BMW 2010 Annual Report Download - page 48

46
12 GROUP MANAGEMENT REPORT
12 A Review of the Financial Year
14 General Economic Environment
18 Review of Operations
41 BMW Group – Capital Market
Activities
44 Disclosures relevant for takeovers
and explanatory comments
47 Financial Analysis
47 Internal Management System
49 Earnings Performance
51 Financial Position
53 Net Assets Position
55 Subsequent Events Report
55 Value Added Statement
57 Key Performance Figures
58 Comments on BMW AG
62 Internal Control System and
explanatory comments
63 Risk Management
70 Outlook
– A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
anew range of small (1 to 1.6 litre) petrol-driven en-
gines entitles each of the cooperation partners to give
extraordinary notification of termination in the event
of a competitor acquiring control over the other con-
tractual party and if any concerns of the other contrac-
tual party concerning the impact of the change of con-
trol on the cooperation arrangements are not allayed
during the subsequent discussion process.
–
BMW AG acts as the guarantor for all of the obligations
arising from the joint venture agreement relating to
BMW Brilliance Automotive Ltd. in China. This agree-
ment grants an extraordinary right of termination to
either joint venture partner in the event that, either
directly or indirectly, more than 25% of the shares of
the other party are acquired by a third party or the
other party is merged with another legal entity. The
termination of the joint venture agreement may re-
sult
in the sale of the shares to the other joint venture
partner or in the liquidation of the joint venture
entity.
– Regarding the trading of derivative financial instru-
ments, framework agreements are in place with finan-
cial institutions and banks (ISDA Master Agreements),
each of which contain extraordinary rights of termi-
nation which trigger the immediate settlement of all
current transactions, in the event that the creditwor-
thiness of the respective party is materially weaker fol-
lowing the direct or indirect acquisition of beneficial
ownership of equity securities having the power to
elect a majority of the Supervisory Board of a contrac-
tual party or any other ownership interest enabling
the acquirer to exercise control of a contractual party
or a merger or transfer of assets.
– Financing agreements in place with the European In-
vestment Bank (EIB) entitle the EIB to request early
repayment of the loans in the event of an imminent or
actual change in control at the level of BMW AG (which
is in most cases the guarantor, in one case, however,
the borrower), if the EIB has reason to assume – either
after the change of control has taken place or 30 days
after it has requested to discuss the situation – that the
change in control could have a significantly adverse
impact, or if – as stated in two of the contracts – the
borrower refuses to hold such discussions. A change
in control of BMW AG arises if one or more individuals
take over or lose control of BMW AG, with control
being defined in the above-mentioned financing agree-
ments as (i) holding or having control over more than
50% of the voting rights, (ii) the right to stipulate the
majority of the members of the Board of Management
or Supervisory Board, or (iii) the right to receive more
than 50% of dividends payable, and, in one case as
additional alternative (iv) other comparable controlling
influence over BMW AG.
–
BMW AG is party to an agreement with SGL Carbon SE,
Wiesbaden, relating to the joint ventures SGL Auto-
motive Carbon Fibers LLC, Delaware, USA, and SGL
Automotive Carbon Fibers GmbH & Co. KG, Munich.
The agreement includes call and put rights in the
event that 50% or more of the voting rights relating to
the relevant other shareholder of the joint venture
areeither directly or indirectly acquired by a third party,
or in the event that 25% of such voting rights are ac-
quired by a third party who is a competitor of the party
not affected by the acquisition of voting rights. In the
event of such acquisitions of voting rights by a third
party, the non-affected shareholder has the right to
purchase the affected shareholder’s shares in the joint
venture or to demand the sale of its own shares in the
joint venture to the affected shareholder.
–
BMW AG is party to an agreement with Peugeot SA,
Paris, relating to the joint venture BMW Peugeot
Citroën Electrification B. V., the Netherlands. The agree-
ment
includes call and put rights in the event that 50%
or more of the voting rights relating to the relevant
other shareholder of the joint venture are either directly
or indirectly acquired by a third party, or in the event
that one-third of such voting rights are acquired by a
third party who is a competitor of the party not affected
by the acquisition of voting rights. In the event of
such
acquisitions of voting rights by a third party, the
non-affected shareholder has the right to purchase
theaffected shareholder’s shares in the joint venture
or to demand the sale of its own shares in the joint
venture to the affected shareholder. The validity of the
agreement between BMW AG and Peugeot SA is sub-
ject to the condition precedent that the transaction is
authorised by the relevant cartel authorities.
Compensation agreements with members of the Board
of Management or with employees in the event of a
takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Management
or with employees for situations involving a takeover
bid.