Cargolux stuck in one place?
Or
feeling like Punxsutawney Phil in Groundhog Day!
"What would you do if you were stuck in
one place and every day was exactly the same, and nothing that you did
mattered?" That is a quote from the movie Groundhog Day you may
have seen. Every morning the same day restarts from anew. Cargolux is fine,
only the caretakers seem to obsessively tread the same water every day: sell
35% of shares held by the Luxembourg government. Why? I don't really know.
So here we go again, but what is the rush to
get a deal done by the end of the year?
Is it pressure from the European Commission, in
a Quixotic battle against "unfair" competition? Just tell them enough.
On a larger scale France, Germany and others have infringed on so many European
rules, such as deficit spending to name a big one, that Luxembourg really
should treat all Commission threats with
benign neglect. Cargolux is a pillar of our post-bank secrecy economy. In
addition, we had the lamentable experience with QR, that was indeed so bad that
I won't call it proof of good will on the Luxembourg side to accommodate the
Commission. If proof it was, then it was one of incompetence or choose any other
characterization you may prefer.
So why do we go at it again? The Unions are
right to be wary. Minister Wiseler was or pretended that he was associated in
the QR deal. That would hardly count as a reference, don't you agree? The
picture showing him recently in the press, sandwiched between two Chinese
officials, led me to try to read from the body language, as a visual of what could
go wrong this time. How would he out-negotiate those two Masters of Mahjong? I
came away with a feeling that the best would be for him to play Mahjong solitaire.
The unions are rightfully scared, not knowing what the new intentions are, and
this time again not knowing what Wiseler's
mandate is. Of course someone will object to this that Cargolux is a private
company. And the argument goes that in due time, a proposal would be submitted
to all shareholders. I guess that suggests some kind of due (confidential)
diligence. In the particular situation of a Cargolux however, where all shareholders are
the government, this type of cat and mouse is laughable and dishonest.
Given all the above, why the urgency to get rid
of the 35% of government shares? Cargolux has 40 years of experience, much more
than most pretenders. Cargolux needs most of all funding, which is not achieved
by replacing one shareholder by another one, who in addition is also a
competitor. As for purely financial interests, there are some potential
investors in Luxembourg, unless no one wants to talk to them.
Finally, a good deal is only a good deal, if it
is a deal you cannot refuse. That's not at $117.5 million, nor at $175 million.
That's also incredible synergies if a partner can be found in the cargo
world. One has to take into account that
the company operates one of the newest fleets, and has the most experienced
employees who could teach the junior partner. This pleads for additional value
in the company. However for a sale, Cargolux is not adequately set up. It was when
the issue was to content BIP during the last QR adventure. I would recommend to
revisit ING and set up the company with the well proven preferred shares to
keep a newcomer without a veto, so he can't veto a 51% decision. Then you might get a deal.
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