Fortis, BNP Paribas And The Belgian State Agree On The Revised Terms Of The Transaction

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

By None

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.

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.

3. CASHES

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.

D.C.

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