Owners of Chargeurs’ convertible bonds with a maturity to the end of 2015 have opted for an earlier conversion. This was widely anticipated as the repayment terms were not attractive in relation to Chargeurs’ share price outperformance. The date of conversion has been primarily determined by the trading windows opened to insiders, who happened to be the prime owners of the bonds.
The exercise of the conversion option changes substantially the formal balance of control at Chargeurs but not the implied one. Indeed Chargeurs SA has always made clear that the owners of the bulk of the yet to be converted convertibles were Mr Malone, ex CEO and now Chairman, and Mr Seydoux, an historically influential shareholder, most notably via his personal holdings. As they were in a position to convert at any time, their ability to influence the board and management has always been there.
The two men, Mr Malone and Mr Seydoux, have had a long career together and had joined their voting rights in a concert party. After the conversion, the concert party will have effective control of 29.62% of the voting rights and 27.76% of the shares. The difference between voting rights and ownership is owed to the double-voting rights attached to long-held shares, a common practice in French corporate governance. The next question is whether there is a case for an end to this concert party. This is obviously not under the control of Chargeurs SA. There is no public indication about a possible calendar between concert party participants.
This new breakdown of control is the “official” face of a well identified control by long-time shareholders. Any speculative view on the subject of control should be put to rest as long as the concert party does not chose to communicate on alternative plans. It is also symbolic that this expensive convertible issue that helped Chargeurs restructure its funding in dire times is truly in the past. Cautious, self-funded growth remains the order of the day.
