Coverage mechanisms
In the frame of the Rhodia acquisition by Solvay in September 2011, Rhodia restricted shares held by Rhodia employees could not be contributed to the transaction. As a result, they are now governed by a liquidity contract with Solvay which enables Solvay to gradually purchase these restricted shares once they become available.
To that effect, the aforementioned liquidity contract foresees an eventual sale of the Rhodia shares to Solvay within a predetermined short period immediately following the date these shares become unrestricted.
In this context, in line with market practice and in full compliance with the corporate governance rules, the beneficiaries of these restricted shares -including senior managers of the Group- are susceptible to enter into coverage mechanisms to mitigate the potential negative effects resulting from this compulsory sale of asset during a predetermined limited period of time.
Price adjustment mechanism
The section below provides the information required under Articles 1.3.2, 1.3.3 and 1.3.4 of the liquidity contract signed between Solvay and certain employees of the former Rhodia Group who have been granted performance shares or stock options prior to the Solvay public tender offer on Rhodia shares.
- TSR Price Adjustment for performance shares subject to a holding period
(art 1.3.3 of the liquidity contract)
Subject to the terms and conditions of the liquidity contract, the price that Solvay should pay for the purchase of Rhodia shares will be adjusted based on the payment of Solvay and/or Rhodia dividends.
The eligible events and the corresponding TSR Adjustments are listed below:
|
Event
|
Date of occurrence
|
Eligible shares*
|
TSR Adjustment
(in €)
|
Payment of the Solvay 2012 interim net dividend
(€ 0.90 per share)
|
January 17, 2013 |
Performance shares vested and subject to a holding period on the date of occurrence of the event.
In most cases, shares resulting from:
Plan 2009 2+2 A & B |
+ 0.31 |
Payment of the Solvay 2011 interim net dividend
(€ 0.90 per share)
|
January 19, 2012 |
Performance shares vested and subject to a holding period on the date of occurrence of the event.
In most cases, shares resulting from:
Plan 2008 2+2 B
Plan 2009 2+2 A & B |
+ 0.31 |
Payment of the balance of the Solvay 2011 net dividend
(€ 1.40 per share)
|
May 15, 2012 |
Performance shares vested and subject to a holding period on the date of occurrence of the event.
In most cases, shares resulting from:
Plan 2009 2+2 A & B |
+ 0.49 |
* based on the liquidity contract, in certain very specific circumstances to be determined on a case by case basis, shares resulting from the plans mentioned above may not be eligible to the TSR Adjustment and shares resulting from other plans not listed above may be eligible to the TSR Adjustment.
