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Post chief is new KPN head
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September 10, 2001: 10:22 a.m. ET
Former Dutch postal group head Scheepbouwer is new KPN boss
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LONDON (CNN) - Debt-crippled Dutch telecom company Royal KPN has named a postal industry boss as the new replacement for Chief Executive Paul Smits.
KPN said Ad Scheepbouwer, the former chief executive of Dutch postal group TPG will be taking over as CEO.
Smits departure comes as the Dutch company attempts to win back investor confidence after failing to cut its  23.2 billion ($21.5 billion) debt mountain and two unsuccessful merger attempts.
The announcement of the appointment of Scheepbouwer coincided with news that KPN had won some medium-term respite from its debt problems with a new 2.5 billion loan from a consortium of banks.
Industry sources said Smits successor had insisted the phone operator got the loan before he accepted the job. The company's stock has plunged 97 percent from a high of 71.67 in March 2000.
KPN said Scheepbouwer, 57, who is no stranger to KPN and who has helped transform a traditional mail company into a respected express and logistics business, would succeed Smits by January 1 next year.
Scheepbouwer was president at PTT Post from 1989 until TPG's June 1998 demerger from Royal PTT Nederland, and was a member of the management board of Royal PTT Nederland before it was renamed KPN. TPG and KPN remain about 35 percent state-held, Reuters reported.
KPN shares surge as new CEO named
KPN shares rose nearly 11 percent to 2.64 in after trade in Amsterdam. The benchmark AEX index had fallen 1.6 percent, as European markets tumbled amid fears of a severe global economic slowdown.
Smits, who became chief executive of the Hague-based company in the March 2000, said last Monday he was willing to do anything in the interest of restoring confidence in the company, whose credit rating is close to being downgraded to "junk bond" status.
KPN accumulated the debt via the purchase of German mobile phone company E-Plus Mobilfunk, and after spending heavily on licenses to offer next-generation mobile-phone services.
Doubts about the company's ability to cut debt has prompted credit rating agencies to cut its borrowing rating to BBB from A. Any cut usually pushes up the interest rate a company must pay for any new borrowings.
Late on Thursday, Moody's Investors Service slashed KPN's debt rating to just one notch above "junk" level. The company said on Friday it was in talks to sell its 22.3 percent stake in Indonesia's PT Telekommunikasi Selular to Singapore Telecommunications.
The Dutch company was prompted to seek a merger partner to try to help absorb its runaway debts. Under the stewardship of Smits, KPN made two unsuccessful merger attempts -- the first with Spain's Telefonica and the latest with Belgium's Belgacom. Talks with Belgacom fell apart at the end of August.
Smits is the latest chief executive to be sacrificed as European telecom companies come to terms with surging debts and crumbling share prices. Iain Vallance, the chairman of British Telecommunications, stepped down amid mounting investor anger over the company's crashing share price. 
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