Form 20-F 2005

Protection Agency regarding future assessment and remediation of certain contamination at the site. The precise nature of the
remedial action, however, has not yet been determined, and actual costs could exceed amounts recorded as a provision or disclosed
as a contingency depending on the method of remediation required, as finally approved by the relevant authorities. As further
described below, Rhodia Inc. is currently suing the former owners/operators of the Silver Bow site, in order to recover clean-up
costs related to this site.
Significant procedures filed by Rhodia
The Silver Bow Site
Regarding the Silver Bow site (Montana, United States), after several unsuccessful approaches beginning in November 2003 to Aventis
by us and Rhodia Inc., a formal legal notice was sent to Sanofi-Aventis on October 8, 2004, in order to claim contribution for present and
future environmental clean-up costs related to the Silver Bow site. In the absence of satisfactory answer from Sanofi-Aventis, Rhodia Inc.,
which never operated the Silver Bow site, filed a complaint against Sanofi-Aventis and Bayer CropScience Inc. with the U.S. District Court
for the District of New Jersey on December 29, 2004, under the U.S. Comprehensive Environmental Response, Compensation and Liability
Act and New Jersey state law to recover clean-up costs.
The Cubatao Site
Regarding the Cubatao site (Brazil), in the absence of a satisfactory answer from Sanofi-Aventis to a formal legal notice sent on
January 5, 2005, we and Rhodia Brasil filed a complaint against Sanofi-Aventis on March 15, 2005, before the Commercial Court of
Sao Paulo. This claim pursues the recovery of costs unfairly borne by Rhodia Brasil and directly related to the operation by Rhône-
Poulenc of this site, which was definitively closed in 1993. On March 28, 2006, Rhodia Brasil’s claim was declared inadmissible by
the Commercial Court of Sao Paulo. Rhodia Brasil is currently reviewing whether or not to appeal the decision.
Environmental and Employees’ Pension Liabilities
Regarding other environmental and employees’ pension liabilities, in the absence of a satisfactory answer from Sanofi-Aventis to
our formal request of preliminary conciliation sent on February 1, 2005, in respect to the dispute resolution procedure provided for
by indemnification agreements concluded with Rhône-Poulenc on May 26, 1998, we officially notified Sanofi-Aventis of the launch
of an arbitration procedure on April 13, 2005. We are currently claiming:
(i) regarding environmental liabilities:
- a payment of €125 million, which corresponds to the estimated remaining net amount of all environmental costs paid
or accrued as of December 31, 2004, relating to sites transferred by Rhône-Poulenc, which were not covered by either
our reserves recorded at the time of our initial public offering or by payments received pursuant to the Rhône-Poulenc
Environmental Indemnification Agreement;
- an additional adequate coverage for future potential environmental liabilities relating to the Rhône-Poulenc transferred
sites exceeding the amount accrued for as of December 31, 2004; and
(ii) regarding employee pension liabilities:
- a payment of €281 million representing the total actuarial losses disclosed as of December 1998, concerning Rhône-
Poulenc’s transfer of retirement plans to us, before the second offering by Rhône-Poulenc of our shares in 1999; and
- a payment of €250 million representing the increase from December 1998 to December 2005 of actuarial losses related to
Rhône-Poulenc’s French supplementary retirement plan obligations that were transferred to us as of December 31, 1997;
we are also asking for additional adequate coverage from Sanofi-Aventis for all costs necessary to fully fund the transfer
of such liabilities out of our accounts.
84 Form 20 - F 2005 - Rhodia