With a potentially crippling raft of lawsuits awaiting it in the United States, Sulzer Medica has taken the sensible step of holding an extraordinary general meeting with shareholders on Monday, ahead of its spin off from its parent, the Sulzer Group, on Tuesday.This content was published on July 6, 2001 - 15:33
No doubt the spin off of the Medica unit will dominate the market's attention at the start of the week. However, Medica's shareholders have to be convinced that the company is dealing correctly with the recall by its orthopaedics division of faulty hip and knee implants.
Only last week Sulzer Medica, which is 74 per cent controlled by Swiss
group Sulzer, revamped its entire orthopaedics division with the boss of the unit leaving the company.
Around 2,100 patients, mainly in the United States, have already undergone revision surgery to replace faulty hip joints, which failed to bond properly because they were contaminated with traces of lubricants. A further 100 patients have also received remedial surgery for faulty knee joints.
Concerns about the extent of Medica's litigation liabilities have sent its shares plummeting. They fell by as much as 80 per cent from highs this year but have recovered some ground in recent weeks.
Tuesday's spin off foresees each Sulzer shareholder receiving two Medica shares for each share held in the parent company.
Sulzer said on Friday that the spin off had cleared its final hurdle when no creditors stepped forward to object to Sulzer's capital reduction. However, the big question remains whether the worries over US litigation will keep investor frenzy in check.
Later in the week, the Swissair Group is set to update the press and public on its reorganisation plans.
The Swiss aviation conglomerate has been facing a financial crisis since losses of SFr2.9 billion ($1.6 billion) were announced earlier this year.
The new chairman and chief executive, Mario Corti, will on Thursday give financial details of business so far this year. After abandoning its "hunter" strategy of taking stakes in other airlines, the group has promised to refocus on its core businesses of Swissair and Crossair, along with airline-related services such as its airline catering division, Gate Gourmet.
However, of more interest will be any comments Mr Corti makes on developments in Swissair's battle to extricate itself from a deal with loss-making Belgian airline Sabena. Under the terms of the contract, the Swissair Group should increase its stake from 49.5 to 85 per cent once the bilateral agreements between Switzerland the EU come into force.
Last week, both the Belgian government, which is currently the majority shareholder of the loss-making Belgian airline, and Sabena itself launched legal action against the Swissair Group. They argue it has failed to meet its original promises.
Corti has a lot to address on Thursday, including news on how the Swissair Group is progressing in attempts to withdraw from another failed investment in French airlines AOM-Air Liberté.
by Tom O'Brien
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