SUEZ uses French-Argentinian BIT in order to secure its investments
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06/28/2002 SUEZ invokes procedures provided under the French-
Argentine Bi-lateral Investment Treaty and books provisions to cover
all its exposure in Argentina
On January 6, 2002, the Argentine government simultaneously:
- ended the fixed 1 US dollar/ 1 Argentinean peso parity in effect
since 1991;
- blocked price adjustment provisions in contracts with regulated
companies, according to both peso exchange rate fluctuations in
relation to the dollar and inflation.
In light of this situation, SUEZ immediately took the necessary steps
to sustain its Argentine subsidiaries' operations and provide
uninterrupted quality service to its customers. At the same time,
these subsidiaries entered into discussions with Argentine
authorities within the framework of procedures, as provided by
Argentine Federal Government and Provincial Government. Philippe
Brongniart, Vice Chairman of SUEZ and member of the Board of
Directors, is coordinating these operations.
These negotiations are particularly important for the future of SUEZ
activities in Argentina, notably in the water sector, because of the
magnitude of its activity, and of investments undertaken in
association with large multi-lateral financial institutions such as
the International Finance Corporation (IFC), Inter-American
Development Bank (IDB), and the European Investment Bank (EIB),
directly and via bank syndications.
The peso devaluation has become more pronounced. The economic
situation has deteriorated. Negotiations between Argentine
authorities and the Group's subsidiaries have not yet come to a
successful conclusion. Consequently, SUEZ has decided to:
- Invoke procedures provided under the Bi-lateral Investment Treaty
signed by France and Argentina. These procedures commit the Argentine
government to reach an amicable agreement with French investors in
Argentina concerning corrective and compensatory measures in relation
to disputes affecting such investors when such disputes arise from
actions or omissions of the government.
Should these negotiations not produce a conciliatory agreement within
six months, the Group can seek to resolve the issue through
international arbitration under the jurisdiction of the International
Center for Settlement of Investment Disputes (ICSID), an
international arbitration tribunal established in conjunction with
the World Bank.
- Book a EUR 500 million charge Group' share in consolidated accounts
as of June 30, 2002. Together with the charge recorded December 31,
2001, this equates to eliminating SUEZ's foreign exchange risk on
debt and writing off its net consolidated equity
Gérard Mestrallet, Chairman and CEO of Suez, stated:
"These dispositions are exceptional measures in an exceptional
situation. SUEZ is determined to maintain an essential service to 11
million people in Argentina and expects its efforts to be shared by
all stakeholders with the support of multi-lateral financial
institutions. SUEZ is also determined to defend its contractual
rights. I do greatly hope that Argentina quickly finds the path of
economic recovery"
SUEZ has been active in Argentina for over 10 years, providing
services mainly in the water area.
In 2001, Argentina represented 2.5% of total Group revenues and less
than 3% of capital employed.
Group water companies provide 11 million people with drinking water
and 7.5 million people with wastewater treatment services which
together in 2001 generated total revenues of EUR 873 million. The
main companies involved are Aguas Argentinas (Buenos Aires), Aguas
Provinciales de Santa Fe, and Aguas Cordobesas. Ondeo Degrémont and
Ondeo Nalco are also present.
SUEZ Energy Division generated EUR 185 million in revenues in 2001,
principally in natural gas distribution, via Litoral Gaz, to industry
and municipalities in Santa Fe and Rosario (Litoral Gas). The Energy
Division is also active in the transmission of natural gas thanks to
Gazoducto Nor Andino which supplies Argentine natural gas to energy
producers based in Chile.
In Waste Services, Cliba, consolidated under the equity method,
generated EUR 200 million in revenues in 2001. Cliba is specialized
in the collection and the treatment of municipal waste for the
provinces of Buenos Aires and Cordoba.
SUEZ is one of the world's premier services groups, with a staff of
190,000 employees at work in 130 countries, serving industrial,
individual, and municipal customers. SUEZ is a leading international
player in each of its businesses: the world leader in water-related
services, the world leader in waste services outside the U.S., among
the world's leading energy groups, and nº1 in energy services in
Europe. It generated 2001 revenues of EUR 42.4 billion, 54.6% of
which originated outside the Group's domestic markets of France and
Belgium.
SUEZ is listed on Euronext Paris and Euronext Brussels, as well as on
the Luxembourg, Zurich
and New York Stock Exchanges. It is the only name from its sector
represented on every major
international index: CAC 40, Eurostoxx 50, FTSE Eurotop 100 and the
MSI Europe (Morgan Stanley
Index). According to the World Investment Report 2001 (United Nations
Conference on Trade and
Development - UNCTAD), SUEZ is ranked 19th in the world among
companies with the greatest
international presence, and 2nd among French companies so listed.
Disclaimer
This press release contains certain forward-looking statements,
particularly with respect to
future events, trends, plans or objectives. These statements are
based on management's current
views and assumptions and involve a number of risks and uncertainties
which may lead to a
significant difference between actual results and those suggested
either explicitly or
implicitly in these statements (or suggested by past results).
Additional information about these risks and uncertainties appears in
documents filed by Suez with the U.S. Securities and Exchange
Commission and the French Commission des Opérations de Bourse. The
present forward-looking statements are offered as of the date of
release, with no undertaking by Suez to update or revise them,
whether in connection with new information, future events, or any
other factor.
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