CE » Topics » Domination Agreement

These excerpts taken from the CE 10-Q filed Apr 28, 2009.
Domination Agreement
 
On October 1, 2004, a Domination Agreement between Celanese GmbH and the Purchaser became operative. When the Domination Agreement became operative, the Purchaser became obligated to offer to acquire all outstanding Celanese GmbH shares from the minority shareholders of Celanese GmbH in return for payment of fair cash compensation. The amount of this fair cash compensation was determined to be €41.92 per share, plus interest, in accordance with applicable German law. Until the Squeeze-Out was registered in the commercial register in Germany on December 22, 2006, any minority shareholder who elected not to sell its shares to the Purchaser was entitled to remain a shareholder of Celanese GmbH and to receive from the Purchaser a gross guaranteed annual payment on its shares of €3.27 per Celanese GmbH share less certain corporate taxes in lieu of any dividend. For the year ended December 31, 2006, a charge of €3 million ($4 million) was recorded to Other income (expense), net for the anticipated guaranteed annual payment.
 
On June 1, 2006, the guaranteed annual payment for the fiscal year ended September 30, 2005, which amounted to €3 million, was paid. In addition, pursuant to a settlement agreement entered into with plaintiff


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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS — (Continued)
 
shareholders in March 2006, the Purchaser paid €1 million on June 30, 2006, the guaranteed annual payment for the fiscal year ended September 30, 2006, to those shareholders who signed a letter waiving any further rights with respect to such guaranteed annual payment that ordinarily would become due and payable after the 2007 annual general meeting. Between June 30, 2006, and January 17, 2007, the Purchaser paid a total amount of less than €1 million to minority shareholders who required early payment of the guaranteed annual payment for the fiscal year ended September 30, 2006, by submitting such waiver letter after June 30, 2006.
 
On January 17, 2007, the Purchaser made, pursuant to a settlement agreement entered into with plaintiff shareholders in December 2006, the following guaranteed annual payments: (i) a total amount of €1 million was paid to all minority shareholders who had not yet requested early payment of the guaranteed annual payment for the fiscal year ended on September 30, 2006, and (ii) a total amount of €1 million representing the pro rata share of the guaranteed annual payment for the first five months of the fiscal year ending September 30, 2007 was paid to all minority shareholders.
 
The Domination Agreement cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. The Company’s subsidiaries, Celanese International Holdings Luxembourg S.à r.l. (“CIH”), formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate Celanese GmbH for any statutory annual loss incurred by Celanese GmbH during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, the Company may not have sufficient funds for payments on its indebtedness when due. The Company has not had to compensate Celanese GmbH for an annual loss for any period during which the Domination Agreement has been in effect.
 
The amounts of the fair cash compensation and of the guaranteed annual payment offered under the Domination Agreement are under court review in special award proceedings. As a result of these proceedings, either amount could be increased by the court so that all former Celanese GmbH shareholders, including those who have already tendered their shares into the mandatory offer and have received the fair cash compensation could claim the respective higher amounts. Certain former Celanese GmbH shareholders may initiate such proceedings also with respect to the Squeeze-Out compensation. In this case, former Celanese GmbH shareholders who ceased to be shareholders of Celanese GmbH due to the Squeeze-Out are entitled, pursuant to a settlement agreement between the Purchaser and certain former Celanese GmbH shareholders, to claim for their shares the higher of the compensation amounts determined by the court in these different proceedings. Payments these shareholders already received as compensation for their shares will be offset so that those shareholders who ceased to be shareholders of Celanese GmbH due to the Squeeze-Out are not entitled to more than the higher of the amount set in the two court proceedings.
 
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the Celanese GmbH, formerly known as Celanese AG, extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between Celanese GmbH and the Purchaser became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Our subsidiaries, Celanese International Holdings Luxembourg S.a.r.l. (“CIH”), formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate Celanese GmbH for any statutory annual loss incurred by Celanese GmbH during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate Celanese GmbH for an annual loss for any period during which the Domination Agreement has been in effect.
 
These excerpts taken from the CE 10-K filed Feb 13, 2009.
Domination Agreement
 
On October 1, 2004, a Domination Agreement between Celanese GmbH and the Purchaser became operative. When the Domination Agreement became operative, the Purchaser became obligated to offer to acquire all outstanding Celanese GmbH shares from the minority shareholders of Celanese GmbH in return for payment of fair cash compensation. The amount of this fair cash compensation was determined to be €41.92 per share, plus interest, in accordance with applicable German law. Until the Squeeze-Out was registered in the commercial register in Germany on December 22, 2006, any minority shareholder who elected not to sell its shares to the Purchaser was entitled to remain a shareholder of Celanese GmbH and to receive from the Purchaser a gross guaranteed annual payment on its shares of €3.27 per Celanese GmbH share less certain corporate taxes in lieu of any dividend. For the year ended December 31, 2006, a charge of €3 million ($4 million) was recorded to Other income (expense), net for the anticipated guaranteed annual payment.
 
