2008 Registration Document - Rexel

14. Financial information concerning the assets andliabilities, financial position and profits and lossesof RexelSummer Group, Inc. (United States)In December 2007, Summer Group, Inc., a subsidiary ofRexel, Inc., obtained the dismissal of a pending proceedinginitiated against it in January 2007 in California in relationto the death of a person further to a mesothelioma cancercase. The court ruled that Summer Group, Inc. was notliable, and acknowledged that the claimant had inducedSummer Group, Inc.’s liability by mistake, as it had noimplication whatsoever in the facts.In 2008, Summer Group, Inc. became a defendant in aproceeding in which the claimant allegates an exposureto products or materials containing asbestos, whichwould have been sold by a company acquired in 1993 bySummer Group, Inc., while the claimant would have workedon various sites on behalf of third parties. The claimant’sdemand as well as potential insurance coverage are underreview.Consequently, taking into account the progression of theproceedings and the impossibility of determining, at thisstage of the proceeding, the exact implication of SummerGroup, Inc., the Rexel Group is not able to provide anindication in numbers concerning the claims made and therisk potentially incurred.14.6.3 Other litigation in relationto the Rexel GroupUnited StatesRexel, Inc. was a party in two proceedings in the UnitedStates, in relation to a product liability claim in connectionwith the death of two people in a fire, the cause of whichhas not been established yet, and the pollution of alandfill by unauthorized products, respectively. These twoproceedings were dismissed in 2008.Rexel, Inc. has not paid any indemnities to the plaintiffsto obtain a rejection of this claim and termination of thelawsuit. Nevertheless, in one of the proceedings, the RexelGroup’s legal insurer financed the payment of a symbolicindemnity consisting of attorney’s fees upon the finalizationof the ruling and the obtainment of a rejection of the claim.The insurance company took charge of the legal fees andpotential damages linked to these proceedings as per theterms and conditions of our policy.Litigation regarding bankruptcy of CetecoSince 1995, Hagemeyer has held, directly and indirectly,approximately 65% of the shares in Ceteco N.V. (“Ceteco”),which was declared bankrupt in May 2000. In October2003, Ceteco’s bankruptcy receivers filed a lawsuit againstHagemeyer and the managing and supervisory boardmembers of Ceteco in a Dutch court for the entire deficit inbankruptcy, currently estimated by the bankruptcy receiversat €190 million, which includes a subordinated claim ofHagemeyer on Ceteco of €42 million, fully depreciated byHagemeyer.This claim is based on the allegation that the non-executivedirectors improperly supervised the executive directorswhile they mismanaged Ceteco, leading to its demise.The basis of the alleged liability is that three of thesenon-executive directors were members of Hagemeyer’sBoard of Management during the period of the allegedmismanagement.In addition, and alternatively, the bankruptcy receiversallege that Hagemeyer, as a majority shareholder of Ceteco,breached a duty of care it owed to Ceteco and its creditorsby, among other things, failing to intervene in time to preventmismanagement at Ceteco. The bankruptcy receivers alsoclaim that Hagemeyer has unjustly discharged Ceteco’sSupervisory Board and Board of Management.The damages in this tort claim are based on the losssuffered by Ceteco in certain countries. Any damagesso recoverable in the tort claim will reduce the deficit inbankruptcy and therefore will reduce the amount of the firstclaim. Taking into account the existence of Hagemeyer’ssubordinated claim, it is expected that the aggregate claimof the bankruptcy receivers will not exceed €148 million.One of Ceteco’s creditors, Dresdner Bank LateinamerikaAG, claims damages from Hagemeyer in the amount of€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.Further to a ruling dated December 12, 2007 the Utrechtdistrict court allowed the claim of the bankruptcy receiversof Ceteco and ordered Hagemeyer as well as the formermembers of the Board of Management and the SupervisoryBoard of Ceteco to pay a still to be determined amount ofdamages and referred the parties to a separate proceedingto determine the amount of the damages. In additionHagemeyer and the former members of Ceteco’s Boardof Management and Supervisory Board were jointly andseverally ordered to make an advance payment of damagesof €50 million. Hagemeyer and former members of Ceteco’sManagement Board and Supervisory Board have appealedthis judgment. The appeal suspends the enforceabilityof the judgment, including the advance payment and thecommencement of the separate damage proceedings.Hagemeyer filed its memorandum in response on June 24,2008.On February 8, 2008, the bankruptcy receivers seizedfor an amount of €190 million the shares of certain ofHagemeyer N.V.’s directly held Dutch subsidiaries andintragroup receivables that were due on February 8, 2008by these Dutch subsidiaries to Hagemeyer N.V.. Hagemeyerappealed this decision. By a ruling dated May 22, 2008,the Appeal Court dismissed the appeal of Hagemeyerwithout giving any decision in respect of the validity of theseseizures. Hagemeyer has appealed this ruling before theDutch supreme court.PAGE 236 | REXEL 2008