UPDATED: Norske Skog was once one of Norway’s major industrial companies, tapping into the country’s vast timberlands to manufacture newspaper and magazine paper, and expanding internationally. Now it’s burdened by huge debts and weak markets, and its CEO Sven Ombudstvedt quit over the weekend after a dramatic last few weeks.
Ombudstvedt, age 50, took over at Norske Skog in 2010 after an industrial career at Norsk Hydro and its spun-off fertilizer unit Yara that also ended dramatically. Ombudstvedt abruptly resigned from Yara, angry that he hadn’t been selected to become its CEO in 2008. After making some attempts to start up a competitor to Yara, he was hired as CEO of Norske Skog to help it fend off the proverbial axe, since the company was in trouble already then.
He started chopping assets and even began to see some light through the forest, but debt remained a big problem. Newspaper Dagens Næringsliv (DN) has written that Ombudstvedt has had to navigate carefully through open power struggles between various groups of creditors, lenders and shareholders.
Bankruptcy evaluation after stunning share sale
Last month Ombudstvedt confirmed to DN that Norske Skog was considering bankruptcy protection, after he stunned the market by selling off all of his own shares in the company on April 26 in a protest action. Stock market commentator Thor Christian Jensen wrote in DN on Friday April 28 that Ombudstvedt was “finished” as CEO of Norske Skog: “It’s probably never happened before on the Oslo Stock Exchange that a CEO dumps all of his own shares in his own company in protest against the company’s own shareholders and creditors, while he stays in his job.” Jensen added that the sale “should scare the daylights out of the other shareholders,” and that the sale indicated a lack of confidence in the share’s upside potential.
Ombudstvedt claimed the next day, though, that the sale was not meant to be any notice that he’d resign, even though he did feel creditors and shareholders had lost confidence in him. Rather, he felt that his holding of 2.4 million shares was “probably getting in the way” of proceeding with other possible solutions for the company. He later told DN that he sold his stake in the company he ran so that he wouldn’t have any personal interests in meetings with creditors. The sale was badly received, though, and Norske Skog shares sunk like a stone after his sell-off, falling around 40 percent in value after Ombudstvedt’s move. That led Norske Skog’s largest private shareholder, Rikard Storvestre, to claim that Ombudstvedt was “the biggest drittsekk (literally, bag of shit) on the Oslo Stock Exchange.”
Almost amazingly, Ombudstvedt remained at the company for another week and as late as Friday, the board of Norske Skog declared it still had full confidence in him. Board chairman Henrik A Christensen also expressed support for Omudstvedt and that the board backed his share sell-off. “As a board, we must do what we think puts shareholders in the best position over time, and we believe that the best thing for the company and sharedholders is that Ombudstvedt continue as CEO,” Christensen said.
Ombudstvedt told DN on Tuesday that he wasn’t happy with the board’s formulation of a message sent Friday morning to the Oslo Stock Exchange that he would “continue” as CEO. “I had never quit,” Ombudstvedt told DN, “so that was a strange way of putting it. They (the board) felt a need to say that what I’d done (selling off his shares) wasn’t OK. I couldn’t understand that.” So he quit Friday night, first by sending an emailed resignation to Christensen and then in a phone conversation with him.
New CEO quickly in place
Asked whether he was surprised by Ombudstvedt’s resignation, Christensen told DN “both yes and no. I thought we were finished with the share sale issue. Ombudstvedt has done a very good job, and the board wanted him to continue.” Ombudstvedt’s resignation was accepted, however, and he’ll leave with six months worth of salary.
On Sunday evening, the board named Lars Sperre, age 41, as its new acting CEO. Sperre has worked for Norske Skog since 2006 and been part of top management since 2014. Christensen told DN that Ombudstvedt had “chosen,” in the end, to resign but that wouldn’t “change anything” for the company. Sperre, Christensen said, was the logical choice to succeed Ombudstvedt because he has worked at the company for more than 10 years and been responsible for strategy and refinancing. “We won’t be looking for a new CEO now,” Christensen said, adding that he thinks Sperre “will do an excellent job” after having worked “most tightly” on the restructuring of the company.
Sperre claimed he was “extremely motivated” to take on his new role, that Norske Skog’s operations and cash flow were “good” but the debt level was too high, with too much of the cash flow paying it down “instead of being invested in the company’s operations.”
Christensen tried to downplay the drama at Norske Skog: “The plants are running as usual and as far as I know, there’s no unease within the organization. This is actually quite undramatic.”