On June 1, 2006, the guaranteed annual payment for the fiscal year ended September 30, 2005, which amounted to €3 million, was paid. In addition, pursuant to a settlement agreement entered into with plaintiff shareholders in March 2006, the Purchaser paid €1 million on June 30, 2006, the guaranteed annual payment for the fiscal year ended September 30, 2006, to those shareholders who signed a letter waiving any further rights with respect to such guaranteed annual payment that ordinarily would become due and payable after the 2007 annual general meeting. Between June 30, 2006, and January 17, 2007, the Purchaser paid a total amount of less than €1 million to minority shareholders who required early payment of the guaranteed annual payment for the fiscal year ended September 30, 2006, by submitting such waiver letter after June 30, 2006.
 
On January 17, 2007, the Purchaser made, pursuant to a settlement agreement entered into with plaintiff shareholders in December 2006, the following guaranteed annual payments: (i) a total amount of €1 million was paid to all minority shareholders who had not yet requested early payment of the guaranteed annual payment for the fiscal year ended on September 30, 2006, and (ii) a total amount of €1 million representing the pro rata share of the guaranteed annual payment for the first five months of the fiscal year ending September 30, 2007 was paid to all minority shareholders.
 
The Domination Agreement cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. The Company’s subsidiaries, Celanese International Holdings Luxembourg S.à r.l. (“CIH”), formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate Celanese GmbH for any statutory annual loss incurred by Celanese GmbH during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, the Company may not have sufficient funds for payments on its indebtedness when due. The Company has not had to compensate Celanese GmbH for an annual loss for any period during which the Domination Agreement has been in effect.
 
The amounts of the fair cash compensation and of the guaranteed annual payment offered under the Domination Agreement are under court review in special award proceedings. As a result of these proceedings, either amount could be increased by the court so that all former Celanese GmbH shareholders, including those who have already tendered their shares into the mandatory offer and have received the fair cash compensation could claim the respective higher amounts. Certain former Celanese GmbH shareholders may initiate such proceedings also with respect to the Squeeze-Out compensation. In this case, former Celanese GmbH shareholders who ceased to be shareholders of Celanese


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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
GmbH due to the Squeeze-Out are entitled, pursuant to a settlement agreement between the Purchaser and certain former Celanese GmbH shareholders, to claim for their shares the higher of the compensation amounts determined by the court in these different proceedings. Payments these shareholders already received as compensation for their shares will be offset so that those shareholders who ceased to be shareholders of Celanese GmbH due to the Squeeze-Out are not entitled to more than the higher of the amount set in the two court proceedings.
 
Domination
Agreement



 



On October 1, 2004, a Domination Agreement between Celanese
GmbH and the Purchaser became operative. When the Domination
Agreement became operative, the Purchaser became obligated to
offer to acquire all outstanding Celanese GmbH shares from the
minority shareholders of Celanese GmbH in return for payment of
fair cash compensation. The amount of this fair cash
compensation was determined to be €41.92 per share, plus
interest, in accordance with applicable German law. Until the
Squeeze-Out was registered in the commercial register in Germany
on December 22, 2006, any minority shareholder who elected
not to sell its shares to the Purchaser was entitled to remain a
shareholder of Celanese GmbH and to receive from the Purchaser a
gross guaranteed annual payment on its shares of €3.27 per
Celanese GmbH share less certain corporate taxes in lieu of any
dividend. For the year ended December 31, 2006, a charge of
€3 million ($4 million) was recorded to Other
income (expense), net for the anticipated guaranteed annual
payment.


 



On June 1, 2006, the guaranteed annual payment for the
fiscal year ended September 30, 2005, which amounted to
€3 million, was paid. In addition, pursuant to a
settlement agreement entered into with plaintiff shareholders in
March 2006, the Purchaser paid €1 million on
June 30, 2006, the guaranteed annual payment for the fiscal
year ended September 30, 2006, to those shareholders who
signed a letter waiving any further rights with respect to such
guaranteed annual payment that ordinarily would become due and
payable after the 2007 annual general meeting. Between
June 30, 2006, and January 17, 2007, the Purchaser
paid a total amount of less than €1 million to
minority shareholders who required early payment of the
guaranteed annual payment for the fiscal year ended
September 30, 2006, by submitting such waiver letter after
June 30, 2006.


