Most companies that are struggling financially would likely be relieved when a major American company comes along and offers millions of dollars to acquire the business.
But in the case of American Supreme Group's planned acquisition of around 80 percent of the shares in the old Axel Eitzen company EMS Seven Seas, things are different, according to several of the employees ShippingWatch has spoken to.
Partly because the news came as a huge surprise when the Americans announced their plans to buy out the five major shareholders, headed by insurance company If, as EMS Seven Seas was in the midst of planning a share issue scheduled for May 22nd 2014, a move that would bolster the company with USD 36.3 million in fresh capital. Three days prior to this, Dutch-registered Supreme Group BV made its announcement, thus derailing the company's own attempt at strengthening its capital base.
Will Eidesvik complete his mission?
The worry among the employees of supply company EMS Seven Seas is not least caused by the fact that the five major shareholders apparently appear to not have trusted the restructuring process that EMS Seven Seas' new CEO, Toril Eidesvik, was in the midst of performing.
Eidesvik has formally served as CEO of EMS Seven Seas since March of this year, but has in effect been heading the company since mid-November last year. The finances were improving. 2013 resulted in a USD 699,900 deficit, a significant improvement over 2012 and 2011, where the company suffered million-dollar deficits. As such, the employees are puzzled that Eidesvik - as it looks now - will not be able to complete her mission.
But the worries of the employees of EMS Seven Seas, based in Norway, is just as much caused by Supreme Group's history and DNA as a company that has made a good living off of the war and which has been working in the tracks of the US Army.
One could say that Supreme Group was born out of the Second World War, as experiences from the great war made Albert Orenstein establish the major logistics company in 1957. But the massive growth of Supreme Group is primarily a result of the 2001 terrorist attacks on the World Trade Center in New York, because in that same year in which the attacks occurred, the United States entered Afghanistan and later Iraq.
And along with the many US troops in the country came a colossal need for supplies, not least food - and Supreme Group was supremely successful in winning contracts for these deliveries.
Revenue increased 50-fold
Since the beginning of the war in 2001, Supreme Group's revenue has increased 50-fold, to USD 5.5 billion in 2011. According to Bloomberg, Supreme's CFO Mike Thorne has explained that more than 90 percent of the company's revenue comes from operations in Afghanistan.
As ShippingWatch reported last week, numerous factors indicate that Supreme Group is first and foremost interested in EMS Seven Seas' branch in Dubai, which has performed well over the years because this part of the business has also served as a supplier to the wars in Afghanistan and Iraq.
Supreme Group and EMS Seven Seas have collaborated closely in Dubai on delivering supplies to the around 100,000 US soldiers spread across 800 camps, a collaboration where EMS Seven Seas would purchase the commodities and produce millions of field rations, while Supreme group has handled the logistics and storage facilities, delivering the food to the soldiers on a daily basis.
Lawsuits against Supreme
However, the golden contracts with the US Department of Defense at Pentagon have resulted in a massive criticism of Supreme Group in US society, where the company at a public hearing will have to defend the contracts, and where several lawsuits have been filed at the company aimed at returning some of the many billions of dollars paid out.
For the major shareholders, who look set to sell their stakes in EMS Seven Seas, the transaction is likely a result of the fact that they have been offered a solid price for the shares - a price that they could not turn down. Perhaps they doubted whether the money they would place in the share issue would bring returns.
For the employees, however, this development has raised a long list of questions about the intentions of Supreme Group: Are the Americans planning to split up EMS Seven Seas, keeping only the military business in Dubai? And in that case, what will happen to the 20 remaining agencies? Could Danish Wrist Ship Supply be interested? And if they are: What plans do they have for the agencies in a business that is in need of consolidation?
In addition to If, the major shareholders include the Norwegian Pension Fund and Norwegian dairy group Tine. Following an acquisition, Supreme Group BV would be EMS Seven Seas' biggest shareholder by far with an 82.1 percent stake in the company.