Corus in turmoil as Pedder is forced to go
Saturday 15 March 2003
The crisis at the stricken steel maker Corus claimed its first executive scalp yesterday as Tony Pedder resigned from the role of chief executive as the Anglo-Dutch group lurched toward a drastic restructuring likely to result in thousands more redundancies.
Sir Brian Moffat, Corus' chairman, would not make any guarantees about the future of the group's three main plants in the UK, in Redcar, Scunthorpe and south Wales. The expected impact on jobs from any restructuring, he said, would not be "as severe as last time [in 2001]" when the group axed about 10,000.
As the hunt for a replacement chief executive got underway, Corus appointed Stuart Pettifor, one of its executive directors, to the role of chief operating officer. Corus is considering only external candidates for the top job.
"In the light of the company's performance, the board, including Mr Pedder, has concluded that a change of leadership is required," the company said, adding Mr Pedder had tendered his resignation which had been accepted with immediate effect.
His departure came just a day after an Amsterdam court forced Corus to abandon the £543m sale of its aluminium business – a move that left the company's future in the balance.
Sir Brian, under pressure from the unions to step down himself, said yesterday he would put his retirement on ice until his successor had been appointed. He had planned to step down at next month's annual general meeting. "The unions, I know, have requested that [his resignation] but I, personally, haven't been under intense pressure either from the board, from within or from shareholders," he said.
However, the unions were still baying for his blood yesterday. "Tony Pedder has done the honourable thing in resigning as chief executive, but he mustn't be a scapegoat. Sir Brian Moffat, the Corus chairman, does not have the trust of the workforce in either the UK or the Netherlands. We demand that he must go now," said the National Trade Union Steel Co-ordinating Committee, which contains representatives from the ISTC, Amicus, T&G and GMB unions.
Under the terms of his contract, Mr Pedder will be entitled to a year's salary of £550,000. In 2001, he earned £434,047 in total including a £410,000 salary.
The move came as Corus unveiled a net loss of £458m for the 12 months to 28 December, an increase from the £237m loss recorded the year before.
Corus is currently carrying out a review to come up with a plan to eliminate the losses, although the outcome of that is expected in months rather than weeks. "This will inevitably lead to significant further capacity reductions and concentration of operations on to fewer sites," Corus said.
After failing to bring in cash from the sale of its aluminium businesses, Corus said it was now looking at getting fresh financing from both equity and debt providers as well as from selling non-core assets. It is also in talks with its bankers to get a new facility in place. Its existing €1.4bn (£950m) facility expires at the end of January.
Analysts at BNP Paribas said: "Corus remains in discussions with its bankers about securing further finance and is also looking at equity finance although we suspect that with the shares trading at about 4p this is more likely to be through an equity-for-debt swap," they said. The stock closed up 1.5p, or 37.5 per cent, at 5.5p last night.
Sir Brian, however, insisted a debt-for-equity swap was not the only option left. "We're not in such a parlous state," he said. "We are going to pull through this difficult time. We are determined to make Corus succeed as an international and combined group."
Mr Pettifor was appointed to the board in September 2001. A graduate in metallurgy, he has held a number of key roles including managing director of the construction/ industrial business. He was also president and chief executive of the Swedish stainless steel producer Avesta Sheffield until it merged with Finland's Outokumpu Steel to form AvestaPolarit in 2000.
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