2008 Registration Document - Rexel

14. Financial information concerning the assets andliabilities, financial position and profits and lossesof Rexelby, among other things, failing to intervene in time to preventmismanagement at Ceteco. The bankruptcy receivers alsoclaim that Hagemeyer has unfairly dismissed Ceteco’ssupervisory board and management board.The damages in this tort claim are based on the lossessuffered by Ceteco in certain countries. Any damagesso recoverable in the tort claim will reduce the deficitin bankruptcy and therefore will reduce the amount ofthe first claim. Taking into account the full depreciationof Hagemeyer N.V.’s subordinated claim, the aggregateclaim of the bankruptcy receivers is not expected toexceed €148 million, although the Group cannot give anyassurances in this respect.One of Ceteco’s creditors, Dresdner Bank LateinamerikaAG, claims damages from Hagemeyer N.V. in the amountof €14.5 million based on tort and alleging that Hagemeyerbreached a duty of care to Dresdner Bank by failing tointervene in time to prevent mismanagement at Ceteco.The amount claimed forms part of the deficit in Ceteco’sbankruptcy. Dresdner Bank has not commenced any formalcourt proceedings.Pursuant to a judgment rendered on December 12, 2007,the Utrecht district court allowed the claim of the bankruptcyreceivers of Ceteco and ordered Hagemeyer N.V., as wellas the former members of the management board andsupervisory board of Ceteco to pay a still to be determinedamount of damages and referred the parties to a separateproceeding to determine the amount of the damages. Inaddition Hagemeyer N.V. and the former members ofCeteco’s management board and supervisory board werejointly and severally sentenced to make an advance paymenton damages of €50 million. Hagemeyer N.V. and some ofthe former members of Ceteco’s management board andsupervisory board have appealed this judgment, with asuspensory effect thereon including on the payment ofthe advance on damages and on the separate proceedingwhich is to determine the amount of damages. HagemeyerN.V. filed its memorandum in response on June 24, 2008.On February 8, 2008, the bankruptcy receivers seized theshares of certain of Hagemeyer N.V.’s directly-held Dutchsubsidiaries and intragroup receivables, for an amountof €190 million, that were due on February 8, 2008 bythese Dutch subsidiaries to Hagemeyer N.V. Hagemeyerappealed this decision. By a ruling dated May 22, 2008,the Appeal Court dismissed the appeal of Hagemeyer N.V.without giving any decision in respect of the validity of theseseizures. Hagemeyer N.V. has appealed this ruling beforethe Dutch Supreme Court.The Group believes that it has sound legal grounds to defeatthis claim, but cannot give assurances that its defense willultimately prevail, nor can it predict the outcome of thislawsuit will be. Would the outcome be not favorable for theGroup, the agreement entered into on October 23, 2007between Rexel and Sonepar provides for certain provisionsin relation to the allocation of the losses, if any, suffered asa result of this litigation proceeding.Litigation relating to ElettrovenetaDuring 2007, Rexel Italia, an indirect subsidiary of Rexel,considered the acquisition of Elettroveneta, an Italiancorporation operating mainly in the region of Veneto. In2007, further to a disagreement on the price, the executionof the agreement was cancelled. On July 31, 2008, theshareholders of Elettroveneta filed a claim with the courtof Monza against Rexel Italia, Rexel S.A. and its managerbased on the allegation that an agreement on the price hadbeen reached and therefore, there is an agreement betweenthe parties in spite of the lack of signature.Elettroveneta’s shareholders have filed a claim with theCourt of Monza for an indemnification for the losses sufferedof a minimum amount of €24.8 million excluding interest.Elettroveneta’s shareholders consider that the lossessuffered are between €24.5 million and €29.5 million.The Group believes that it has sound legal grounds to defeatthis claim, but cannot give assurances that its defense willultimately prevail.Asbestos litigation and product liabilityThe Group is party to several proceedings relating toexposure to asbestos-containing materials in North America.The Group believes that its exposure to having to paysignificant amounts in connection with these proceedingsis limited and that these lawsuits will not have, individuallyor in the aggregate, a material adverse effect on its financialcondition or results of operations as these claims may berejected or will be settled for amounts covered partially ortotally by Rexel’s insurance policies. Considering the widerange of these claims and the number of defendants, theGroup cannot give any assurances in this respect, nor canit predict with certainty what the outcome of these lawsuitswill be. The amounts the Group may pay, as the case maybe, are difficult to quantify.The following proceedings, relating to Hagemeyer, havebeen settled at the balance sheet date and their relatedeffect recognized in the goodwill on acquisition as part ofthe purchase price allocation of Hagemeyer.Settlement agreementwith CEF City Electrical Factors B.V.One of Hagemeyer’s competitors, CEF Holdings Ltd,a wholesaler in electrical materials, claimed that it wasprejudiced by a cartel maintained by, among others, theDutch trade association of wholesale traders in electricalmaterials (the FEG) and all members of the FEG including(at that time) Elektrotechnische Groothandel Bernard B.V.,one of Hagemeyer’s Dutch subsidiaries. CEF City ElectricalFactors B.V. initiated legal proceedings against Hagemeyerand its Dutch subsidiaries. On January 6, 2009, Rexel andCEF entered into an agreement to settle all pending litigationagainst Rexel and its subsidiaries effective on January 22,2009. This agreement is subject to a confidentialityundertaking of the parties.PAGE 204 | REXEL 2008