Suez damaged Electrabel interests

23 August 2005

BRUSSELS — The French firm Suez has damaged the interests of Belgian electricity company Electrabel and its minority shareholders, Brussels Court has ruled.

The court also ruled last Friday that a demand by minority shareholders to appoint an expert to determine the extent of the damage was well-founded.

The ruling is linked to court proceedings lodged against Electrabel by US-based activist investment fund Knight Vincke earlier this year.

Knight Vincke’s high-profile campaign was designed to encourage Suez — which has a majority stake in Electrabel — to change the structure of the group and decide on the future role of Electrabel.

In a counterattack, Electrabel requested the court force Knight Vincke to pay a EUR 5 million guarantee to ward off further legal action.

However, Brussels Court ruled that Knight Vincke’s demand for the appointment of an expert to assess the damage inflicted by Suez in the past five years was well-founded.

The damage includes the conflicts of interest between Suez and Electrabel and the way in which they were dealt with in recent years.

It also includes the billions of euros Electrabel lost by not investing surplus funds into industrial projects, but instead loaned them to Suez for low interest when the company was in financial need.

Brussels Court had set a date of 9 November aside to further debate the matter, but Suez — apparently stung into action by Knight Vincke — launched a EUR 11.2 billion takeover bid for Electrabel earlier this month.

The takeover bid was welcomed by Knight Vincke, which subsequently decided to abandon its legal action.

Subject: Belgian news