Hagemeyer NV extends credit agreement with lenders until February 2004

With a shaky third-quarter earnings report sparking concerns over its health, Hagemeyer NV announced that 24 of its lending banks had extended a standstill agreement until Feb. 9, 2004.

The agreement allows for the continuation of existing credit lines and gives Hagemeyer, the Dutch industrial conglomerate, time to structure a new refinancing plan. The company said it's discussing options to restructure its debt, which on Sept. 30 was approximately $1.1 billion, an increase of approximately $88 million since June 30.

According to a Reuters report, the Daily Het Financieele Dagblad, a European newspaper, published an article saying that Hagemeyer is talking with Clayton Dubilier & Rice (CDR), New York, about taking a stake in the company. CDR, a private equity investment firm, is no stranger to the electrical industry. The company bought WESCO Distribution from Westinghouse Electric Corp., Pittsburgh, in 1994, several years before WESCO went public. That article said Hagemeyer officials declined to confirm these discussions.

Shares of the publicly held Hagemeyer have plunged the past year by more than 50 percent due to concerns over its financing, according to an Amsterdam Dow Jones Newswire report.

Hagemeyer entered the North American electrical and industrial markets several years ago with acquisitions of Cameron & Barkley Co., Vallen Safety Supply Co. and Tristate Electrical and Electronics Supply Co. These companies now operate as Hagemeyer North America.

According to a company release, Hagemeyer's problems in the North American market are the sluggish U.S. industrial market, which accounts for approximately 75 percent of its sales, and the questions suppliers and customers have about its financial health.

“Hagemeyer's ability to write and implement new customer contracts is being hampered by concerns amongst our customer and supplier base about the company's financial position … The uncertainty regarding Hagemeyer's financial situation is having an impact on our sales, with competition exploiting our current position,” the release said.

Third-quarter sales in Hagemeyer's Professional Products and Services division, which includes its distribution businesses, fell to approximately $1.66 billion from approximately $2.43 billion a year ago.