 



On January 17, 2007, the Purchaser made, pursuant to a
settlement agreement entered into with plaintiff shareholders in
December 2006, the following guaranteed annual payments:
(i) a total amount of €1 million was paid to all
minority shareholders who had not yet requested early payment of
the guaranteed annual payment for the fiscal year ended on
September 30, 2006, and (ii) a total amount of
€1 million representing the pro rata share of the
guaranteed annual payment for the first five months of the
fiscal year ending September 30, 2007 was paid to all
minority shareholders.


 



The Domination Agreement cannot be terminated by the Purchaser
in the ordinary course of business until September 30,
2009. The Company’s subsidiaries, Celanese International
Holdings Luxembourg S.à r.l. (“CIH”), formerly
Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US,
have each agreed to provide the Purchaser with financing to
strengthen the Purchaser’s ability to fulfill its
obligations under, or in connection with, the Domination
Agreement and to ensure that the Purchaser will perform all of
its obligations under, or in connection with, the Domination
Agreement when such obligations become due, including, without
limitation, the obligation to compensate Celanese GmbH for any
statutory annual loss incurred by Celanese GmbH during the term
of the Domination Agreement. If CIH
and/or
Celanese US are obligated to make payments under such guarantees
or other security to the Purchaser, the Company may not have
sufficient funds for payments on its indebtedness when due. The
Company has not had to compensate Celanese GmbH for an annual
loss for any period during which the Domination Agreement has
been in effect.


 



The amounts of the fair cash compensation and of the guaranteed
annual payment offered under the Domination Agreement are under
court review in special award proceedings. As a result of these
proceedings, either amount could be increased by the court so
that all former Celanese GmbH shareholders, including those who
have already tendered their shares into the mandatory offer and
have received the fair cash compensation could claim the
respective higher amounts. Certain former Celanese GmbH
shareholders may initiate such proceedings also with respect to
the Squeeze-Out compensation. In this case, former Celanese GmbH
shareholders who ceased to be shareholders of Celanese





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Table of Contents





 




CELANESE
CORPORATION AND SUBSIDIARIES




 




NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)


 



GmbH due to the Squeeze-Out are entitled, pursuant to a
settlement agreement between the Purchaser and certain former
Celanese GmbH shareholders, to claim for their shares the higher
of the compensation amounts determined by the court in these
different proceedings. Payments these shareholders already
received as compensation for their shares will be offset so that
those shareholders who ceased to be shareholders of Celanese
GmbH due to the Squeeze-Out are not entitled to more than the
higher of the amount set in the two court proceedings.


 




This excerpt taken from the CE 10-Q filed Oct 22, 2008.
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the Celanese AG (“CAG”) extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Our subsidiaries, Celanese International Holdings Luxembourg S.a.r.l. (“CIH”), formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
This excerpt taken from the CE 10-Q filed Jul 23, 2008.
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the Celanese AG (“CAG”) extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Our subsidiaries, Celanese International Holdings Luxembourg S.a.r.l. (“CIH”), formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
This excerpt taken from the CE 10-Q filed Apr 23, 2008.
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the CAG extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Our subsidiaries, CIH, formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
These excerpts taken from the CE 10-K filed Feb 29, 2008.
Domination Agreement
 
On October 1, 2004, a Domination Agreement between CAG and the Purchaser became operative. When the Domination Agreement became operative, the Purchaser became obligated to offer to acquire all outstanding CAG shares from the minority shareholders of CAG in return for payment of fair cash compensation. The amount of this fair cash compensation was determined to be €41.92 per share, plus interest, in accordance with applicable German law. Until the Squeeze-Out was registered in the commercial register in Germany on December 22, 2006, any minority shareholder who elected not to sell its shares to the Purchaser was entitled to remain a shareholder of CAG and to receive from the Purchaser a gross guaranteed annual payment on its shares of €3.27 per CAG share less certain corporate taxes in lieu of any dividend. For the years ended December 31, 2007, 2006 and 2005, a charge of €0 million ($0 million), €3 million ($4 million) and €19 million ($22 million), respectively, was recorded in Other income (expense), net for the anticipated guaranteed annual payment.
 
On June 1, 2006, the guaranteed annual payment for the fiscal year ended September 30, 2005, which amounted to €3 million, was paid. In addition, pursuant to a settlement agreement entered into with plaintiff shareholders in March 2006, the Purchaser paid €1 million on June 30, 2006, the guaranteed annual payment for the fiscal year ended September 30, 2006, to those shareholders who signed a letter waiving any further rights with respect to such guaranteed annual payment that ordinarily would become due and payable after the 2007 annual general meeting. Between June 30, 2006, and January 17, 2007, the Purchaser paid a total amount of less than €1 million to minority shareholders who required early payment of the guaranteed annual payment for the fiscal year ended September 30, 2006, by submitting such waiver letter after June 30, 2006.
 
