Q4 - Power Corporation of Canada

PARGESA HOLDING SAPower Financial and the Frère group of Charleroi, Belgium, control on an equal basis Parjointco N.V., aNetherlands-based company that, as at December 31, 2012, held a 75.4% voting interest and a 55.6% equityinterest in Pargesa Holding SA (Pargesa), the Pargesa group’s parent company. Pargesa has its head office inGeneva, Switzerland and its shares are listed on the Swiss Exchange (SWX). The Pargesa group holds interests ina limited number of large European companies active primarily in the following sectors: energy, water, wasteservices, industrial minerals, cement and building materials, and wines and spirits.At year-end, the carrying value of Power Financial’s interest in Parjointco was $2.1 billion, compared to$2.2 billion in 2011.As at December 31, 2012, Pargesa held a 50.0% equity interest (same in 2011) in Groupe Bruxelles Lambert(GBL), representing 52.0% of the voting rights. GBL, a holding company whose head office is in Brussels,Belgium, is listed on the Euronext Exchange. At the same date, GBL held a 56.9% interest in Imerys (industrialminerals), 21.0% in Lafarge (cement, aggregates and concrete), 4.0% in Total (energy – oil and gas), 5.1% inGDF Suez (energy – electricity and gas), 7.5% in Pernod Ricard (wines and spirits) and 7.2% in SuezEnvironnement (water and waste services), all of which are listed on the Paris Exchange.HIGHLIGHTSIn December 2012, the Power group and the Frère family group announced that the term of the agreement ineffect since 1990 within Parjointco, Pargesa’s controlling shareholder, had been extended to December 31, 2029,with provision for possible extension.The main transactions carried out by Pargesa and GBL in 2012 and early 2013 were as follows: In March 2012, GBL sold its entire interest in Arkema for €433 million and 2.3% of Pernod Ricard’s capitalfor €499 million, with GBL still holding a 7.5% stake in Pernod Ricard. Cash proceeds from these twotransactions amounted to €932 million, while GBL recorded a capital gain of €461 million, Pargesa’s shareof which amounting to SF288 million. In April 2012, GBL reimbursed the €184 million balance of its convertible bonds redeemable in GBL shares. In September 2012, GBL issued bonds exchangeable into Suez Environnement shares, for an amount of€400 million. The bonds are exchangeable into 35 million shares of Suez Environnement, which representsalmost all GBL’s interest in the company. The bonds have a three-year maturity and bear interest at a rate of0.125% per annum, and the exchange price represented a 20% premium to the reference share price. Thebonds will be redeemed at par in 2015 subject to GBL’s option to deliver Suez Environnement shares to theholders and pay in cash any balance between the value of the shares to be delivered and the par value of thebonds. During the year, Pargesa continued to repurchase in the market its bonds exchangeable for bearer sharesmaturing in 2013 and 2014, for a notional amount of SF46 million. In March 2012, Pargesa also repurchasedall of its bonds exchangeable for registered shares maturing in 2013 and 2014 for a notional amount ofSF152 million. Out of a total of SF1,672 million in exchangeable bonds issued in 2006 and 2007, theaggregate repurchases stood at SF750 million as at December 31, 2012. In January 2013, GBL completed a placement of €1 billion in bonds exchangeable into GDF Suez shares.The bonds, which have a four-year maturity and bear interest at a rate of 1.25% per annum, are exchangeableinto approximately 54 million shares of GDF Suez, which represents almost half the interest held by GBL inthe company. The exchange price represents a 20% premium to the reference share price. GBL has theoption of delivering GDF Suez shares to the holders of the bonds and paying in cash any balance betweenthe value of the shares delivered and the par value of the bonds.PARGESA HOLDING SAE 2POWER CORPORATION OF CANADA