BMW 2014 Annual Report Download - page 85

85 COMBINED MANAGEMENT REPORT
Significant agreements entered into by the Company
subject to control change clauses in the event of
a takeover bid
The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a take-
over bid:
– An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line
(which was not being utilised at the balance sheet
date) entitles the lending banks to give extraordinary
notice to terminate the credit line (such that all out-
standing amounts, including interest, would fall due
immediately) if one or more parties jointly acquire
direct or indirect control of BMW AG. The term “con-
trol” is defined as the acquisition of more than 50 %
of the share capital of BMW AG, the right to receive
more than 50 % of the dividend or the right to direct
the affairs of the Company or appoint the majority of
members of the Supervisory Board.
– A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
a new family 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
con-
tractual party concerning the impact of the change
of control on the cooperation arrangements are not
allayed during the subsequent discussion process.
–
BMW AG acts as guarantor for all obligations arising
from the joint venture agreement relating to BMW
Brilliance Automotive Ltd. in China. This agreement
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 termi-
nation of the joint venture agreement may result in
the sale of the shares to the other joint venture part-
ner or in the liquidation of the joint venture entity.
– Framework agreements are in place with financial in-
stitutions and banks (ISDA Master Agreements) with
respect to trading activities with derivative financial
instruments. Each of these agreements includes an
extraordinary right of termination which triggers the
immediate settlement of all current transactions in
the event that the creditworthiness of the party in-
volved is materially weaker following a direct or indi-
rect acquisition of beneficially owned equity capital
which confers the power to elect a majority of the
Supervisory Board of a contractual party or any other
ownership interest that enables the acquirer to exer-
cise control over a contractual party or which consti-
tutes a merger or a transfer of net assets.
–
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request early
repayment of the loan in the event of an imminent
or
actual change in control at the level of BMW AG
(partially in the capacity of guarantor and partially in
the capacity of borrower), if the EIB has reason to
as-
sume – 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 significant
adverse impact, or, in all but one case, as an additional
alternative, if the borrower refuses to hold such dis-
cussions. 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 agreements 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, (iii) the right to receive more than 50 % of
dividends payable, and, in all but one case, as an ad-
ditional 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 operations SGL
Automotive Carbon Fibers LLC, Delaware, USA and
SGL Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement includes call and put rights
in case – either directly or indirectly – 50 % or more of
the voting rights relating to the relevant other share-
holder of the joint operations are acquired by a third
party, or if 25 % of such voting rights have been ac-
quired by a third party if that third party is a com-
petitor of the party that has not been affected by the
acquisition of the voting rights. In the event of such
acquisitions of voting rights by a third party, the non-