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FORTIS: Transactions Agreed Between Fortis Holding, the Belgian State, Fortis Bank and BNP Paribas Have Closed

^{Published on 2009-05-12 23:39:41, Last Modified on 2009-11-02 11:49:40 - Market Wire}
 

BRUSSEL, BELGIUM--(Marketwire - May 13, 2009) - On 12 May, Fortis holding, the Belgian State acting through Société Fédérale de Participations et d'Investissement/Federale Participatie- en Investeringsmaatschappij SA/NV (SFPI/FPIM), Fortis Bank and BNP Paribas closed the transactions announced by Fortis holding on 7 March 2009. This follows the vote in favour of the transactions at the General Meetings of Shareholders of Fortis SA/NV and Fortis N.V. on 28 and 29 April 2009.

The key elements of these transactions from the perspective of Fortis holding are the following:

1. Sale of 25% + 1 share in Fortis Insurance Belgium to Fortis Bank

A stake of 25% + 1 share in Fortis Insurance Belgium (FIB) was sold to Fortis Bank for EUR 1,4 billion. The sale generated a capital gain of approximately EUR 0.7 billion, which will be included in the second quarter 2009 result of Fortis holding.

The continuation of the existing distribution agreements between FIB and Fortis Bank until at least the end of 2020 guarantees the ties between both entities and is expected to contribute positively to the further commercial development of FIB in Belgium.

2. Acquisition of part of the structured credits portfolio of Fortis Bank by Royal Park Investments

The agreement of March 2009 provided for the financing of a special purpose vehicle, Royal Park Investments SA/NV, in order to enable the acquisition of a portion of the structured credits portfolio of Fortis Bank. This portfolio was acquired for a purchase price of EUR 11.7 billion. The price takes into account redemptions and exchange rate fluctuations between 31 August 2008 and 30 April 2009. The corresponding current face value (nominal minus redemptions) of the portfolio amounts to EUR 20.5 billion.

Fortis holding is a shareholder in RPI with a stake of 44.7%, representing EUR 760 million of the total equity of RPI. The other shareholders are SFPI/FPIM (43.5%) and BNP Paribas (11.8%). The remainder of the financing of RPI has been provided in the form of debt by Fortis Bank and BNP Paribas, which benefits from a guarantee from the Belgium State (senior loan) and collateral (super senior loan).

For further details on RPI and its assets, please refer to the annex of this press release.

3. Loan of EUR 1.0 billion provided by Fortis Bank

Fortis Bank has made available a EUR 1.0 billion loan to Fortis holding, consisting of two tranches: a first tranche of EUR 760 million which Fortis holding can use to refinance the investment it made in RPI out of its own funds and a separate tranche of EUR 240 million which Fortis holding can use for general corporate purposes during the four-year term of the loan.

Fortis holding has not yet taken up this loan and has until 30 September 2009 to decide whether or not it will make use of the EUR 760 million tranche. The other EUR 240 million can be drawn during the first year of the four-year term of the loan. The loan will be provided at market-conform terms. In addition, the loan will benefit from a guarantee provided by the Belgian State to Fortis Bank.

4. Call option granted by the SFPI/FPIM linked to the BNP Paribas shares

Fortis holding has the benefit of a call option linked to the BNP Paribas shares acquired by the SFPI/FPIM. This cash-settled option will entitle Fortis holding, whenever it exercises the option, to be paid a cash amount equal to the value of the BNP Paribas share at the date of exercise minus the strike price per share (EUR 68 per share), multiplied by the number of BNP Paribas shares in respect of which the call option is exercised.

Assuming approval by the BNP Paribas shareholders of the issuance of 32,982,760 BNP Paribas shares at their Annual Shareholder Meeting today, Fortis holding's option will extend to 121,218,054 BNP Paribas shares. Otherwise, the option will be limited to 88,235,294 BNP Paribas shares.

Fortis holding is entitled to exercise the option at any time but no more than twelve times per calendar year between 10 October 2010 and 9 October 2016. The call option gives Fortis holding certain anti-dilution protection as explained in the shareholder circular of 16 March 2009.

The option will be accounted at fair value under 'Other assets'. The value of the option depends on specific terms agreed with the SFPI/FPIM and will be calculated in the second quarter of 2009.

5. Interest payment mechanism based on the value of the Relative Performance Note

As explained in the shareholders' circular of 31 January 2009, it was decided to leave the Relative Performance Note (RPN) linked to the CASHES instrument in place and to provide for a quarterly interest payment between Fortis holding and Fortis Bank. Such interest will be calculated on the evolution of the underlying RPN and based on 3 months EURIBOR plus 20 basis points. The Belgian State will provide a guarantee on the payments based on the interest rate mechanism.

The interest payments in respect of the RPN will result in a positive or negative impact on Fortis holding's income statement, depending on the future evolution of the underlying formula. As at the date of closing, the reference amount of the RPN for calculating the interest payments amounted to EUR 137 million, due by Fortis holding to Fortis Bank. In the course of the second quarter, Fortis will investigate if and how the fair value of these future interest payments or interest receivables can be calculated.

For further details on the calculation mechanism of the interest payments, please refer to the memo on the interest payments mechanism published on 6 February 2009.

Impact on pro forma financial position end 2008

The closing of these transactions resulted in an increase of approximately EUR 0.7 billion of the net equity attributable to shareholders, being the capital gain on the sale of 25% +1 share of Fortis Insurance Belgium. As at the end of December 2008, net equity attributable to shareholders amounted to EUR 6.8 billion, resulting in a net pro forma equity position of EUR 7.5 billion (excluding the impacts of the fair values of the RPN, the call option on the BNP Paribas shares and the investment in RPI).

The closing of the transactions had a positive impact of EUR 0.6 billion on the net cash position of the General Account, reflecting the sum of the positive impact of the proceeds of the sale of 25% +1 share of Fortis Insurance Belgium and the investment in RPI. As per December 2008, the net cash position of the General Account was EUR 2.0 billion. The pro forma net cash position of the General Account following the closing of the transactions, taking into account a EUR 0.3 billion injection in Fortis Insurance International in the first quarter of 2009 to eliminate leverage and assuming the take up of the EUR 1.0 billion loan provided by Fortis Bank amounted to EUR 3.3 billion.

Transfer of part of Fortis Bank to BNP Paribas

The closing of the transactions also included the acquisition of 54.5% of Fortis Bank by BNP Paribas from the Belgian State.

This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

PDF version FULL press release: [ http://hugin.info/134212/R/1314359/305415.pdf ]

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