Cookson boss has faith and hope – will shareholders offer charity?

Business Profile: Future of chief executive Steve Howard hangs in the balance as electronics group asks for £277m

Steve Howard looks remarkably relaxed for a man facing the most crucial week of his business career. As chief executive of Cookson, this deeply religious American is trying to persuade shareholders to back a £277m rights issue that will cut the debts of the electronics and ceramics group and give it valuable breathing space with its bankers. With the deadline for acceptances looming on Wednesday he has only a few more days to preach his message to the flock.

"It has clearly been an exhausting process but an interesting challenge," he says with an accent that hails from Detroit. "I'll be pleased when it's over, let's put it that way."

He has certainly put in the hours. "I will have done well over 80 meetings and have done a couple of trips to the US. People have asked me, 'Who's running the business?' Well, we are, but at nights and the weekends."

It has been a gruelling experience, not least because the cash call hangs in the balance and, if it fails, Mr Howard could find himself out of a job. Cookson's share price stands only marginally above the 25p price of the rights issue, which is not underwritten. And there have been rumblings of discontent from some shareholders that they are being asked to back the same management who were responsible for the group's £750m of debt, built up through a £1bn acquisition spree.

During the darkest days, when Cookson shares fell as low as 19.5p, Mr Howard has found his Christian faith a comfort. "I do [find it a comfort] in good times and bad. That's the beauty of faith," he says. "It can be a lonely experience in management. And we've had a number of redundancies, salary freezes and people getting no bonuses which have had an impact on a lot of families. But we have done what we believed were the right things to do."

Mr Howard, 49, is known for holding regular faith meetings in his London offices and adds that "meditation and prayer are part of my life". He attends the International Community Church near his home in Weybridge, Surrey, though he does not align himself with any particular denomination. Instead, he describes himself as "a follower of Jesus".

Whether he is relying on faith, hope, or charity in the run-up to the rights issue is open to debate but the former lawyer is confident. "We have every reason to believe it will be a successful issue," he says, sticking resolutely to the script.

This view is supported by last week's statement that 45 per cent of the group's equity base had given written indications that they will take up their rights. But Mr Howard points out that the real level of support may be much higher. "There are a number [of institutions] that simply don't do this in writing. The US funds certainly tend to be that way."

Even so the fund-raising remains finely balanced, though Mr Howard says a modest shortfall would not present a serious problem. "If we raised, say, 70 per cent of the money it would go a long way to reducing the [debt] problem," he explains. "And we do have other options such as small disposals and some redundant property that could be sold. But some people have been saying that if the rights issue fails than the company will have to be put into liquidation. That's not so. Shareholders shouldn't feel that if they don't support this [the fund-raising] then they are going to lose all their money. That's not the case. The business will still grow and prosper. It would just grow more quickly if the rights issue succeeded."

Supporters maintain that the business is in better shape since a corporate restructuring by Mr Howard, who became chief executive four years ago after starting out as the group's main lawyer in the United States. He slimmed the group down but bulked up in areas like ceramics and electronics with big deals. Unfortunately they were financed with debt rather than equity and signed at the peak of the boom.

The result was that a £159m profit in 2000 turned into a £25m loss last year, devastating the share price in the process. Cookson's sectors, such as providing electronic components for printed circuit board makers and ceramics for steel furnace linings, have been miserable and the group's significant US exposure has worked against it too.

Mr Howard says the business has worked hard to put itself back on track. Cookson is now breaking even and is cash generative. And it claims it has good relationships with its bankers. "We aren't in breach of our covenants and we don't anticipate that we will be."

Explaining why Cookson decided not to underwrite its cash call, Mr Howard says: "The decision to not underwrite was certainly not to save a few bob. Our shareholder register is 25 per cent US funds who don't participate in sub-underwriting [where institutions, often a company's existing shareholders, underwrite a fund-raising for a certain fee]. And in pre-marketing we explained the process to major shareholders and came out of that process thinking they were supportive."

Mr Howard insists that the management issue has "not been raised once" in his institutional meetings but says he would be "happy to step aside" if required. His advisers say some shareholders have specifically said they are planning to take up their rights in order to back Mr Howard and his team.

He then hints that he was offered another job earlier this year but turned it down because he wanted to finish what he'd started at Cookson.

If he did need to seek pastures new it is not clear whether he would stay in the UK, where he has lived for 12 years, or return to his native America. Born in Massachusetts, he was raised in Detroit as his father worked for Ford.

He chose to read law, acting as a corporate lawyer for companies which eventually included Cookson. He joined the group in 1986.

"Once I went into business I always had it in my mind that I would like to try to become a chief executive."

He says he enjoys living in Britain with his wife and three children. Indeed they now have dual citizenship.

"I enjoy the climate here, believe it or not, and the attitude of the people. And as a keen skier I much prefer skiing in Europe than the US. It is wilder and you can go off piste."

After Wednesday he'll be hoping for a belated holiday. But he'll only enjoy it if those rights issue cheques are all safely in the bank.

STEVE HOWARD LAWYER TURNED LEADER

Title: Chief executive, Cookson Group

Age: 49

Pay: £761,000, though he waived a 26 per cent bonus.

Career history: 1978-85 lawyer and partner at Adler Pollock & Sheehan (in the US), 1985-86 general council for Cookson America, 1986-91 vice-president, corporate development at Cookson, 1991-97 various director roles becoming chief executive of ceramics division, 1997-to date chief executive.

Interests: Basketball and roller hockey, the church and an interest in the homeless issue.

Biggest influence: "My wife. She keeps me centred and doesn't let me believe my own press."