In the mid-1970s, as a result of a meeting between Johnny Saadé and Jean Rousset, then President of the Compagnie Méridionale de Navigation and the Autonomous Port of Marseille, and who wanted to develop maritime services to Lebanese and Syrian ports, the idea of creating the Compagnie Maritime d'Affrètement- CMA- began to take shape.

On Johnny Saadé's initiative, a meeting was organized between Jacques Saadé, Jean Rousset and himself. The meeting resulted in the creation of CMA. In 1977, the Compagnie Maritime d'Affrètement was listed in the Companies Registrar of Marseille under number 562024422.

The Compagnie Maritime d'Affrètement (CMA), whose head office is located at 4, Quai d'Arenc, Marseille, had a capital of 60 million French Francs divided into 600,000 shares worth 100 French Francs each and equally controlled by Johnny and Jacques Saadé.

This capital was then divided as a consequence of Jacques Saadé’s tortuous maneuvers, in the following manner:

            • Mistral (Holding) s.a.l., incorporated under the laws of Lebanon (Johnny R. Saadé's family), owned 290,474 shares (48.41%)

            • Merit s.a.l., incorporated under the laws of Lebanon (Jacques R. Saadé's family), owned 290,474 shares (48.41%)        

            • Rodolphe Saadé & Co. s.a.l., incorporated under the laws of Lebanon (owned equally by Johnny Saadé and  Jacques Saadé respectively), owned 19,046 shares (3.17%)

              And the following physical persons each owned one share:

                        ° Jacques Saadé (Chairman of the Board of Directors)

                        ° Nayla Saadé, his wife (Member of the Board)

                        ° Farid Salem, his brother-in-law (Member of the Board)

                        ° Tristan Vieljeux (Member of the Board)

On 3 October, 1996, CMA presented a bid to purchase the shares of the Compagnie Générale Maritime (CGM) within the framework of the latter's privatization.

On 21 October, 1996, upon the approval by the Privatization Commission, the Minister of the Economy and Finance, through a decision published in the Official Journal (Journal Officiel) on 22 October, 1996, set out the ways and means of the transfer of CGM to the private sector as follows:

            •11,483,357 shares were transferred to CMA for a price of 18 million French Francs

            •765,569 (6% of CGM) shares were transferred to Jacques Saadé for a price of 1,200,000 French Francs

            •255,190 shares were transferred to Louis Dreyfus, a general partnership, for a price of 400,000 French Francs

            •127,196 shares were transferred to Tristan Vieljeux for a price of 200,000 French Francs

            •127,595 shares were transferred to Farid Salem for a price of 200,000 French Francs.

Mistral and its chairman, Johnny R. Saadé, owners of 50% of CMA's shareholder capital, have not been informed of the takeover of CGM. As a member of the Board of Directors of CMA, Mistral had not been notified to attend any board meeting to discuss the takeover of CGM. Mistral was not aware of the general meeting of CMA held on 12 December, 1996, which decided to increase CMA's capital by 75 million French Francs and granted the Board of Directors of the company powers to implement it. At the CMA’s Board of Directors, Mistral and its chairman merely accounted for one vote, while Jacques Saadé and his group held four board seats.

Having learned of the takeover of CGM and the CMA general meeting of 12 December, 1996, Mistral and its chairman tried by all means and on numerous occasions to obtain information and documents related to CGM and the commitments made by CMA with regards to the takeover. In addition to the duty incumbent upon any member of the Board, whose liability would be called upon otherwise, to have knowledge of those pieces of information, Mistral was, and continues to be, concerned that the continuity of CMA would not be compromised by the takeover of CGM.

These attempts were in vain.

At meetings of the CMA’s Board of Directors held after 30 December, 1996 in the presence of Mistral, the latter having elected domicile in Paris due to that effect, Jacques Saadé made contradictory and disconcerting statements:

After indicating that the equity capital of CMA was increased on 30 December, 1996 in order to reach 200 million French Francs, in particular by the contributed capital of two vessels within the context of subordinated loans, the details of which had not been communicated, and after specifying that the increase in capital of 75 million French Francs was no longer necessary, he convened a meeting of the Board of Directors for 7 March, 1997, during which it was decided to call an extraordinary meeting (Assemblée Extraordinaire)  be held on 27 March 1997 in order to decide an increase of CMA's capital by 12 million French Francs "in order to reconstitute the equity capital of CMA".

On 27 March, 1997, the Board of Directors of CMA was called in order to convene another extraordinary shareholders’ meeting (Assemblée Extraordinaire) in view of an additional increase in the company's capital in the amount of 80 million French Francs made necessary - according to the company's management - due to accumulated losses of more than 125 million French Francs, even though the 1996 accounts had not yet been submitted to the shareholders’ agreement.

Initial Judicial Proceedings:

Faced with this lack of transparency, a total absence of communication of any information, and Jacques Saadé's abuse of power, Mistral filed proceedings:

•To cancel the resolutions of the extraordinary meeting (Assemblée Extraordinaire) of 12 December, 1996.

•To have a minority expert appointed (Mistral owned 6 shares less than the Merit group out of the 600,000 shares of CMA capital, Merit's ownership of these 6 shares is under dispute).

•To present an appeal by Mistral before the Council of State (Conseil d'Etat) for the cancellation of the CGM privatization order, as it still had no knowledge of the relevant details pertaining to this transaction and needed, therefore, to issue proper reservations in this respect.

The Commercial Court of Marseille appointed an expert whose mission was to perform an appraisal in the presence of both parties in order to allow Mistral to obtain the information and documents related to the CGM takeover and to verify the consistency and the true evolution of the company's equity and cash flow situation.

It also appointed, pursuant to the legal dispositions on the prevention of corporate difficulties, an ad hoc agent with the objective of examining the dispute between Mistral and Merit and proposing a solution to the dispute.