Swets: About To Implode, or Stable?
:: The following article appeared in the Dutch Financial Times (het Financieele Dagblad) on Monday, 20th September, 2004:
AMSTERDAM - Swets & Zeitlinger, Dutch distributors of scientific information, are in trouble. The business needs refinancing after it was found that it made losses in the past years. As a consequence of the problems Swets no longer meets the credit conditions of the bank. On Friday, shareholders will decide on a capital injection of EUR 45 million.
This is confirmed by Jan-Willem Baud, chairman of the board of supervisory directors. Baud is the director of NPM Capital, which holds 26% of the shares of Swets. Other shareholders are the Swets family (29%) , Nesbic (23%), Paribas (15%), and Alpinvest (7%). The business has approx. 1400 employees in 23 offices.
The following reply from John Martin, Director of Business Development and Marketing, Swets, has been circulating about the 'net today:
NPM has promised new money. Baud: "We believe that Swets can go on for another hundred years in spite of the problems." Other shareholders are still hesitant about whether or not they should jump to the rescue, says Baud.
Already in May it became public that Swets had found 'errors' in their books. And that hundreds of jobs will be scrapped. Just last year Swets was still being offered for sale to international high-risk venture capitalists with a price tag of hundreds of millions. One buyer, Candover, pulled out in the last minute.
Swets is an intermediary between scientific publishers and major users such as universities. The company suffers from the increasing distribution of information through the Internet. Attempts to become more electronically active themselves have not panned out as predicted by the management.
The last figures published by Swets pertain to 2002, when - according to the information - a turnover of EUR 1.2 billion and a net profit of EUR 30.8 million were achieved. Swets now has to review the figures over 2001, 2002, and 2003.
According to Baud, transactions between parent companies and subsidiaries were processed incorrectly for years. Swets presently cannot give insight into the adjusted results. As a consequence of debit transfers, which Baud does not want to specify, Swets ends up in the red. "But non-recurring items do not get us into loss. Profits do have to increase though."
Fraud, says Baud, was not discovered. Finance director Eelco de Boer is said to have stumbled across errors of his predecessor after taking up office last year. Whether these events will have consequences for director Eric van Amerongen or other managers, Baud does not want to disclose ahead of the shareholders' meeting next Friday. - Gerben Van Der Marel. The original article, in Dutch, was titled "Swets aan rand afgrond na boekhoudfout."
On behalf of the Management of Swets & Zeitlinger, I would like to make a short statement about our plans for the future.
Resulting from the high level of confidence of the shareholders and management in the future of the company, we shortly expect to announce a significant strengthening of our share capital through the provision of new investment funds by our shareholders. These new funds will be used to accelerate our investments in e-services which will thereby further improve our services to our clients. Moreover, we will use part of the new funds to re-structure our organisation in order to further improve service and efficiency for the longer term.
We apologise that we are unable to give you more detailed information at this stage but would like to assure you that we will keep you informed as soon as we can report on new developments.
Thank you for your support.
Dr. John R. Martin
Director of Business Development and Marketing
Swets Information Services
P.O. Box 830
2161 CA Lisse
T +31 (0)252 435 582
F +31 (0)252 435 710
E jmartin AT nl DOT swets DOT com