On January 17, 2007, the Purchaser made, pursuant to a settlement agreement entered into with plaintiff shareholders in December 2006, the following guaranteed annual payments: (i) a total amount of €1 million was paid to all minority shareholders who had not yet requested early payment of the guaranteed annual payment for the fiscal year ended on September 30, 2006, and (ii) a total amount of €1 million representing the pro rata share of the guaranteed annual payment for the first five months of the fiscal year ending September 30, 2007 was paid to all minority shareholders.
 
The Domination Agreement cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. The Company’s subsidiaries, Celanese International Holdings Luxembourg S.à r.l. (“CIH”), formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, the Company may not have sufficient funds for payments on its indebtedness when due. The Company has not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
The Domination Agreement was challenged in eight Null and Void actions in the Frankfurt District Court. These actions were seeking to have the shareholders’ resolution approving the Domination Agreement declared null


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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
and void based on an alleged violation of formal requirements relating to the invitation for the May 2005 CAG shareholders’ meeting. In May 2007, the Frankfurt District Court dismissed all Null and Void actions.
 
The amounts of the fair cash compensation and of the guaranteed annual payment offered under the Domination Agreement are under court review in special award proceedings (see Note 24). As a result of these proceedings, either amount could be increased by the court so that all former CAG shareholders, including those who have already tendered their shares into the mandatory offer and have received the fair cash compensation could claim the respective higher amounts. Certain former CAG shareholders may initiate such proceedings also with respect to the Squeeze-Out compensation. In this case, former CAG shareholders who ceased to be shareholders of CAG due to the Squeeze-Out are entitled, pursuant to a settlement agreement between the Purchaser and certain former CAG shareholders, to claim for their shares the higher of the compensation amounts determined by the court in these different proceedings. Payments these shareholders already received as compensation for their shares will be offset so that those shareholders who ceased to be shareholders of CAG due to the Squeeze-Out are not entitled to more than the higher of the amount set in the two court proceedings.
 
3.   Summary of Accounting Policies
 
Domination
Agreement



 



On October 1, 2004, a Domination Agreement between CAG and
the Purchaser became operative. When the Domination Agreement
became operative, the Purchaser became obligated to offer to
acquire all outstanding CAG shares from the minority
shareholders of CAG in return for payment of fair cash
compensation. The amount of this fair cash compensation was
determined to be €41.92 per share, plus interest, in
accordance with applicable German law. Until the Squeeze-Out was
registered in the commercial register in Germany on
December 22, 2006, any minority shareholder who elected not
to sell its shares to the Purchaser was entitled to remain a
shareholder of CAG and to receive from the Purchaser a gross
guaranteed annual payment on its shares of €3.27 per CAG
share less certain corporate taxes in lieu of any dividend. For
the years ended December 31, 2007, 2006 and 2005, a charge
of €0 million ($0 million), €3 million
($4 million) and €19 million ($22 million),
respectively, was recorded in Other income (expense), net for
the anticipated guaranteed annual payment.


 



On June 1, 2006, the guaranteed annual payment for the
fiscal year ended September 30, 2005, which amounted to
€3 million, was paid. In addition, pursuant to a
settlement agreement entered into with plaintiff shareholders in
March 2006, the Purchaser paid €1 million on
June 30, 2006, the guaranteed annual payment for the fiscal
year ended September 30, 2006, to those shareholders who
signed a letter waiving any further rights with respect to such
guaranteed annual payment that ordinarily would become due and
payable after the 2007 annual general meeting. Between
June 30, 2006, and January 17, 2007, the Purchaser
paid a total amount of less than €1 million to
minority shareholders who required early payment of the
guaranteed annual payment for the fiscal year ended
September 30, 2006, by submitting such waiver letter after
June 30, 2006.


 



On January 17, 2007, the Purchaser made, pursuant to a
settlement agreement entered into with plaintiff shareholders in
December 2006, the following guaranteed annual payments:
(i) a total amount of €1 million was paid to all
minority shareholders who had not yet requested early payment of
the guaranteed annual payment for the fiscal year ended on
September 30, 2006, and (ii) a total amount of
€1 million representing the pro rata share of the
guaranteed annual payment for the first five months of the
fiscal year ending September 30, 2007 was paid to all
minority shareholders.


 



The Domination Agreement cannot be terminated by the Purchaser
in the ordinary course of business until September 30,
2009. The Company’s subsidiaries, Celanese International
Holdings Luxembourg S.à r.l. (“CIH”), formerly
Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US,
have each agreed to provide the Purchaser with financing to
strengthen the Purchaser’s ability to fulfill its
obligations under, or in connection with, the Domination
Agreement and to ensure that the Purchaser will perform all of
its obligations under, or in connection with, the Domination
Agreement when such obligations become due, including, without
limitation, the obligation to compensate CAG for any statutory
annual loss incurred by CAG during the term of the Domination
Agreement. If CIH
and/or
Celanese US are obligated to make payments under such guarantees
or other security to the Purchaser, the Company may not have
sufficient funds for payments on its indebtedness when due. The
Company has not had to compensate CAG for an annual loss for any
period during which the Domination Agreement has been in effect.


