2008 Registration Document - Rexel

The Group believes that it has sound legal grounds todefeat all of these claims, but cannot give assurances thatits defence will ultimately prevail.CEF vs. Elektrotechnische Groothandel Bernardand othersOne of Hagemeyer’s competitors, CEF Holdings Ltd, starteda new wholesale business in electrical materials in 1989 inThe Netherlands. Subsequently, CEF Holdings claimed itsuffered injury from a cartel maintained by, among others,the Dutch 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. In March 1991,CEF Holdings lodged a complaint with the EuropeanCommission against, among others, FEG and all of itsmembers. Subsequently, CEF City Electrical Factors B.V.instituted legal proceedings in February 1999 before thedistrict court in Rotterdam against FEG, Technische Unie(the largest FEG member) and Bernard (the second largestFEG member) for damages in the amount of approximately€98 million exclusive of interest and costs, on the samefactual basis.In October 1999, the European Commission imposeda fine against FEG and Technische Unie based on cartelactivities, which decision was confirmed by the Court ofJustice of the European Communities in September 2006.The European Commission did not fine Bernard and laterexplicitly closed the file on Bernard. The Court of Justiceof the European Communities confirmed the EuropeanCommission’s position.The proceedings before the Rotterdam district courtinitiated by CEF against FEG, Technische Unie and Bernardthat were suspended pending the procedure before theEuropean Court of Justice have been resumed and ahearing was held on November 10, 2008.In 2006, CEF filed also claims against Hagemeyer,Hagemeyer Nederland B.V., HTG Nederland B.V. and theirdirectors, claiming that these parties have restricted CEF’spossibilities for recovery of its alleged damages and holdingthem liable for the resulting loss, if any.In the context of the proceedings involving CEF andFEG, Technische Unie and Bernard, Hagemeyer N.V.,Hagemeyer Nederland B.V., HTG Nederland B.V. and theirdirectors, CEF filed a provisional attachment claim with theRotterdam district court at the end of 2005. In July 2006,the district court dismissed this claim based on the factthat one of the defendants (Technische Unie) had given asecurity covering the amount of damages claimed by CEF.CEF appealed this decision. On April 8, 2008, the Courtof Appeal of the Hague dismissed CEF’s claims to obtainthe provisional attachment of certain assets of Hagemeyer,Hagemeyer Nederland B.V., HTG Nederland B.V. and theirdirectors, based on the plaintiff’s alleged failure to state aclaim. The court only allowed CEF to provisionally attachHagemeyer Nederland B.V.’s shares owned by Bernardfor a total amount of €7 million. The Court of Appeal ofThe Hague ruled that the damages that are likely to resultfrom the alleged breach of competition law may not exceed€5.3 million, or €7 million including interest and legal fees.CEF has not carried out the provisional seizure and has notappealed this decision before the Court of Appeal of TheHague within the limitation period.Furthermore, in March 2008, CEF initiated interiminjunction proceedings before an Amsterdam court toprevent Hagemeyer, ABN AMRO Bank N.V., Rexel, Keliumand Sonepar to be named in Hagemeyer’s bankruptcyproceedings and to compel them to transfer €95 million toan escrow account to ensure the payment of CEF’s claims.On April 17, 2008, the Amsterdam district court rejectedall of CEF’s claims and argued that the plaintiff failed tostate a claim. CEF has appealed this decision. The Courtof Appeal of Amsterdam dismissed, on December 9, 2008,all of CEF’s claims and sentenced CEF to bear the costs ofproceedings.On January 7, 2009, CEF and the Rexel Group entered intoa settlement, without acknowledgement of liability, underwhich CEF undertook to withdraw all claims in relationto the CEF litigation in consideration of the payment of asettlement amount. This transaction does not have anymaterial impact on the company’s results of operations andfinancial condition.Arbitration regarding ABMIn 2001, Hagemeyer acquired ABM, a subsidiary in Spain.In connection with the transaction, it was agreed to makecertain earn-out payments to the seller of ABM, contingentupon Hagemeyer’s achievement of certain agreed adjustedand audited 2002 EBITDA levels. Hagemeyer determinedthat such agreed EBITDA levels were not achieved, andconsequently no earn-out payment was made to the seller ofABM. The company’s statutory auditor at the time certifiedthe financial statements for 2002 without any qualification,which contractually formed the basis of the adjusted andaudited 2002 EBITDA. The seller is however of the opinionthat certain agreed EBITDA levels were achieved andaccordingly claims an earn-out payment of €18 million,excluding contractual interest and expenses, currentlyestimated at €7.6 million, which claim was upheld in an“expert determination” proceeding. The expert’s decisionhas been submitted to arbitration. An arbitration award infavor of the seller was rendered on November 11, 2008.A settlement was entered into on December 12, 2008between the sellers of ABM and ABM, assuming the rightsof the acquiring company merged into ABM, resulting in animpact in cash in an amount of €11.7 million.ElettrovenetaIn 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 and its manager basedREXEL 2008 | PAGE 237