Prosolvia, Prosolvia AB, Prosolvia Clarus AB, Prosolvia R&D, Prosolvia Systems:
This web site aims simply at gathering the facts about the company and its innovative technologies that today more than ever create a significant impact in the IT sector.
Swedish Prime Minister experiences Prosolvias Technology
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• January 1987 - Two Swedish Graduates from
January 1987- June 1997 - During the first 10 years Prosolvia became the worlds global leading Virtual Reality and Simulation company with focus in:
- Defense Simulators
- Numerical Simulation
- 3D Simulation for Design
- and Manufacturing Simulation.
The company grew profitably from 2 employees to over 225 employees, 14 offices with no external financing or external equity.
The Prosolvia Group, consisted of the following key groups:
- Prosolvia Research and Technology - specialized in numerical simulation and mechanical design, electronics, and software development
- Prosolvia Systems manufacturing simulation
- Prosolvia Clarus visual stimulation
For details see: http://prosolvia.blogspot.com/2007/07/what-has-happened-with-prosolvias.html
• June 1997 – April 1998 The Company went public on the Stockholm Exchange and raised $ 46 million during the IPO at $100 million market capitalization, reaching a market capitalization value of $ 512 million by April 1998. The company used the capital to accelerate the growth; the number of employees went up from 225 to 586 from 1997 to 1998. This resulted in a significant revenue increase of 94% (1997 to 1998) but also increased costs making the company more vulnerable from cash flow perspective.
• April 1998 - The financial newspaper Dagens Industri (followed by several other news papers) alleged irregularities related to accounting and questioned the ownership of the EON software. This became a huge media storm and the shares took a significant hit and had a significant negative impact on customers.
• May 1998 - Prosolvia board (CEO included) ordered an extra audit from its auditors Cooper & Lybrand of the first quarter figures to meet the allegations. The auditors conducted a detailed review and found the accounting to be correct. In addition Stockholm Exchange department for Market Surveillance started an inquiry lead by Ernst & Young.
The company was placed on the so-called "observation list" during the inquiry period. Finally Stockholm Exchange department for Market Surveillance presented a report from Ernst & Young that found Prosolvia’s accounting to be in complience with the accounting rules. As a result Prosolvia was fully reinstalled on the Stockholm Exchange in the summer of 1997.
• June 1998 – The media storm did not decrease by these measures. In an aim to help the company and restore the positive image the Board persuaded the companies CEO and (second-in-command) to resign. As a part of this decision several key members of the original team that help building the company over 10 years also left. The CEO decided to move to
Unfortunately this acknowledgement came late, customers had already stopped existing orders, new prospects did not want to pursue, the cash flow was very weak and Prosolvias organization was shaken .
• June 1998 – A New management was put in place. This new management lacked the strength and entrepreneurial spirit that had made Prosolvia successful over 10 years; they focused on reorganizations and internal company activities. As a result the company reported a loss for the first time in its 11 years history. The Founders had to lend the company some $3.5M to cover the cash short fall. The management found it necessary to find an external business partner.
• August 1998
Several companies produced written term sheets and proposals to acquire/invest in Prosolvia including ABB, Techomatix, Sigma etc. The former management voted to accept these proposals which would both provide the needed cash and strengthen Prosolvia’s business to safe guard the companies future. O p>
Unfortunately a majority of Prosolvia’s Board lead by the Government Controlled investment group Industrifonden (who had been on Prosolvia’s board since 1995) insisted in selecting the Industrifonden instead as the investment partner. The Industrifonden's CEO Mr. Lars Öjefors, see picture was leading the Offer to purchase a majority of their Prosolvia shares,
The irony is that ABB, Techomatix, Sigma eventually become the owners of the Prosolvia's technologies but only after the bankruptcy. The attraction with Industrifonden offer was that they promised to invest $35 Million to provide long term funding for growth which would minimize any lay off requirements.