 



The Domination Agreement was challenged in eight Null and Void
actions in the Frankfurt District Court. These actions were
seeking to have the shareholders’ resolution approving the
Domination Agreement declared null





F-8





 





 




CELANESE
CORPORATION AND SUBSIDIARIES




 




NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)


 



and void based on an alleged violation of formal requirements
relating to the invitation for the May 2005 CAG
shareholders’ meeting. In May 2007, the Frankfurt District
Court dismissed all Null and Void actions.


 



The amounts of the fair cash compensation and of the guaranteed
annual payment offered under the Domination Agreement are under
court review in special award proceedings (see Note 24). As
a result of these proceedings, either amount could be increased
by the court so that all former CAG shareholders, including
those who have already tendered their shares into the mandatory
offer and have received the fair cash compensation could claim
the respective higher amounts. Certain former CAG shareholders
may initiate such proceedings also with respect to the
Squeeze-Out compensation. In this case, former CAG shareholders
who ceased to be shareholders of CAG due to the Squeeze-Out are
entitled, pursuant to a settlement agreement between the
Purchaser and certain former CAG shareholders, to claim for
their shares the higher of the compensation amounts determined
by the court in these different proceedings. Payments these
shareholders already received as compensation for their shares
will be offset so that those shareholders who ceased to be
shareholders of CAG due to the Squeeze-Out are not entitled to
more than the higher of the amount set in the two court
proceedings.


 















3.  

Summary
of Accounting Policies



 




This excerpt taken from the CE 10-Q filed Oct 24, 2007.
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the CAG extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Our subsidiaries, CIH, formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
This excerpt taken from the CE 10-Q filed Jul 27, 2007.
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the CAG extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Our subsidiaries, Celanese International Holdings Luxembourg S.à r.l. (“CIH”), and Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIH and/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
This excerpt taken from the CE 10-Q filed May 9, 2007.
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the CAG extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004. Our subsidiaries, Celanese Caylux Holdings Luxembourg S.C.A., formerly BCP Caylux Holdings Luxembourg S.C.A (“Celanese Caylux”) and BCP Crystal, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If Celanese Caylux and/or BCP Crystal are obligated to make payments under such guarantees or other security to the Purchaser and/or the minority shareholders, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
This excerpt taken from the CE 10-K filed Feb 21, 2007.
Domination Agreement
 
On October 1, 2004, a domination and profit and loss transfer agreement (the “Domination Agreement”) between CAG and the Purchaser became operative. When the Domination Agreement became operative, the Purchaser became obligated to offer to acquire all outstanding CAG shares from the minority shareholders of CAG in return for payment of fair cash compensation. The amount of this fair cash compensation was determined to be €41.92 per share, plus interest, in accordance with applicable German law. Any minority shareholder who elected

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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

not to sell its shares to the Purchaser was, until the Squeeze-Out (as defined below) was registered in the commercial register on December 22, 2006, entitled to remain a shareholder of CAG and to receive from the Purchaser a gross guaranteed annual payment on its shares of €3.27 per CAG share less certain corporate taxes in lieu of any dividend. Taking into account the circumstances and the tax rates at the time of entering into the Domination Agreement, the net guaranteed annual payment was €2.89 per share for a full fiscal year. For the years ended December 31, 2006 and 2005 and the nine months ended December 31, 2004, a charge of €3 million ($4 million), €19 million ($22 million) and €6 million ($8 million), respectively, was recorded in Other income (expense), net for the anticipated guaranteed payment. The remaining liability at December 31, 2006 to be paid in 2007 for CAG’s 2006 fiscal year is €3 million ($3 million).
 
On June 1, 2006, the guaranteed dividend for the fiscal year ended September 30, 2005, which amounted to €3 million, was paid. In addition, pursuant to a settlement agreement entered into with plaintiff shareholders in March 2006, the Purchaser paid €1 million on June 30, 2006, the guaranteed dividend for the fiscal year ended September 30, 2006, to those shareholders who signed a letter waiving any further rights with respect to such guaranteed dividend that ordinarily would become due and payable after the 2007 annual general meeting. Between June 30, 2006, and January 17, 2007, the Purchaser paid a total amount of less than €1 million to minority shareholders who required early payment of the guaranteed dividend for the fiscal year ended September 30, 2006, by submitting such waiver letter after June 30, 2006.
 
