MASTER OF DISRUPTION
Red flags overshadow one-time Open Text pursuer in his quest to build a media empire
Seeing other people as mindless ‘jellyfish’ drifting wherever emotion takes them, The Norwegian has long practised the art of emotional manipulation ...
The media world would freak if U.S. President Donald Trump tried to acquire The New York Times, and not just because his tweets routinely attack the credibility of mainstream news. The last thing newspapers need today is a lessthan-truthful owner known for bankruptcies.
But nobody is sounding alarms in the U.K., where a notorious Norwegian with a string of spectacular business failures and a Trumpian fondness for fibbing claims to be serious about consolidating the industry, starting with a hostile bid for one of Britain’s oldest media empires.
“I want to be the next Murdoch for the new age of newspapers,” Christen Ager-Hanssen recently told The Telegraph, billing himself as Odin’s gift to journalism and corporate governance, despite having issued fake news as part of a brazen attempt to take over Waterloo, Ont.-based Open Text Corp.
After acquiring Sweden’s Metro free sheet in February, Ager-Hanssen’s Custos Group is now laying siege to Johnston Press PLC, publisher of about 200 titles, including The Scotsman. The 250-year-old company was once worth billions, but its market value now sits around $25 million thanks to declining revenue and $370 million in high-yield debt.
Custos in August started scooping up Johnston Press shares amid speculation that a debt-forequity swap was inevitable. Ever since, Ager-Hanssen has threatened to oust board chair Camilla Rhodes and chief executive Ashley Highfield, labelling them as “fee suckers,” who can’t be trusted to do anything except toss investors under the restructuring bus.
By deploying his personal brand of “innovative disruption,” Ager-Hanssen insists he can restore company revenue growth with big data initiatives such as trading targeted eyeballs for equity in startups. What about that debt? No problem, he said, claiming cheaper lenders were lined up before he be- came a shareholder.
As for his past, the 55-year-old Hanssen warns critics nobody can stop his empire building. “If people screw with me,” he told the Telegraph, “I will screw them 10 times harder. I’m a street fighter.”
To date, the only group appearing to mess with Ager-Hanssen is his own M&A team. The original strategy was to force Johnston Press to hold an extraordinary general meeting (EGM), aiming to replace most directors and install Ager-Hanssen as chairman with former Evening Standard chief executive Steve Auckland serving as his top executive.
Plan A was ditched in October after Custos said it had missed a clause in Johnston Press’s bond agreements that calls for the immediate repayment of debt if most existing board members are ousted.
Without explaining why refinancing was suddenly a problem, Ager-Hanssen retreated while expressing outrage on behalf of good governance lovers everywhere. He then increased his stake in Johnston Press to more than 20 per cent, making Custos its largest shareholder, while former major investor Crystal Amber, a hedge fund, started cutting bait.
Plan B, introduced in early November, called for the heads of just two directors. Auckland remained on the activist ticket, but Alex Salmond, Scotland’s former first minister who led the independence movement in 2014, replaced Ager-Hanssen as candidate for chairman. At this point, Custos finally requested an EGM, but it messed up the paper work.
Meanwhile, Salmond started ruffling feathers by indicating he’d leave financial matters to Ager-Hanssen and focus on making The Scotsman, which opposed independence, “more Scottish.” By mid-November, Salmond’s fitness to chair a British media empire was also called into question by a chatshow deal he struck with a Russian broadcaster seen as a propaganda tool for the Kremlin.
For now, Johnston Press is playing wait-and-see. But insiders are mocking Ager-Hanssen as an amateur pushing a plan with “more flipflops than a beach shop,” while the Norwegian tweets back “winter is coming,” referring to the House Stark motto on Game of Thrones, where honourable lords of the North always prepare for the worst.
Ager-Hanssen has been talking about attacking Johnston Press for months while Custos has been trolling for ventures willing to hand over equity stakes in return for its so-called “go-to-market” muscle. News reports have presented the Norwegian as a colourful and resourceful former “dot-com wonder boy” building a next-generation media empire.
Whatever the endgame, this coup attempt threatens the survival of Johnston Press and its pension plans because Ager-Hanssen is indeed a master of disruption, just not the productive kind.
Seeing other people as mindless “jellyfish” drifting wherever emotion takes them, the Norwegian has long practised the art of emotional manipulation on journalists looking for a good story, moversand-shakers seeking greater glory and investors hoping for a knight in shining armour.
For Johnston Press stakeholders, plenty of warning signs exist. For example, Custos’s marketing material implies it has a long and eminent history, which it doesn’t. The firm — which Ager-Hanssen runs out of a private-members club in London — bills itself as a technological trailblazer. And yet, its website is unsecured and has a blank portfolio page.
Ager-Hanssen’s speaker bio is also a major red flag. It describes him as “Norway’s Gordon Gekko.” For anyone unfamiliar with the movie Wall Street, Gekko is a fictional criminal sleazeball who manipulates people into manipulating markets and destroying companies.
The nickname was mentioned in a Telegraph feature touching on the Norwegian’s controversial past. However, the paper implied the moniker relates to the short position on shares of Open Text that existed when Ager-Hanssen took a run at the company in 1999. That allowed him to play misunderstood.
“I have never shorted a stock in my whole life,” he said.
In 1998, Ager-Hanssen sold Sweden’s national pension system on a plan to transform Netsys Technology Group, a local software firm, into a global unicorn. Pension officials acquired the company, giving Cognition a majority stake along with financing to implement Ager-Hanssen’s vision.
But Netsys was just a limited reseller of Open Text’s document management software, and could not legally sell its products outside Scandinavia. Ager-Hanssen earned his nickname trying to overcome this problem by boldly lying to Canadian reporters.
Claiming a trade tribunal would soon confirm Netsys owned global rights to Open Text technology, Ager-Hanssen hired a PR firm to spread material news.
In October 1999, a press release listing Ager-Hanssen as Netsys’s chief executive announced the Swedish company would start selling Open Text products internationally at an 80-per-cent discount to the Canadian company’s prices. The next day, a Financial Post headline screamed: “Open Text reels from Netsys discounts.”
Open Text executives insisted Ager-Hanssen was spinning a fairy tale while desperately waiting for arbitration judges to put the lie to his claims, which they did. But winning a positive ruling was never Ager-Hanssen’s objective. The plan, as described in PR billing documents, was to seize Open Text after weakening its share price with the Netsys announcement.
Open Text defended itself with a share buyback program, and AgerHanssen focused his talents elsewhere. In early 2000, with soonto-be-bust Netsys anchoring his portfolio, Ager-Hanssen convinced employees at HSBC in London that Cognition was “almost too substantive” for the U.K. market.
How do I know this? I unwittingly spearheaded Ager-Hanssen’s campaign against Open Text and briefly led investor relations at Cognition. I also helped institutional investors go after the Swedish pension system for unleashing Ager-Hanssen on the world.
The related stock manipulation lawsuit was privately settled, but I exposed the affair in a magazine feature about my wild ride working for Norway’s “Gordon Gekko.” The big reveal was a pension system report describing Ager-Hanssen’s departure from Netsys management (due to conduct unbecoming of a corporate officer) months before he issued fake news on the company’s behalf.
Back in London today, the big question is whether Ager-Hanssen is a born-again champion of investor rights or using Salmond to apply Scottish blue to the lips of some hidden agenda.
Johnston Press declined to comment, while some investors pray for the storm to come. History offers them little reason for hope.
Cognition imploded because of Netsys, which went bankrupt after Ager-Hanssen cost it the ability to sell anything. As a result, the pension system posted what was its biggest venture loss ever at the time.