Industrifonden required also that the Founders agreed to sell the majority of their shares (67% of the company) at significantly reduced price. This was not the Founders preferred choice as they believed that the government controlled company Industrifonden was not the right partner for Prosolvia.
However, the Board majority voted in favor to accept Industrifonden . Consequently, the Founders sold the majority of their Prosolvia shares, and the former CEO discontinued all his relations with Prosolvia and moved permanently to
• October 1998 – Industrifonden immediately appointed a new management and their own CEO and declared to the shareholders and customers that they are long term stable key owner committed to Prosolvia’s financially support and future development. Reassured by this the new management interrupted the aggressive cost cutting measures as well as back up partnership alternatives initiated by the former management.
• October - November 1998 - The financial newspaper Dagens Industri and other newspapers now attacked Industrifonden accusing them that the Prosolvia’s take over broke the rules of their government founded Charter. They claimed that Industrifonden was set up to invest in small companies not in Public companies. This became a very sensitive matter and even Sweden’s Minister Anders Sundström, see picture became directely involved. Fueled by this new media storm the Swedish Political opposition initiated a Parliamentary inquiry lead by the Chairman of Konstitutionsutskottet see the attached extensive reports and inquiry Swedish Government and Prosolvia.
• 15 November 1998 – The Parliamentary inquiry became a very uncomfortable process for the Swedish government and run almost daily in the news. Consequently, the Government Controlled investment group Industrifonden decided to stop its $35 Million investment in spite of its promises to shareholders, media and employees. Here follows the evidence that this decission was in fact Political motivated by the realisation that the Industrialfund investment was breaking with the the rules of their government founded Charter (extract from the Parliamentary inquiry that followed):
Konstitutionsutskottet O p>
2000-03-30
Kl. 08.00-08.30
Offentlig utfrågning med f.d. kanslirådet Lars Häggmark angående statsrådet Anders Sundströms ansvar för Industrifondens engagemang i Prosolvia AB
Ola Karlsson: I Industrifondens styrelse den 15 november 1998 accepterade man ett åtgärdsprogram som skulle innebära ett kraftigt likviditetstillskott för Prosolvia. Enligt protokollet gjorde du, Lars Häggmark, en protokollsanteckning där du betonade vikten av att försöka minska ägarandelen, då huvudägarskap inte låg i linje med förordningen. Vad var skälet till att du gjorde denna protokollsanteckning?
Lars Häggmark: Jag såg det som en del av min roll i den här styrelsen att erinra mina kamrater i styrelsen om de regler som gällde. Det här var ett inslag i det. Det hände flera gånger utan att det noterades till protokollet att jag erinrade om vilka begränsningar som gällde beträffande storlek på företag osv. Flera av mina kolleger i styrelsen kom ju från näringslivet och hade inte samma insyn i regelverket...
Lars Häggmark: Jag ville särskilt betona hur jag tolkade regelverket. Situationen förändrades ju successivt under hösten 1998 i Prosolvia och i fondens engagemang. Nu ansåg vi att tiden var mogen att dels påtala denna omständighet igen, dels få det antecknat i protokollet.
Ola Karlsson: Så man ska inte tolka deras skrivning om ”under särskild vägledning” så att ni bedömdes ha den särskilda kompetensen att utröna stadgarna och reglerna?
Lars Häggmark: Jag minns inte att vi tog på oss någon roll som vägledare för styrelsen; det gör jag inte.
Ola Karlsson: I varje fall hävdar ju Industrifondens ordförande och vd i sin skrivning, eller i sin kommentar, att ni fungerade som vägledare. Förekom det att du stämde av diskussioner i Industrifondens styrelse eller stämde av uppfattningar vad gällde regelverket med någon på departementet?
Ola Karlsson: Och det förekom aldrig att du stämde av med rättschefen på departementet?
Lars Häggmark: Inte som jag minns nu faktiskt men det är möjligt att så kan ha skett. Jag minns inte det.