On January 17, 2007, the Purchaser made, pursuant to a settlement agreement entered into with plaintiff shareholders in December 2006, the following guaranteed dividend payments: (i) a total amount of €1 million was paid to all minority shareholders who had not yet requested early payment of the guaranteed dividend for the fiscal year ended on September 30, 2006, and (ii) a total amount of €1 million representing the pro rata share of the guaranteed dividend for the first five months of the fiscal year ending September 30, 2007 was paid to all minority shareholders.
 
Beginning October 1, 2004, under the terms of the Domination Agreement, the Purchaser, as the dominating entity, among other things, is required to compensate CAG for any statutory annual loss incurred by CAG, the dominated entity, on a non-consolidated basis, at the end of the fiscal year when the loss was incurred. This obligation to compensate CAG for annual losses will apply during the entire term of the Domination Agreement. The Purchaser has not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.
 
The Domination Agreement is subject to legal challenges instituted by dissenting shareholders. During August 2004, ten actions were brought by minority shareholders against CAG in the Frankfurt District Court, all of which were consolidated in September 2004. Several minority shareholders joined these proceedings via a third party intervention in support of the plaintiffs. The Purchaser joined the proceedings via a third party intervention in support of CAG. Among other things, these actions requested the court to set aside shareholder resolutions passed at the extraordinary general meeting held on July 30-31, 2004 based on allegations that include the alleged violation of procedural requirements and information rights of the shareholders. On March 6, 2006, the Purchaser and CAG signed a settlement agreement settling the ten minority shareholder actions (See Note 25).
 
Twenty-seven minority shareholders filed lawsuits in May and June of 2005 in the Frankfurt District Court contesting the shareholder resolutions passed at the annual general meeting held May 19-20, 2005, which confirmed the resolutions passed at the July 30-31, 2004 extraordinary general meeting approving the Domination Agreement and a change in CAG’s fiscal year. In conjunction with the Purchaser’s acquisition of 5.9 million ordinary shares of CAG from two shareholders in August 2005, two of those lawsuits were withdrawn. In February 2006, the Frankfurt District Court ruled to dismiss all challenges contesting the confirmatory resolutions and upheld only the challenge regarding the ratification of the acts of the members of the board of management and the supervisory board. CAG appealed the decision with respect to the ratification. Three plaintiff shareholders appealed the decision on the confirmatory resolutions, however, two plaintiff shareholders agreed in a settlement agreement to withdraw their actions.


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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
The Domination Agreement is further challenged in four Null and Void actions pending in the Frankfurt District Court. These actions are seeking to have the shareholders’ resolution approving the Domination Agreement declared null and void based on an alleged violation of formal requirements relating to the invitation for the shareholders’ meeting.
 
If legal challenges of the Domination Agreement by dissenting shareholders of CAG are successful, some or all actions taken under the Domination Agreement, including the transfer of CAC (see Organizational Restructuring below for discussion regarding CAC’s transfer) may be required to be reversed and the Company may be required to compensate CAG for damages caused by such actions, which could have a material impact on the Company’s financial position, results of operations and cash flows.
 
The amounts of the fair cash compensation and of the guaranteed annual payment offered under the Domination Agreement are under court review in special award proceedings (See Note 25). As a result of these proceedings, either amount could be increased by the court so that all minority shareholders, including those who have already tendered their shares into the mandatory offer and have received the fair cash compensation could claim the respective higher amounts. Minority shareholders may initiate such proceedings also with respect to the Squeeze-Out compensation. In this case, shareholders who cease to be shareholders of CAG due to the Squeeze-Out are entitled, pursuant to a settlement agreement between the Purchaser and minority shareholders, to claim for their shares the higher of the compensation amounts determined by the court in these different proceedings. Payments they already received as compensation for their shares will be offset so that the minority shareholders who cease to be shareholders of CAG due to the Squeeze-Out are not entitled to more than the higher of the amount set in the two court proceedings.
 
This excerpt taken from the CE 10-Q filed Nov 1, 2006.
Domination Agreement
 
The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the CAG extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004. See further details in our 2005 Annual Report on Form 10-K which was filed with the SEC on March 31, 2006.
 
On June 1, 2006, the guaranteed dividend for the fiscal year ended on September 30, 2005, which amounted to €3 million ($3 million), was paid. In addition, pursuant to a settlement agreement entered into with plaintiff shareholders in March 2006, the Purchaser paid €1 million ($1 million) on June 30, 2006, the guaranteed dividend for the fiscal year ending on September 30, 2006, to those shareholders who signed a letter waiving any further rights with respect to such guaranteed dividend that ordinarily would become due after next year’s annual general meeting. The remaining liability at September 30, 2006 to be paid in 2007 for CAG’s 2006 fiscal year is €1 million ($2 million).


