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“Square D” was a well-regarded brand in the electrical equipment
industry throughout North America.
During the years in issue, Schneider, a French corporation
with its principal executive offices in Paris, France, was,
through its subsidiaries, a multinational manufacturer and
marketer of electrical distribution and industrial control
equipment, among other activities. Schneider owned, directly or
indirectly, five major subsidiaries, including Merlin Gerin S.A.
(MGSA) and Telemecanique S.A. (TESA), both French corporations.
II. Loan Commitment and Legal Fees Arising From Acquisition of
Petitioner
A. The Commitment Letter
Around late 1990 or early 1991, Schneider began taking steps
to initiate a hostile takeover of petitioner. In this regard,
Schneider sought financing from two French banks, Societe
Generale and Banque Paribas (collectively, the French banks).
The French banks sent Schneider a commitment letter dated
February 18, 1991 (Commitment Letter), in which they agreed
(subject to various conditions) to (1) provide a “bridge” or
temporary loan (Bridge Loan) to a to-be-organized subsidiary for
the purpose of acquiring petitioner, equal to one-half of the
purchase price of petitioner, up to a maximum of $1 billion; and
(2) underwrite permanent financing of one-half of the purchase
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