount of Baker Hughes stock at undiscounted prices, obtain more than $4 billion in immediate and much-needed liquidity, and yet still
maintain control over the Company. Baker Hughes, on the other hand, was forced to expend more than $1.5 billion in Company cash to help solve GE’s problems, allow GE to flood the market with Baker Hughes stock, and restructure its arrangements with GE in ways that are even more unfavorable to the Company.

6. As BMO Capital Markets (“BMO”) aptly explained in a November 13, 2018 report, it “expected GE to offer a ‘sweetener’ to escape its 7/19 lockup early, but the sweetener seems to be extended commercial arrangements at worse terms.” (Emphasis added). BMO also noted that the revision to the commercial arrangements between Baker Hughes and GE will cost the Company approximately $75 million per year.

7. The one-sided terms of the Transactions demonstrate that far from seeking to use GE’s looming crisis as a negotiating tool for the Company’s benefit, Baker Hughes instead permitted GE to use its influence and control to handcraft a series of transactions designed to quickly funnel much-needed cash and other benefits to GE at the direct expense of the Company.

8. Plaintiff brings this action to remedy the harm incurred by Baker Hughes as a result of GE’s and the Board’s breaches of fiduciary duty in connection with the Transactions.

I feel their pain.


Executive Profile* - Göran Sture Malm

2014-Present
Chairman of the Board
Arcam AB (publ)

......... Mr. Malm also served as the Senior Vice President of General Electric Company (GE) and President of General Electric Asia-Pacific from 1997 to 1999 responsible for all of GE's business in the Asia Pacific region; since 1992, he served as the President and Chief Executive Officer of GE Medical System Asia and since 1971, he was with SKF Group in Sweden. He has been the Chairman and Director of Arcam AB since March 2014........



EON REALITY APPOINTS NEW CHAIRMAN OF THE BOARD: GÖRAN MALM, A FORMER PRESIDENT OF GENERAL ELECTRIC ASIA PACIFIC - IRVINE, CA, July 19th, 2017

Mr. Malm doesn't get any recognition for being Arcam's Chairman of the Board of Directors here.

From 1997 to 1999, Malm was Senior Vice President of General Electric (GE) Company and President of General Electric Asia Pacific with the base in Hong Kong, where he was regionally responsible for the company’s 11 business units totaling US $10 billion in Revenue with 40,000 employees.

Between 1992 and 1997 Malm held position of President and CEO of GE Medical Systems Asia and Vice President of General Electric (GE) Company. In this position he developed the organization into a fully integrated region-wide business, growing revenues to US $1 billion and earnings to US $100 mill with 4,000 employees.

Executive Profile - Anna Malm Bernsten

..... She served as the Chief Marketing Officer of GE Healthcare Life Sciences...........

....... She served as a Director of Arcam AB since March 23, 2015. Ms. Bernsten holds a B.Sc (Eng.). She holds a Master of Science in Chemical Engineering from KTH in Stockholm.

An earlier post here - A Tale of Two Boards

Arcam/GE has broken some of the links indicated within the post. This is the Board of Directors prior to the squeeze-out.

ARCAM - The Board

Göran Malm
Chairman since 2014.
Master’s degree in business administration and economics, has previously had top management positions within SKF, General Electric and Dell, i.e. as President General Electric Asia-Pacific and President Dell Computer Corporation Asia-Pacific.
Other former Board of Director assignments; Samsung Electronics, Envac and Micronic Laser Systems.

Lars Bergström
Board member since 2006.
President of Seco Tools AB in Sweden.
M.Sc. and MBA at KTH in Stockholm.

Vandana Sriram
Board member since 2017.
Global Business Controller at GE Aviation, Cincinnati, USA.
Studies at Dehli University in finance, accounting and economics.

Riccardo Procacci
Board member since 2017.
CEO at Avio Aero s.r.l – a GE Aviation business in Italy.
Ms.D. and Ph.D at Sapienza Università di Roma.

Carlos Haertel
Board member since 2017.
CEO at GE Germany and Austria.

General Electric Company 1997 Annual Report