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While the Domination Agreement is operative, the Purchaser is required to compensate CAG for any statutory annual loss incurred by CAG, the dominated entity, on a non-consolidated basis, at the end of its fiscal year when the loss was incurred. If the Purchaser were obligated to make cash payments to CAG to cover an annual loss, the Purchaser might not have sufficient funds to pay interest when due and, unless the Purchaser is able to obtain funds from a source other than annual profits of CAG, the Purchaser might not be able to satisfy its obligation to fund such shortfall. The Purchaser has not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect. The Domination Agreement cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009.
 
Our subsidiaries, Celanese Caylux Holdings Luxembourg S.C.A., formerly BCP Caylux Holdings Luxembourg S.C.A (“Celanese Caylux”) and BCP Crystal, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligations to make a guaranteed annual payment to the outstanding minority shareholders, to offer to acquire all outstanding CAG shares from the minority shareholders in return for payment of fair cash consideration and to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. In addition, the Company expects to guarantee all obligations of the Purchaser under, or in connection with, the Domination Agreement, including the repayment of all existing and future intercompany indebtedness of the Company’s subsidiaries to CAG. Further, under the terms of the Company’s guarantee, in certain limited circumstances CAG may be entitled to require the immediate repayment of some or all of the intercompany indebtedness owed by the Company’s subsidiaries to CAG. If the Company, Celanese Caylux and/or BCP Crystal are obligated to make payments under such guarantees to the Purchaser, CAG and/or the minority shareholders, as the case may be, or if the intercompany indebtedness owed to CAG is accelerated, we may not have sufficient funds for payments on our indebtedness when due or to make funds available to the Company.
 
This excerpt taken from the CE 10-Q filed Aug 2, 2006.
Domination Agreement
 
On October 1, 2004, a domination and profit and loss transfer agreement (the “Domination Agreement”) between CAG and the Purchaser became operative. When the Domination Agreement became operative, the


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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

Purchaser became obligated to offer to acquire all outstanding CAG shares from the minority shareholders of CAG in return for payment of fair cash compensation. The amount of this fair cash compensation had been determined to be €41.92 per share, plus interest, in accordance with applicable German law. The Purchaser may elect, or be required, to pay a purchase price in excess of €41.92 to acquire the remaining outstanding CAG shares. Any minority shareholder who elects not to sell its shares to the Purchaser will, until the above Squeeze-Out becomes effective, be entitled to remain a shareholder of CAG and to receive from the Purchaser a gross guaranteed fixed annual payment on its shares of €3.27 per CAG share less certain corporate taxes in lieu of any future dividend. Taking into account the circumstances and the tax rates at the time of entering into the Domination Agreement, the net guaranteed fixed annual payment would be €2.89 per share for a full fiscal year. The net guaranteed fixed annual payment may, depending on applicable corporate tax rates, in the future be higher, lower or the same as €2.89 per share. For the three and six months ended June 30, 2006, a charge of €1 million ($1 million) and €2 million ($2 million), respectively, was recorded in Other income (expense), net for the anticipated guaranteed payment. For the three and six months ended June 30, 2005, a charge of €5 million ($7 million) and €12 million ($15 million), respectively, was recorded in Other income (expense), net for the anticipated guaranteed payment. Substantially all of the charge recorded during the three and six months ended June 30, 2005 was reversed during the three months ended September 30, 2005 as a result of the additional CAG shares purchased by the Company (See Note 2).
 
On June 1, 2006, the guaranteed dividend (Ausgleichszahlung) for the fiscal year ended on September 30, 2005, which amounted to €3 million ($3 million), was paid. In addition, pursuant to a settlement agreement entered into with plaintiff shareholders in March 2006, the Purchaser paid €1 million ($1 million) on June 30, 2006, the guaranteed dividend (Ausgleichszahlung) for the fiscal year ending on September 30, 2006, to those shareholders who signed a letter waiving any further rights with respect to such guaranteed dividend (Ausgleichszahlung) that ordinarily would become due and payable after next year’s annual general meeting. The remaining liability at June 30, 2006 to be paid in 2007 for CAG’s 2006 fiscal year is €2 million ($2 million).
 
Beginning October 1, 2004, under the terms of the Domination Agreement, the Purchaser, as the dominating entity, among other things, is required to compensate CAG for any statutory annual loss incurred by CAG, the dominated entity, on a non-consolidated basis, at the end of the fiscal year when the loss was incurred. This obligation to compensate CAG for annual losses will apply during the entire term of the Domination Agreement. The Purchaser was not obligated to compensate CAG for the period October 1, 2004 to September 30, 2005 because CAG did not incur a loss during this period.
 
