Published: 16:30 07.03.2009 GMT+1 /HUGIN /Source: FORTIS /BXS: FORB /ISIN: BE0003801181

Fortis holding, BNP Paribas and the Belgian State reach new agreement

--  A French and Dutch translation of this release will follow as soon as possible --
On 6 March 2009, Fortis holding, BNP Paribas and the SFPI/FPIM reached an agreement on the revised terms of the transaction. The proposed new agreement will be subject to the approval of shareholders at the forthcoming shareholders' meetings of Fortis SA/NV in Brussels and Fortis N.V. in Utrecht in April 2009.
Commenting on the proposed new agreement CEO Karel De Boeck said: "After many days of negotiation, we are pleased to have been able to agree with both BNP Paribas and the Belgian State on revised terms of our agreement with BNP Paribas and the Belgian State. We believe with a new agreement on the table, subject to shareholders' approval, it is now the right time to look forward and to seize the opportunity we have to build for the future. We have the nucleus of a new start for Fortis holding - a sizeable domestic and international insurance franchise that provides us with a platform for growth and future value creation. At the same time, the new agreement allows us to reduce our investment in the SPV."
Fortis holding will publish a new shareholders' circular shortly which will contain detailed information on the proposed transactions.
The main elements of the agreement are summarized below:
1. Fortis Insurance Belgium
Fortis holding will sell 25% of the shares in Fortis Insurance Belgium (FIB) to Fortis Bank for a total consideration of EUR 1,375 million, thereby valuing 100% of FIB at EUR 5.5 billion. The sale of a stake of this size in Fortis Insurance Belgium to Fortis Bank allows to align the interests of Fortis Bank, with Fortis' insurance operations, thereby reinforcing the bancassurance model and strengthening the ties between FIB and Fortis Bank, an important distribution channel for FIB.
The existing distribution agreement between Fortis Insurance Belgium and Fortis Bank for the distribution of insurance products through Fortis Bank will form the basis of a strong and long-term strategic partnership in bancassurance between Fortis and BNP Paribas. This agreement cannot be unilaterally terminated before the end of 2020 by any of the parties.
Fortis holding and BNP Paribas have further agreed to explore broader cooperation with respect to insurance activities, whereby Fortis holding will become BNP Paribas' preferred commercial partner for non-life insurance products. The parties will together focus on developing certain non-life insurance activities outside of France, Belgium, Turkey and certain other markets where existing agreements with third parties prevent such cooperation.

BNP Paribas and Fortis will also enter into a shareholders' agreement which will give Fortis Bank a representation on the Board of Directors of Fortis Insurance Belgium in line with the level of its shareholding.
2. SPV
The new agreement provides that the SPV will purchase about EUR 2.0 billion of additional lines from the structured credits portfolio of Fortis Bank, of whichabout EUR 1.0 billion will be in replacement of redemptions that occurred since 31 August 2008 on the original portfolio. These additional lines will be selected in mutual agreement between partiesfrom the remaining portfolio of Fortis Bank. As a result, the conventional purchase price is therefore expected to increase from EUR 10.4 billion to about EUR 11.4 billion (at currency rates of 31 August 2008).
Under the terms of the proposed new agreement, Fortis holding's funding obligation in respect of, and maximum exposure to, the SPV will be limited to EUR 760 million, corresponding to 45% on a total equity of EUR 1.7 billion. The financing by Fortis holding will consist of equity only. The other parties will provide EUR 740 million (SFPI/FPIM) and EUR 200 million (BNP Paribas) in equity.
The remainder of the SPV funding will be provided by way of debt financing by BNP Paribas and by Fortis Bank , partially guaranteed by the Belgian State.
Fortis holding will also have the benefit of a loan of about EUR 1.0 billion from Fortis Bank to fund, amongst others, its commitments towards the SPV.
In line with the previous agreement and as set out in the 31 January 2009 addendum to the shareholder circular, Fortis holding will no longer be required to make an upfront payment of EUR 2.35 billion related to the settlement of the CASHES instrument. Furthermore, the interest payment mechanism between Fortis holding and Fortis Bank based on the evolution of the Relative Performance Note ("RPN")remains unchanged.
4. Anti-dilution clause related to the call option on the BNP Paribas shares held by SFPI/FPIM
Fortis holding will continue to have the benefit of a call option granted by the SFPI/FPIM linked to the BNP Paribas shares to be acquired by the SFPI/FPIM.
This cash settled option will entitle Fortis holding to the difference between the stock price of the BNP Paribas shares at the time of the exercise of the option and EUR 68.
Under the new agreement, Fortis holding has been granted certain anti-dilution rights which aim at preserving the value of the option. However, such anti-dilution mechanism will not apply to a BNP Paribas capital increase without preferential subscription rights or to other cases where the SFPI/FPIM would be diluted without compensation.
Estimated pro forma net cash and net asset value under the new agreement
The unaudited pro forma net equity attributable to shareholders of Fortis holding at 30 September 2008, assuming approval by the shareholders of the new agreement, would amount to EUR 7.0 billion.
This represents an increase of EUR 510 million compared to the previous agreement as described in the 31 January 2009 addendum to the shareholder circular, representing the capital gain on the sale of an additional 15% in Fortis Insurance Belgium.
The unaudited pro forma net cash position as per 30 September 2008, assuming approval by the shareholders of the new agreement, would increase to EUR 3.4 billion. The net cash position is impacted positively by the additional payment of EUR 825 million for 15% of Fortis Insurance Belgium and by the lower investment (EUR 240 million) in the SPV.
This estimate does not take into account potential future payments related to the RPN mechanism related to the CASHES, nor the potential value of the option on the BNP Paribas shares.
The Fortis holding Board of Directors considers the new agreement to represent an improvement of the terms previously agreed, and consequently the Board strongly recommends that shareholders vote in favour of this new agreement which it believes is the best possible deal for all stakeholders.
Fortis holding (Fortis SA/NV and Fortis N.V.) consists of (1) Fortis Insurance Belgium (2) Fortis Insurance International, and (3) financial assets and liabilities of various financing vehicles. The international insurance activities (Fortis Insurance International) are located in the UK, France, Hong Kong, Luxembourg (Non-Life), Germany, Turkey, Russia, Ukraine and in joint ventures in Luxembourg (Life), Portugal, China, Malaysia, India and Thailand. Fortis holding is not involved in banking activities.
Press Contacts:
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+31 (0)30 226 32 61
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+31 (0)30 226 65 66

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