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Financial Times: Dutch consider disclosure change

EXTRACT: Alongside investor revolts at Stork, Ahold, the food retailer, ABN, Royal Dutch Shell, the energy company, and VNU, the business information group, the Netherlands has seen a rash of private equity buy-outs – the biggest involving VNU, units of technology company Philips and TNT, the post group.

THE ARTICLE

By Ian Bickerton in Amsterdam
Published: April 12 2007 03:00 | Last updated: April 12 2007 03:00

Dutch regulators said yesterday they were considering lowering the threshold for disclosure of share ownership to one per cent – the lowest level anywhere – as they sought greater insight into the activities and motives of activist investors.

Nout Wellink, president of the Dutch central bank, and Paul Koster, director of the Netherlands’ Authority for Financial Markets, the securities regulator, told a parliamentary hearing the move would provide an additional weapon to monitor hedge funds.

The Netherlandsis wrestling with the twin phenomena of shareholder activism and a surge in private equity buy-outs. It has raised political hackles, notably in relation to risks to the stability of financial systems, the economy and the effect on jobs.

“We want to know more, sooner,” said Mr Wellink. “We have to talk about this together [with AFM] and with the finance ministry.” Mr Wellink recently courted controversy when he warned that a hedge fund’s demands to break up ABN Amro, the largest Dutch bank, were “a bridge too far”.

While the idea of lowering the disclosure threshold has been floated recently by several organisations, including trade unions, yesterday’s hearing may provide the political impulse to act.

Those present at the hearing included private equity and hedge fund executives, regulators, worker and employer representatives and board members from companies targeted by hedge funds or buy-out funds.

However, Peter Paul de Vries, director of VEB, the Dutch shareholder association, said lowering the threshold from five per cent to three per cent – the level in Germany after it was recently lowered from five – was a more realistic goal.

There were calls too for the central bank to limit the amount of debt involved in buy-outs. Jan Kalff, chairman of Stork, the industrial conglomerate, said this was impossible because capital structures differed between companies. Alongside investor revolts at Stork, Ahold, the food retailer, ABN, Royal Dutch Shell, the energy company, and VNU, the business information group, the Netherlands has seen a rash of private equity buy-outs – the biggest involving VNU, units of technology company Philips and TNT, the post group.

However, private equity companies said concerns about over-leveraged deals had been overstated. Pieter Korteweg, of Cerberus Global Investment Advisors, said: “The debt problems I have seen have been with listed companies. I have not seen one private-equity-owned company with debt problems.”

Mr de Vries told the Financial Times the threat posed by activism or buy-outs had been exaggerated, noting that the targets were almost always companies with poor management or performance record.

Copyright The Financial Times Limited 2007

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