Rhodia Woes Mount as Activist Shareholders Demand Changes at the Top

EUROPEAN CHEMICALS

As its share price sinks almost to penny-stock levels, France's Rhodia has received several hostile shareholder proposals for its annual meeting next month. The company is also facing the threat of class-action lawsuits from irate U.S. shareholders.

Last month, France's stock market regulatory authority accused Rhodia of improper financial disclosures from 2000 through roughly the end of 2003 (C&EN, April 4, page 12). Since then, a number of law firms in the U.S. have filed complaints that may develop into class-action suits. The first such complaint was filed on April 7, and at least six more have been lodged since.

Meanwhile in France, minority shareholders, led by French shareholder rights activist Colette Neuville, are trying to force Rhodia's top directors out. They have sent two proposed resolutions to Rhodia's board calling for the ouster of Yves-René Nanot, the company's chairman, and Hubertus Sulkowski, the former head of its risk committee. The proposals also call on shareholders to not renew the contract of Rhodia's CEO, Jean-Pierre Clamadieu.

Ironically, the legal turmoil overshadows the genuine accomplishments of Clamadieu, who took over following the forced resignation of Jean-Pierre Tirouflet in October 2003. In 2004, Clamadieu and his team were able to keep sales at $6.57 billion--97% of 2003 levels--while cutting the firm's net loss by 54%, to $777 million, and reducing its debt by a quarter to an end-of-2004 level of $2.34 billion.