Decision on Elisa split postponed until late January

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A decision on moves to split the telecommunications service provider Elisa into two parts is to be postponed by about a month. The company's Board of Directors announced on Wednesday that the extraordinary shareholders' meeting on the matter will be convened on January 21st.
      Pekka Ketonen, Chairman of the Board of Elisa denies suggestions that the delay would be an attempt by the board to counter moves by a major shareholder to push through the proposed changes.
     "Numerous shareholders expressed concern that a shortly before Christmas would not be a good time to hold a meeting, as people have other commitments. They asked for a postponement, and we felt that the request was a reasonable one.
     On Thursday last week, Elisa announced that a shareholders' meeting would be convened on December 18th. Icelandic investor Thor Björgólfsson and other shareholders will be getting more time to come to a decision, and to persuade others.
      A lobbying effort is expected,any.
     Novator is the largest owner of as Elisa's ownership is very dispersed, and no clear front lines have been established in the issue.
     Novator, a company owned by Thor, called for a reshuffle on the Elisa board, and for splitting the company into two separate parts. In his vision, a separate holding company would deal with international growth issues, and would be responsible for major strategic decisions.
     The present Elisa, which mainly focuses on telecommunications services in Finland, would be a subsidiary of this company. The change would increase the power of the board of the owner company, which would be entitled to sell the subsidiary Elisa on its own without the authorisation of a shareholders' meeting.
     The Elisa Board of Directors said already last week that it opposes splitting up the company. On Wednesday it reiterated its view, in a somewhat longer statement.
     "In acquiring their shares, Elisa's owners have chosen that the telecommunications branch is the field in whose development they want to be involved in. The new parent company would have such a broad scope that it might do almost anything", Ketonen explains.
     
Relinquishing decision-making power to the Board of Directors in the manner put forward by Thor "is not fair from the point of view of all shareholders", Ketonen says.
     The Elisa Board also rejects criticism that Elisa has not been sufficiently active in the international arena: the company has been very active in looking for things to buy from abroad, it says.
     Elisa has nevertheless refrained from buying, because the price has been too high.
     "The Board believes that even in hindsight this has been the right choice", says a press release issued on Wednesday. Ketonen said in a telephone interivew that Elisa has looked at possible purchases mainly in Eastern Europe, where telecommunication companies have been privatised.
     "In some cases we have stayed in the race, all the way to the final stretch. Now that money has been cheap, private investors have had the final word. At some stage the calculation has begun to flash red."
     
The structural change advocated by Thor would require the backing of a two thirds majority in a shareholders' meeting. The next meeting is expected to be an exciting one, as Elisa shareholders' meetings have traditionally attracted the owners of about one third of the shares of the whole comp Elisa stock, with a holding of just over ten per cent of Elisa's shares, this is about as much as the combined holdings of the 20 other owners that come after it.
     The number-two owner, the pension insurance company Ilmarinen, has less than two per cent of Elisa shares. It said last week that it opposes Thor's proposal. Number three on the list, the investment company Ajanta, owned by Ari Salmivuori, is an ally of Novator.
     Other shareholders, including the City of Helsinki and the pension insurance company Eläke-Fennia have remain undecided on the matter.
     
A large number of Elisa shares are in the hands of people who were given a small holding in exchange for shares in the former Helsinki Telephone Company, which they had as ordinary telephone subscribers.
     The Central Organisation of Shareholders plans to collect powers of attorney from small shareholders who cannot make it to the meeting.
     Shareholders can decide if their voting shares should be used on behalf of the Icelandic initiative or against it. The organisation itself has a small holding of Elisa shares; chairman Jarmo Leppiniemi says that the voting rights of those shares will be used for opposing the proposed changes.


Previously in HS International Edition:
  Icelandic shareholders hope to restructure management of telecom company Elisa (26.11.2007)
  Elisa stock exchange bulletin 28.11.2007: Invitation to Extraordinary General Meeting - New Date 21 January, 2008

Links:
  Elisa stock exchange bulletin 28.11.2007: Elisa´s Board Announces the Rationale of Its Views Regarding Novator Finland´s Oy´s Proposal to the EGM on 21 January 2008

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