SOURCE: FIMALAC

March 15, 2006 13:36 ET

FIMALAC Enters Into Agreement to Sell Minority Share in Fitch Group to Hearst

PARIS -- (MARKET WIRE) -- March 15, 2006 -- FIMALAC has today entered into a definitive agreement with the HEARST Group of the United States to sell 20% of FITCH GROUP,[1] the parent company of Fitch Ratings and Algorithmics.

HEARST CORPORATION, one of the largest private diversified communications companies in the United States, is one of the world's leading players in media. The positioning and excellent reputation of HEARST in the US will create a positive dynamic for the FITCH GROUP as HEARST and FIMALAC are committed to growing together through FITCH in the dynamic financial information services sector.

We are delighted to welcome the HEARST group as a minority partner at our side in FITCH. HEARST is one of the most respected media and information groups in the US, whose strategic vision and corporate culture is in concert with that of FIMALAC,' said Marc Ladreit de Lacharrière, Chairman of FITCH and Chairman of FIMALAC

Victor Ganzi, President and CEO of The HEARST CORPORATION, said: "For more than 25 years, Hearst has focused on growth businesses. FITCH has achieved a strong track record of both growth and profitability and represents a unique opportunity for HEARST to pursue its long-term strategy. We look forward to working with FIMALAC to contribute to the continued growth and development of FITCH."

The enterprise value for 100 % of FITCH GROUP which has served as basis for FIMALAC's negotiation is 4,434 million USD (3,695 million euros using a conversion rate of 1 EUR < > = 1.2 $US). The sale of 20% of FITCH GROUP is expected to result in a price at closing of 592 million USD (493 million euros) after taking into account a minority discount as well as the reduction for closing indebtedness of FITCH GROUP. Subject to satisfaction of usual closing conditions, including antirust clearance, the proceeds of the sale are expected to be received before the end of April 2006.

The sale of 20% of FITCH GROUP is expected to result in a price at closing of 592 million USD (493 million euros). The deal is subject to satisfaction of usual closing conditions, including antirust clearance. The proceeds of the sale are expected to be received before the end of April 2006.

HEARST will be represented at the board of directors of FITCH GROUP by two directors, with FIMALAC retaining the majority.

Shareholders Agreement

Simultaneously with the signing of the stock purchase agreement, HEARST and Fimalac entered into a Stockholders Agreement.

Under the Stockholders Agreement, FIMALAC retains 80% of the share capital and voting rights of FITCH GROUP and a majority on the board of directors. The Stockholders Agreement does not provide for any puts or calls in favour of either of the parties or their affiliates.

The following description is a partial summary of the key terms of the shareholders' agreement, the full text of which shall be made available to all shareholders on FIMALAC's website (www.fimalac.com). The mains terms of the Stockholders Agreement are as follow :

1) Corporate governance of FITCH GROUP

HEARST will be represented at the board of directors of FITCH GROUP by two directors, with FIMALAC retaining the majority.

If in the future HEARST's shareholding in FITCH GROUP were to increase, its representation on the board of directors would evolve. However, even if FIMALAC were to become a minority stockholder in FITCH, FIMALAC has the possibility pf retaining the same number of board seats as HEARST for so long as FIMALAC retains more than 20% ownership.

In the event that HEARST's ownership in FITCH were eventually to equal the indirect ownership of Marc Ladreit de Lacharrière and his family through FIMALAC, HEARST would be entitled to equal representation on the FITCH board of directors;

Certain important decisions of the FITCH board of directors will be subject to the prior approval of representatives of HEARST: charter amendments, mergers, and material asset transfers, capital increases, borrowings, investments or acquisitions, etc.

If Fimalac were to become a minority shareholder, it would benefit from the same veto rights.

2) Conditions under which FITCH GROUP shares can be transferred

Subject to the right of first offer described below, FIMALAC and HEARST can each transfer its shares to third parties in private transactions or through a public offering. However, with certain exceptions, all transfers are required to represent a block of sufficient size that, if bought by the other stockholder, it would result in the purchasing stockholder owning 50%, 80% or 100% of FITCH GROUP.

- First offer right

The first offer procedure provides that, if one stockholder wishes to sell its FITCH shares, both shareholders will exchange simultaneous price proposals. If the difference between the two bids is less than 25%, the selling shareholder will be required to transfer the shares to the other shareholder for a price representing the average of the two proposals. If the difference between the two proposals is 25% or more, the selling shareholder is free to sell its shares to a third party during a period of nine months (subject to certain conditions regarding the minimum transfer price).

Without providing a first offer to HEARST, Fimalac may at any time sell to a third party (within a maximum limit of 25% of the share capital):

- 5% of FITCH in a private transaction or

- 25% of FITCH through a public offering.

In the case of such sales without compliance with the first-offer procedure, no tag-along right or drag-along rights (as described below) would apply.

- Tag-along right and drag-along right

In the event that Fimalac or HEARST sells all or part of its shareholding, the other shareholder, if it owns 50% or less of FITCH, will benefit from a proportional tag-along right.

If selling its shares to a third party, the majority shareholder can force the other shareholder to sell its shares on a proportional basis.

3) Requirements regarding purchase by HEARST of shares of FIMALAC

If HEARST ever wishes to buy FIMALAC shares, it has first to satisfy two conditions:

- signature of an agreement to vote in accordance with the the instructions of Marc Ladreit de Lacharrière at FIMALAC general meetings, as more fully described below;

- the obtaining of an exemption from the obligation to make a takeover bid for FIMALAC granted by the Autorité des marchés financiers (AMF) or the Court of Appeals of Paris in case of an appeal.

The draft voting agreement provides in particular :

- HEARST irrevocably commits to vote in accordance with the instructions of Marc Ladreit de Lacharrière on all proposals submitted to the FIMALAC general meetings.

- the voting agreement constituting an "action in concert" between HEARST and FIMALAC, if one of the parties takes an action individually that triggers an obligation to make a takeover bid, that party will undertake all costs of the takeover bid;

- the commitment of HEARST as described above will terminate if HEARST owns 30% of the capital of FIMALAC.

4) Other provisions of the shareholders' agreement

In addition :

- Fimalac and HEARST have undertaken not to compete with FITCH GROUP

- Fimalac and HEARST will first offer to FITCH GROUP any corporate opportunity in the area of financial services.

- Capital increases in FITCH shall be reserved for FIMALAC and HEARST.

Fitch Group

Fitch Group, Inc. is the parent company of Fitch Ratings and Algorithmics. In 2005, the turnover was 692.6 million $US.

Fitch Ratings is a leading global rating agency committed to providing the world's credit markets with accurate, timely and prospective credit opinions. Fitch Ratings is dual-headquartered in New York and London, operating offices and joint ventures in more than 50 locations and covering entities in more than 80 countries. Algorithmics is recognized as the world's leading provider of enterprise risk management solutions and services that enable financial institutions to effectively understand and manage their financial risk.

Hearst

Hearst Corporation (www.hearst.com) is one of the nation's largest diversified communications companies. Its major interests span 176 magazines around the world, including Cosmopolitan and O, The Oprah Magazine; 12 daily newspapers, including the Houston Chronicle and San Francisco Chronicle; 28 television stations through Hearst-Argyle Television (NYSE: HTV) which reach a combined 18% of U.S. viewers; ownership in leading cable networks, including Lifetime, A&E and ESPN, as well as business publishing, Internet businesses, television production, newspaper features distribution and real estate.

[1] FIMALAC Inc., which owns 100% of the share capital and voting rights of Fitch Group and which will be renamed FITCH GROUP after the closing.

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