Lagardere threatened with cancellation of 7.9% bonds exchangeable for EADS

By Angela McDaniels

Tacoma, Wash., June 11 - Lagardere SCA said it received notice that a group will seek annulment of its 7.9% mandatory exchangeable bonds due 2009 in the Paris Commercial Court unless the company enters into negotiations.

The bonds were issued in 2006 in the amount of €1.99 billion and are exchangeable into shares of the European Aeronautic Defense and Space Co. (EADS).

Lagardere received the notice from a lawyer acting on behalf of a number of companies in the Credit Mutuel group, according to a company news release.

In response, Lagardere said it "will not yield to Credit Mutuel group threats" and that "this strange approach has no legal relevance."

Lagardere is being investigated for insider trading in connection with a sale of EADS shares previous to the announcement that production of the A380 aircraft - which is produced by EADS subsidiary Airbus - would be delayed.

In Wednesday's release, Lagardere said the Credit Mutuel group assumes Lagardere will be found guilty of insider dealing, "even though no such verdict has been pronounced."

In addition, the Credit Mutuel group companies appear to have contracted forward purchases of EADS shares from one of the subscribers to the bonds and therefore have no contractual relationship with the company, according to Lagardere.

Lagardere is a Paris-based media company whose brands include Elle magazine.

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