May 30, 2009.
Look, I haven’t made a big deal out of this because that’s not really my way. I like to make my point as best I can in a reasonable manner and let it sink in.
But in this instance, time is near and this is important. Hence, I’m publishing it again.
May 11, 2009
Longest intro in history….
OK. Before I get on to addressing my concerns, I’d just like to acknowledge the fact that some people here won’t agree with my stance on Renco and their bid for Saab. That’s OK. People have their opinions and they’re entitled to air them and have them taken seriously.
But this is an important moment. Saab’s bidders are being considered right now. Not next week, but now. And I’ve got pretty solid info from several sources saying that the Renco Group are one of the bidders, and quite possibly in with a shot.
This is a situation that I don’t think I can let pass without covering some information in the hope that decision makers will know that Renco have some opposition in the marketplace.
And let me say right now that whilst I introduced Renco the other day as being the company behind the introduction of the Hummer to the consumer market, my opposition to Renco taking over Saab has absolutely nothing to do with Hummers.
And to those who’d prefer just Saaby stuff, I hope to get back to that soon. But this is a moment in time that can’t pass without comment.
A few days ago I revealed here at Saabs United that an American private investment firm called The Renco Group was one of the bidders to take over Saab.
Earlier today I posted some pointers on who some of the decision makers are with regard to Saab’s future ownership.
Right now I’d like to address one of those decision makers – the Swedish Government – regarding the character of one of those bidders: the Renco Group. The more I’ve looked into this group and the man pulling the strings, Ira Rennert, the more uncomfortable I am with the possibility of Renco being successful in their bid for Saab.
A few dot points, all of which are a quick Googling away if people would like to know more.
— Mr Rennert was recently listed at #57 on Forbes’ list of the Top 400 richest Americans with an estimated nest egg of $6 Billion. Bear that in mind when you read some of the things that follow.
— Renco is a private holding company owned by Rennert and it has interests primarily based in the following six companies – a partial holding in AM General (makers of the Humvee), Doe Run Peru, Baron Drawn Steel Company, Doe Run Company (US), Unarco Material Handling and US Magnesium. As a private holding company, Renco does not have to disclose as much financial information as companies listed on the stock exchange do.
— Of concern are Renco’s dealings with Doe Run (the US company), Doe Run Peru, and the predecessor to US Magnesium, which was called Magnesium Corp.
— Additionally, there is a long history documented online of Rennert financing the growth of his operations via junk bonds, using bankruptcies to avoid obligations and abandoning stakeholders and responsibilities. BusinessWeek have a comprehensive history of Rennert’s methods, written a few years ago.
— Renco was ready to walk away from pension obligations for a steel mill it owned until the US government began to persue his private assets to pay for the pension plan
Some more detailed info…..
— Rennert was once labelled as “America’s Worst Private Polluter” by the Environmental Protection Agency in the USA.
— His former company, Magnesium Corp, was fined $900million for environmental breaches in Utah, which he escaped by placing the company concerned in Chapter 11 bankruptcy:
In 2001, the Justice Department and EPA took action against Renco, filing suit against the company. The agencies demanded nearly $1 billion in fines, alleging MagCorp (a Renco Metals Inc. subsidiary) dumped toxic waste in ditches and ponds on the Great Salt Lake, Utah. The suit claimed PCB-laced sludge and dust choked the plant’s plumbing, wastewater ponds, landfill and ditches, where contaminants were 12 times the allowed limit for accidental release. MagCorp maintained it was exempt from the federal Resource Conservation and Recovery Act, which requires companies to monitor certain kinds of hazardous waste. Magcorp declared Chapter 11 bankruptcy shortly after the lawsuit began and a federal judge allowed Rennert to restructure MagCorp — now U.S. Magnesium — which exempted it from previous legal liability
— The key issue with Doe Run and Doe Run Peru is the pollution produced by these operations.
— The US Doe Run operation is in a town called Herculaneum in Missouri. Several years ago, Doe Run had to purchase $11 million of real estate and demolish it to create a safe zone around what is the largest primary lead smelter in the US. Prior to this purchase, lead and other heavy metals were a significant presence on homes there.
— The US Doe Run operation is now a much cleaner operation. Renco have learned lessons in making it a cleaner, safer operation, lessons they should have applied in Peru.
— Doe Run Peru operates another lead smelter in a town in the Andes called La Oroya. The smelter actually started operations in 1922 and was sold to Doe Run Peru by the Peruvian government for a bargain basement price on the condition that Doe Run clean up the smelter. Doe Run responded by stalling any clean up efforts and the Peruvian government were helpless to force the issue as the smelter is the primary employer in the area.
— A summary from Wikipedia:
The Blacksmith Institute has placed La Oroya on its list of ten most polluted places in the world, along with Chernobyl, Ukraine. In August 2007, it was reported that air levels of arsenic levels were 85 times more than the “safe” level, cadmium 41 times, and lead 13 times more. Water levels of lead exceeded the “safe” lead level (as established by the World Health Organisation) as well. A study by St. Louis University scientists found that 97 percent of children in La Oroya suffer from mental and physical deficiencies related to their exposure to polluted air.
— I can highly recommend that you watch the following videos about Doe Run Peru and the situation in La Oroya. Some of Doe Run’s activities in Herculaneuum are also covered.
Renco know how to fix the problems at Doe Run Peru. They fixed them at Herculaneum. Yet despite the fact that they asked for a delay in taking any action to fix the situation at La Oroya, Doe Run Peru was still able to return tens of millions of dollars to Renco in royalties and management fees.
The Swedish government has pledged to provide loan guarantees for the successful bidder and as such will have a significant influence over who is successful in the bidding for Saab Automobile.
The question the Swedish government must ask themselves is this: is this the investor that they wish to pledge money to?
Sweden has a strong commitment to managing their natural environment. In fairness to Renco, their recent record includes cleaning up a lot of their own mess, with a 97% reduction in emissions from US Magnesium since 1989 and a similar reduction at Herculaneum. But they made plenty of money before doing this, and there’s still La Oroya.
Do Sweden want to commit loans to someone labelled as the worst private polluter in the US?
And do Sweden want to commit loans to a company with a long track record of using other people’s money to return significant ‘management fees’ to the corporate parent?
Will Saab be able to stand on a platform of environmental responsibility with a corporate parent that has this sort of record?
I’d like to urge the Swedish government – and all other decision makers in this process – to exercise the utmost caution and ensure that they give the greatest consideration to this matter.
If you’ve read this far, thanks for your patience. I know this was a huge one, but time is of the essence.
Decisions are being made right now, and as this is a major concern for me as a Saab enthusiast, I felt compelled to use this platform to air my concerns.