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Hagemeyer reorganizes and refinances; CEO leaves

Hagemeyer NV, Amsterdam, The Netherlands, announced major reorganization plans on Dec. 9: cutting an additional 270 jobs in the U.S., part of an international 1,000-job reduction overall in 2004 to trim costs, a EUR 1.5 billion (US$1.83 billion) refinancing package, and the resignation of its CEO. In a conference call, CEO Rob Ter Haar said he would step down from his post, according to a report in the Wall Street Journal.


The move follows a year in which rumors were rampant and its North American operations increasingly were hamstrung by concerns among suppliers and customers as to its financial position. There was speculation recently the company was in financing talks with Clayton, Dubilier & Rice, the investment group that bought electrical distributor WESCO in 1994 and sold it in 1998. But the company went with a deal through its lenders, including ABN Amro as the lead bank.


The announcement is likely to come with a high price tag from lenders, but has to be viewed by suppliers, U.S. employees and customers as a long-overdue move to get the financial uncertainty cleared, and shift the focus to getting its operations back on track.


Hagemeyer North America, Inc., is a wholly owned subsidiary of Netherlands-based Hagemeyer NV,ᅠand consists of Cameron & Barkley Company, Vallen Safety Supply Company, and Tristate Electrical & Electronics Supply Company, three wholly-owned subsidiary companies.


Hagemeyer's North American operations have been the source of rumors regarding job cuts throughout 2003. The Wall Street Journal reported the parent company cut 1,300 jobs overall in 2003. By many accounts, the North American operations have struggled to integrate the three primary acquisitions it made in U.S. distribution in 1999 and 2000: Cameron & Barkley (acquired in 2000), Tristate Electrical & Electronics Supply Company, and Vallen Safety Supply Company (both acquired in 1999).


When Hagemeyer acquired CamBar in 2000, the combined annualized revenues of the three subsidiaries were $1.5 billion, with CamBar at $850 million, Vallen reporting annual sales of $450 million, and Tristate with annual sales of $200 million.


Hagemeyer reported net sales in 2002 of EUR 8,343.5 million. Net sales in 2001 were EUR 8,835.7 million. Net sales in North and South America in 2002 were EUR 1,696.3 million; EUR 1,924.0 million in 2001; and EUR 1,354.9 million in 2000.



Refinancing & financials


The Wall Street journal reported that the EUR 1.5 billion refinancing package included a EUR 460 million underwritten rights issue at EUR 1.20 a share, a EUR 150 million subordinated convertible bonds offering, and a lending agreement for EUR 905 million in credit facilities.


Hagemeyer said it expects its full year loss to be EUR 285 million, higher than expected when it reported six-month results in August. As of the end of September, Hagemeyer reported net debt of nearly EUR 1 billion, with its costs overtaking declining revenues. The company announced in October it was in talks with lenders on refinancing options.


The company reported third-quarter net sales ended Sept. 30 were EUR 1,450 million, down 32% from EUR 2,123 million in the 2002 third quarter. Divestments, particularly Tech Pacific and the termination of its Puma contract, resulted in a decrease in sales of EUR 504 million.


For the first six months of 2003, Hagemeyer's net sales were EUR 3,438 million, down 32% from EUR 4,144 million in the first half of 2002. Continued weak market conditions across its core PPS division and loss of market share in the UK had a major impact, the company said.


Hagemeyer reported net sales in 2002 of EUR 8,343.5 million. Net sales in 2001 were EUR 8,835.7 million. Net sales in North and South America in 2002 were EUR 1,696.3 million; EUR 1,924.0 million in 2001; and EUR 1,354.9 million in 2000.


Hagemeyer's North American operations reported net sales for the first six months

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