Belvedere says €14 million judgment against directors does not affect company, rescue procedure

By Caroline Salls

Pittsburgh, Feb. 23 - Belvedere SA said Monday that a British High Court personal judgment ordering directors Jacques Rouvroy and Christophe Trylinski to pay €14 million to speculative hedge fund Maple Leaf Macro Volatility Master Fund does not affect Belvedere and its subsidiaries.

According to a Belvedere news release, as a reconstructuring was taking place to end the involvement of CL Financial in 2007, directors Rouvroy and Trylinski decided to become personally involved in Belvedere's future by taking on a personal debt of €20 million to reclassify BSAR no.1.

Belvedere said The Maple Leaf hedge fund subscribed to €30 million debt of BSAR no.1 for a period of one year with 25% interest.

However, the company said the Belvedere directors refused to turn the letter of intent into a formal contract before the deadline for institutional placement given unacceptable conditions, notably a condition related to an informal structure proposed by Maple Leaf under which the directors would lend securities to them with a view to selling them on the open market via a concealed sale.

In spite of the directors' refusal, Belvedere said Maple Leaf subscribed to a block of the BSAR no.1 on the last day of the private placement "with the intention of making a highly speculative but profitable investment, typical behavior for this type of fund."

In the following weeks, the company said the directors obtained new financing from the banks, which made it possible for them to take over this holding.

Although they were not contractually bound, Belvedere said the directors offered to take over the block of shares by paying €32.5 million on Oct. 31, 2007, representing a profit of €2.5 million over three months.

Belvedere said Maple Leaf refused this offer and stood by the conditions of the term sheet, which in English and French law is not contractual and merely a letter of intent.

According to the release, Maple Leaf filed a case before the High Court of Justice in London, but the directors rejected the court's territorial jurisdiction in the matter.

"The financial crisis which followed resulted in the collapse of the Belvedere stock price, and of course a considerable loss of value for investors, the directors and Maple Leaf," Belvedere said in the release.

The company said the judgment was contested by the directors, who argued that they have no responsibility for the loss in value suffered by the fund, which refused to be released from the holding when it was financially feasible.

In addition, Belvedere said the directors have brought a case with the Procureur de la République in Paris alleging fraud and breach of trust.

Belvedere said the litigation between the directors and Maple Leaf has no bearing on the company's operations or its rescue procedure.

Based in Beaune, France, Belvedere is a producer and distributor of alcoholic and non-alcoholic beverages.

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