French private equity firm Wendel is to appeal a €1.5m fine issued by French regulators over insufficient disclosure in the way the firm went about ramping up its stake in glass packaging company Saint-Gobain.
Jean-Bernard Lafonta, Wendel’s former CEO, also received a €1.5m penalty.
According to the Autorité des Marchés Financiers (AMF), the firm increased its stake in the company without disclosing the fact through a series of swap contracts between four banks, securing €5.5bn financing from the banks, and allowing it to acquire €4.5bn in Saint-Gobain stock as it began unwinding the swap contracts in September 2007.
The AMF said that even though none of these steps individually constituted a breach of regulations, they had been carried out by Wendel with the intent of increasing its stake in Saint-Gobain. The firm currently owns 17.5 per cent of the company, and holds three seats on its board of directors.
Wendel has disputed the AMF’s conclusion, saying that it will take the case to the Paris Court of Appeal, and accusing the regulator of breaching procedural rules.
In a statement, the firm said, “Wendel is extremely disappointed that, after eighteen months investigating the case, the Enforcement Committee has not followed the findings, analyses and conclusions of its own reporter, who had clearly exonerated Wendel.
“The committee has used alternative reasoning which in no way considers the decisions taken by Wendel’s management bodies and which is based on a series of unrelated elements, each of which has been construed against the company.”
The Euronext-listed firm invests primarily in France and Europe, with portfolio companies including Bureau Veritas, Legrand, Saint-Gobain, Materis, Deutsch, Oranje-Nassau and Stahl.
Copyright © 2011 AltAssets