BC Partners is facing a growing rebellion at one of its largest portfolio companies, United Group, after executives from its key operating subsidiaries expressed support for the founder and CEO who was ousted by the British investment firm, the Financial Times reports.
In a letter sent to the Board of Directors of United Group this week, eight CEOs of the operating companies of this sprawling telecommunications and media conglomerate criticized the investment fund for the way it runs the company, which they say threatens to cause "long-term damage" after the dismissal of founder Dragan Šolak and CEO Viktorija Boklag, the Financial Times reports.
All but one of the CEOs of United's operating companies - which together contribute 90 percent of cash flow and about 70 percent of earnings before interest, tax, depreciation and amortization - signed a letter seen by the Financial Times demanding that both ousted executives be reinstated.
The rift between the investment fund owners and United's management followed after the Board fired founder Dragan Šolak and CEO Viktorija Boklag in June.
Šolak, the owner of English football club Southampton, has come into conflict with the BC Partners fund after being removed from the company he founded in Serbia in 2000, which has since grown to annual revenues of 2,7 billion euros.
The Serbian billionaire has sued BC Partners, claiming he was not paid a 200 million euro bonus linked to the sale of part of the group's assets, and has called on Dutch authorities to investigate a "serious crisis of corporate governance" at the media company.
According to people familiar with the case, BC Partners said he would be paid the bonus. However, the Dutch court rejected Šolak's request for the case to be considered urgently.
United Group previously stated that Šolak's complaints "serve exclusively the interests of Dragan Šolak, not United Group."
Over the past year, Šolak, who still has a minority stake in the firm, has been trying to buy out BC Partners' stake in the company, but his offers have been rejected.
His stake still gives him sole control over the allocation of shares to managers under United's incentive program, according to sources familiar with the matter.
A group of 14 senior United executives, including the chief financial officer and chief operating officer, but not directors from different countries, sent a letter to the Board following Solak's dismissal.
In it, they expressed "deep concern about recent changes at the top," which they said led to the resignations of several employees in senior positions, Bloomberg reported earlier.
"The sudden and unplanned regime change was not only a random, but also a highly irresponsible decision - and therefore poses an existential threat to the United Group and its business," the executives said.
United's board and BC Partners have dismissed the claims as exaggerated, according to people familiar with the matter. However, in the latest letter, eight more United directors echoed the concerns raised by the original 14 executives.
"We join the broader group of senior management in a clear position: this situation is unsustainable for both United Group and our operating companies," the operating directors stated.
They added that they are increasingly concerned about the "accelerated introduction" of external consultants into the new management environment.
"The Group's management, with whom we worked closely, has been excluded from the management and decision-making process," the latest letter states.
More than 50 top executives demand immediate return of Šolak and Boklag
The letter from eight CEOs of United Group, which was reported in the Financial Times, expresses serious concerns about the decisions of the BC Partners fund and calls for the return of stability, strategic continuity and trust - both within the Group and in local markets.
Recall that with their intervention, these CEOs join the voices of more than 50 top executives of United Group, United Media and United Cloud, sending a clear message that the reaction to BC Partners' recent decisions is not an isolated or sporadic case; it is structural, shared and permeates the entire Group - from headquarters to local markets.
The letter from the CEOs introduces a new, particularly critical dimension, as these are people who are directly responsible for the Group's operations in local markets and who deeply understand the needs, challenges and consequences of BC Partners' harmful decisions.
Their main demand coincides with that of more than 50 senior managers: the immediate reinstatement of Dragan Šolak and Viktorija Boklag to their positions, as the only realistic solution for restoring trust, cohesion and operational normality in United Group.
They warn that the current situation is unsustainable and emphasize that, unless there is an urgent and fundamental change of direction, they will be forced to reconsider their relationship with the Group.
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