While Freyr Executives Are Milking the Company, the Shareholders Are Bleeding

Giga Artic sep 2023
2500 jobs were to be created here. Thus far, just over 2300 are missing. (Photo: Freyr)

Commentary: What have the shareholders in Freyr Battery not understood since the share price is sinking like a stone, while the chairman, CEO, local newspaper editor, and a knowledge park believe everything to be well and good?

Les på norsk.

It was supposed to be the next big industrial adventure in the North—a battery factory with several thousand employees in the Northern Norwegian industrial capital of Mo i Rana.

Clint Eastwood

Instead, the shareholders are trying to selling stocks quicker than Clint Eastwood drew his revolver in«The Good, the Bad and the Ugly» in 1966. The shareholders are bleeding more than nosebleeds on the New York Stock Exchange.

Do the shareholders suddenly not see their own best interest?

Before every salary rise, every single bonus payment, every stock option, and most recently, before the moving operation from Mo i Rana to Georgia, USA, the management referred to the company's shareholders and their interests. However, after the share price has fallen from 15 to 1,5 dollars over a year, the same shareholders are accused of being more or less ignorant.

Even insiders in the company are fleeing at a price far below the top level.

Critical questions do not oppose the industry.

Perhaps a look back at the company's history can explain why investors do not trust the company's assurances that most things have gone according to plan. It is not because, as Editor Marit Ulriksen of Rana Blad writes, "individuals have, and have long had, a genuine wish that Freyr's venture in Mo i Rana would not succeed."

Do not care

American investors do not care about what Norwegian commentators think about Freyr. They care about one thing, and that is the company's value creation and bottom line.

I am one of those who have been skeptical of the battery venture in Mo i Rana since the beginning. Not because I had any wish for Freyr and the Rana society to fail but because I never got the numbers behind the plans to add up.

Asking critical questions is not about opposing an industrial venture. It is about seeing the realities behind the promises.

Because Freyr started its adventure with the battery factory in Mo i Rana with a promise of 2500 jobs based on wind power and other green energy, with a production start in 2022.

Since then, almost everything has been turned upside down, and production is still not underway.

Maximize profits

Today, Freyr is a Luxemburg-based company with its headquarters in Oslo and a factory based on everything but green energy under construction in the US. The company had 19 executives before they announced a slimming of the organization the other day. Of a total of 189 employees in Mo i Rana and Oslo, 78 will be laid off these days.

A meaningless, PR-created cliché.

None of this is due to anyone wishing for Freyr to fail. Not that over 2300 employees are missing to fulfill the promise, nor that the production start has been exceeded by a scant two years.

On the contrary, it is due to the shareholders' desire to maximize dividends and profits by running after American protectionism and subsidies instead of technological development based on Norwegian expertise and green energy.

Or, to put it in the executives' own words, They moved from Norway because Norwegian taxpayers were unwilling to pick up the bill to develop a battery industry in Mo i Rana. NOK 10 billion is missing in state aid.

Sky-high salaries

That would also cover sky-high salaries for the executives (competitive, but not leading), board fees on a scale we have not seen the likes of in Norway before, and severance packages that make it more attractive to quit than to remain in the company.

Yet, when Freyr first chose to listen to its shareholders, which a company listed on the American stock exchange certainly must do, it must also deal with shareholders currently placing an exceptionally low value on the company's dispositions. 

Because the shareholders are always right, right?

Right now, the shareholders believe Freyr to be of not much more value than the company's cash holdings. 

In other words, the PR-created meaningless clichè about the salaries being "competitive, but not salary-leading" has not created any added value whatsoever.

Freyr's investment in the US has instead sent the share price down by nearly 90 percent. Apparently, only the company's insiders have managed to sell out faster than Freyr could write press releases and quarterly reports.

If we are to interpret the share price, the only thing left in Norway is a fairytale. The industry, measured against the original plans, lies fallow.

That the shareholders of Freyr Battery should have a malicious desire to destroy the company is illogical.

Or that asking critical questions is malicious.

That a local editor believes Freyr to be a victim is forgivable.

A snapshot

At the same time, and this is important, it is worth remembering that the share price is always a snapshot of a moment. For Freyr, the moment of falling share prices has lasted a little over a year so far.

The Freyr management's statements of buying its own shares have not raised the price either. And so this promise, so far, has not been fulfilled either.

That an editor in a local newspaper with close ties to Freyr believes the company to be a victim is perhaps forgivable.

However, it is less understandable that the leader of the Confederation of Norwegian Enterprise in Nordland believes it is right to use terms such as "bullying, labeling, and suspicion" when Freyr is the subject of criticism. 

An annual salary of nearly NOK 30 million goes a long way in compensating for the criticism against a company that has gone from a promise of 2500 jobs in Mo i Rana via Oslo, Luxemburg, to Georgia, USA.

Right now, however, it is the stock market that is passing a crushing verdict on Freyr. It can turn around, to the delight of the shareholders.

For the industrial city of Mo i Rana, it is, unfortunately, less significant.

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