KPN Minority Shareholder Association

Our Mission is to promote shareholder rights and push the KPN management to stop value destruction. 

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13. 12. 2013

Shareholders Should Push KPN to Abolish the KPN Foundation

Right Agenda for the Shareholder Meeting on the 10. 1. 2014

KPN is having a shareholder meeting on January 10. The reason for the meeting is (i) to cancel the shares issued to the KPN foundation, (ii) to reduce the subscription price for future share issues executed for the foundation.

If you are a shareholder and if you want to make money on your KPN shareholding than press the company to abolish the the KPN Foundation. The share price will jump up immediately.

The reasons for this are very simple:

1. There is no value to KPN shareholders to be prevented from making a choice on a takeover bid. To the opposite the shareholders will value the option to make a choice. The valuation of this right is simple - it has a value of a put option. There is no reason for the shareholders to give up this value.

2. The foundation is expensive - KPN pays interest on the shares it issues to the foundation. The interest payment is not small - it has to cover the foundation´s funding costs for the purchase of the shares and its related operation costs. Further, the costs are tax non-deductible for KPN - the interest costs are paid from after tax profits. The money belongs to the shareholders of KPN, and the amounts are not small. The foundation borrowed 252 million EUR to purchase the shares.

3. The foundation is value destructive - the only beneficiary of the foundation mechanism is the management. As stated by the foundation chairman the foundation acted to block KPN takeover by AM because the AM submitted the takeover offer without first striking a relationship agreement with the KPN management. With the management, which oversaw 75% KPN share price drop over the last 12 months prior to the offer, one of the worst performances in the industry. The management deserved to be fired. The foundation acted to protect their positions. This is wrong in principle and it is value destructive. This needs to stop.

Stop the Arrogance - The foundation chairman Mr. Jacques Schraven in his press conference stated, that "In football the rules in the Netherlands and Mexico are the same, but it is not football." The point here is that Mr. Schraven rules are wrong and should be abolished. Everywhere. It is time to liquidate the foundation and let Mr. Schraven watch his favourite game without KPN shareholders paying the bill. It may not help Mr. Schraven, but it will certainly help the KPN share price.