Investors in the Aeternum Capital fund have voted to fire manager Vegard Søraunet and his team, according to a motion put forward by the most senior of them, billionaire John Fredriksen, DN has learned.
“Seatankers employs many directors around the world and we have never seen such a breach of trust as occurred with Aeternum Management, as the director did in this case. We cannot live with a trustee who shows so little Understanding of the trustee agreement and shareholder values.”
It also stipulates starting conversations with the official with the aim of finding a good solution.
“We did our best and tried for a long time to find a solution with the manager, but unfortunately it proved impossible. We saw no other way out but to ask the general meeting of Aeternum Capital to terminate the agreement.”
Vegard Søraunet is on his way to the general meeting on Friday afternoon. – There’s not much to say, is there? He said with a smile: Capital wins in the end. (Photo: Bear Thrana)
Although the decision has now been taken to terminate the management agreement, Soroni says the parties were still sitting in Thommessen’s office in Oslo late on Friday afternoon and discussing the possibility of reaching a solution for the fund’s minority shareholders.
– The parties remain and I have great faith that we will find a solution for all shareholders, including the minority. However, lawyers say we have a great chance of winning in the legal system, Soront wrote in a text message.
The statement from WQZ and the Seatankers states:
“For Seatankers, minority shareholders have always been important and will of course be treated equally with us. Those who wish to participate further will have the opportunity to do so, and for those who wish to withdraw their funds, we will facilitate a reasonable process for all parties.”
Go to court
Frederiksen and Soronette have been in a bitter feud for months, leading to the billionaire announcing his withdrawal from the fund he commissioned Soronette to start, and filing a lawsuit. It culminated this week in a call for an extraordinary general meeting at which Frederiksen’s investment firm WQZ Investments Group submitted a proposal to replace Søraunet and the rest of Aeternum Management with managers from Arctic Securities.
That’s what happened now, but Søraunet still has a chance to save his head: the management company sent a petition for a temporary injunction to the Oslo District Court. The court hearing was originally supposed to take place on October 4, but has now been postponed to October 10. If the district court comes to the conclusion that the fund, which is organized as a separate company with Frederiksen as the largest shareholder, cannot dispose of Aeternum Management, Søraunet will likely be able to continue managing the funds of those investors who wish to continue.
DN recognizes that in any event it is unlikely that the new administrators will be able to take up this role at such short notice, and therefore the opinion of the District Court on this matter will be decisive. Søraunet himself believes there is no good reason to sack him.
It was previously known that Frederiksen received at least 63% of the vote, and possibly as much as 74.8%, just a few tenths away from the required 75% majority.
“It’s about trust”
The dispute between Frederiksen and Suraunt is over whether the managers used leverage, or debt financing, in a way that violated the fund’s agreement. The investment in question is in Sweden’s Skistar, where Aeternum has bought a 20 percent stake through a holding company.
It is clear that the holding company was heavily indebted, and the fund entered into a financing agreement with DNB Bank worth SEK 1.2 billion. The question here is whether the issuance of the so-called “equity commitment letter” gave the fund commitments consistent with financial leverage.
“Management is about trust. Unfortunately, Aeternum Management, as manager, has broken this trust to such an extent by assuming that Aeternum Capital, at parent company level, fully guarantees SEK 1.2 billion, in direct violation of the manager agreement, which It states that there is no debt at the fund level,” says the statement sent on behalf of WCZ and the Seatankers after the general meeting.
In several articles based on a number of documents, DN provided a description of the arguments of the parties in the case. WQZ and Frederiksen rely on statements from law firms Thommessen and Wiersholm, and believe that the relationship amounted to a breach of contract, was not remedied within the deadline, and that it caused costs and risks to the fund. Frederiksen’s camp also refers to the whole thing as a “violation of trust.”
For their part, Søraunet and Aeternum Management say that WQZ was aware of the setup even before the deal took place, and that the conflict over indebtedness arose afterward because Frederiksen was dissatisfied with the fund’s performance and managers’ fees, and wanted to exit more easily. According to the rules, the redemption requested by Frederiksen must take place over at least a year and a half and entail a fee.
Billionaires support Søraunet
Soronette also accused Frederiksen’s personnel of “threatening messages” and threatening police reports, and of trying to remove him earlier as well.
“The reason we are requesting a recall is because we have lost confidence in the manager, not because we have lost confidence in the Aeternum concept or because we are dissatisfied with the fund’s performance (although it has been disappointing thus far),” WQZ recently wrote in a letter to the fund’s other shareholders.
Among these, several Norwegian billionaires responded this week, just two days before the general meeting, by sending a message to WQZ supporting Søraunet.
“WQZ’s measures have had, and continue to have, a significant negative impact on all investors in the Fund, and we believe this is both unfortunate and unreasonable,” Knut Heege at AGRA, Jürgen Steinshagen of Sr. Egils Steinshagen Invest, and Anders Andersson of AGRA wrote, Skoghøy Invest and Arild Årdal from management company Gabler in the letter.
They have been joined by several Swedish investors, but in total they constitute no more than about seven percent of the shares in Aeternum Capital, according to DN calculations.
Søraunet started Aeternum in 2020 and began investing the following year, initially with just money from Frederiksen. The first year was an overwhelming success with returns of 58 percent. But the results went wrong last year, losing 38 percent. Frederiksen invested a total of NOK 5.6 billion in the fund.
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