There is no assurance that the Domination Agreement will remain operative in its current form. If the Domination Agreement ceases to be operative, the Company will not be able to directly give instructions to the CAG board of management. The Domination Agreement cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. However, irrespective of whether a domination agreement is in place between the Purchaser and CAG, under German law, CAG is effectively controlled by the Company because of the Purchaser’s more than 95% ownership of the outstanding CAG shares. The Company does have the ability, through a variety of means, to utilize its controlling rights to, among other things, (1) cause a domination agreement to become operative; (2) use its ability, through its more than 95% voting power at any shareholders’ meetings of CAG, to elect the shareholder representatives on the supervisory board and to thereby effectively control the appointment and removal of the members of the CAG board of management; and (3) effect all decisions that a majority shareholder who owns more than 95% is permitted to make under German law. The controlling rights of the Company constitute a controlling financial interest for accounting purposes and result in the Company being required to consolidate CAG as of the date of acquisition. In addition, as long as the Domination Agreement remains effective, the Purchaser is entitled to give instructions directly to the management board of CAG, including, but not limited to, instructions that are disadvantageous to CAG, as long as such disadvantageous instructions benefit the Purchaser or the companies affiliated with either the Purchaser or CAG.


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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

 
The Domination Agreement is subject to legal challenges instituted by dissenting shareholders. During August 2004, ten actions were brought by minority shareholders against CAG in the Frankfurt District Court (Landgericht), all of which were consolidated in September 2004. Several minority shareholders joined these proceedings via a third party intervention in support of the plaintiffs. The Company joined the proceedings via a third party intervention in support of CAG. Among other things, these actions request the court to set aside shareholder resolutions passed at the extraordinary general meeting held on July 30 and 31, 2004 based on allegations that include the alleged violation of procedural requirements and information rights of the shareholders. On March 6, 2006, the Purchaser and CAG signed a settlement agreement settling the ten minority shareholder actions (See Note 14).
 
Twenty-seven minority shareholders filed lawsuits in May and June of 2005 in the Frankfurt District Court (Landgericht) contesting the shareholder resolutions passed at the annual general meeting held May 19-20, 2005, which confirmed the resolutions passed at the July 30-31, 2004 extraordinary general meeting approving the Domination Agreement and a change in CAG’s fiscal year. In conjunction with the Purchaser’s acquisition of 5.9 million ordinary shares of CAG from two shareholders in August 2005, two of those lawsuits were withdrawn. In February 2006, the Frankfurt District Court (Landgericht) ruled to dismiss all challenges contesting the confirmatory resolutions and upheld only the challenge regarding the ratification (Entlastung) of the acts of the members of the board of management and the supervisory board. CAG appealed the decision with respect to the ratification. Three appeals by plaintiff shareholders regarding the decision on the confirmatory resolutions are also pending.
 
The Domination Agreement is further challenged in four Null and Void actions (Nichtigkeitsklagen) pending in the Frankfurt District Court (Landgericht). These actions are seeking to have the shareholders’ resolution approving the Domination Agreement declared null and void based on an alleged violation of formal requirements relating to the invitation for the shareholders’ meeting.
 
If legal challenges of the Domination Agreement by dissenting shareholders of CAG are successful, some or all actions taken under the Domination Agreement, including the transfer of CAC (see Organizational Restructuring below for discussion regarding CAC’s transfer) may be required to be reversed and the Company may be required to compensate CAG for damages caused by such actions, which could have a material impact on the Company’s financial position, results of operations and cash flows.
 
Holders of CAG shares can still accept the Purchaser’s mandatory offer under the Domination Agreement to acquire their shares at €41.92 per share. Shareholders who elect not to do so will remain shareholders of CAG until the effectiveness of the Squeeze-Out with an entitlement under the Domination Agreement to the above described guaranteed fixed annual payment. Upon effectiveness of the Squeeze-Out, their shares will be transferred to the Purchaser against payment of €66.99 per share. In case of shareholder lawsuits against the shareholders’ resolution approving the Squeeze-Out, there can be no assurance as to whether and when the Squeeze-Out will become effective.
 
The amounts of the fair cash compensation and of the guaranteed fixed annual payment offered under the Domination Agreement are under court review in special award proceedings (Spruchverfahren, see Note 14). As a result of these proceedings, either amount could be increased by the court so that all minority shareholders, including those who have already tendered their shares into the mandatory offer and have received the fair cash compensation could claim the respective higher amounts. Minority shareholders may initiate such proceedings also with respect to the Squeeze-Out compensation. In this case, shareholders who cease to be shareholders of CAG due to the Squeeze-Out are entitled, pursuant to a settlement agreement between the Purchaser and minority shareholders, to claim for their shares the higher of the compensation amounts determined by the court in these different proceedings. Payments they already received as compensation for their shares will be offset so that the minority shareholders who cease to be shareholders of CAG due to the Squeeze-Out are not entitled to more than the higher of the amount set in the two court proceedings.


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CELANESE CORPORATION AND SUBSIDIARIES
 
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

 
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