If Fitch Ratings, the bond rater, ever scrutinized its parent company, its report might read something like this: Fimalac is the EUD1.26 billion-in-sales holding company of French entrepreneur and bon vivant Marc Ladreit de Lachar-riere. The closely held, Paris-based company is a true conglomerate: It consists of highly disparate businesses ranging from a furniture retailer to a global bond rating agency. Lachatriere, 63, who controls 71 percent of Fimalacs voting shares, recently disposed of two metals-processing businesses, CLAL-MSX and Engelhard CLAL, for EUD60.5 million ($72 million), and a chemicals storage concern, LBC, for EUD243 million, and used the proceeds to pay down loans. However, this still leaves Fimalac saddled with two problematic companies: tool manufacturer Facom and furniture maker and retailer Cassina, both of which appear to be hard-pressed to compete against lower-cost rivals. Fimalac took a EUD248.7 million write-off on Facom in 2003, which largely accounts for group profits plunging EUD329.7 million into the red last year. The company had to resort to a EUD100 million rights issue that same year to shore up its balance sheet. But in addition to Facom and Cassina, Fimalac owns global rating agency Fitch, far and away the star of the group. Fitch now generates one third of Fimalac's sales; the agency's operating earnings have increased nearly 280 percent over the past five years, to EUD100 million. The world's No. 3 rating agency, behind Moody's Investors Service and Standard & Poor's, Fitch alone is likely worth more than all of Fimalac, which as of May 20 had a market capitalization of EUD1.17 billion. Fimalac's shareholders therefore would ostensibly benefit from the sale of the company's remaining industrial holdings; indeed, the stock rose 43 percent in the 12 months through May 20 largely because investors are speculating that Lachar-riere will dispose of Fimalac's other businesses and concentrate on Fitch alone. However, the Fimalac chairman and CEO continues to be somewhat evasive about whether or not this is his intention. Fimalac remains something of a mystery.
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