SOURCE: FORTIS

July 11, 2007 10:54 ET

Fortis prices an offering of Conditional Capital Exchangeable Notes ("CCENs")

BRUSSELS, BELGIUM--(Marketwire - July 11, 2007) - Fortis announces today that it has priced an offering (the "Offering") of EUR 2,000 million Conditional Capital Exchangeable Notes ("CCENs"). The CCENs will be issued by Fortis Bank nv-sa, Fortis Bank Nederland (Holding) N.V., Fortis SA/NV and Fortis N.V. as joint and several co-obligors (the "Issuers"). The CCENs represent senior unsecured obligations of the Issuers and will carry a coupon of 3 month EURIBOR + 15 bps payable quarterly in arrear.

The CCENs are mandatorily exchangeable into Mandatory Convertible Securities ("MCS") upon the completion of a qualifying preferential rights issue to existing holders of Fortis shares made in connection with the funding of the ABN AMRO transaction (the "Rights Issue"). If there is no Rights Issue the CCENs will redeem at par on 4 August 2008.

The MCS, will be mandatorily convertible into fully paid ordinary shares of Fortis three years following the issue date of the MCS. The MCS will represent unsecured and subordinated obligations of the Issuers and will rank junior to any indebtedness or obligation, including any preference shares, of the Issuers, pari passu with the FRESH Capital Securities and senior to the ordinary shares of the Issuers.

The MCS will pay a fixed coupon amount of 8.75% of their principal amount per annum, payable semi-annually in arrear. The minimum conversion price is to be set at the Reference Price and the maximum conversion price is to be set at 120% of the Minimum Conversion Price.

The Reference Price of the MCS will be set at the average of the 30 daily Volume Weighted Average Prices of the Fortis Shares as quoted on each of Euronext Amsterdam and Euronext Brussels, calculated during the 30 trading days beginning 7 trading days following the successful completion of the Rights Issue.

The coupon payments are discretionary if Fortis does not make a dividend payment to ordinary shareholders and payment of the coupon is prohibited if the Issuers' distributable reserves are insufficient or if the Issuers are insolvent. Any coupon amount which is not paid at the discretion of the Issuers or for which Fortis is prohibited from paying will be cancelled.

Any dividend paid to the holders of Fortis shares in respect of the 12 month periods prior to the second, fourth and sixth Fixed Coupon Payment Dates, multiplied by the number of shares underlying each MCS, which exceeds 5% of the principal amount of an MCS shall be placed in escrow with a proportion paid to investors on conversion depending on the share price. The transaction enables Fortis to proactively address its planned capital needs through a contingent instrument that will not result in a capital issuance unless required. The proceeds of the Offering, in whole or in part, will be taken into account when Fortis subsequently resolves to increase the capital of Fortis SA/NV in the framework of the planned rights issue.

No application has been made to list the CCENs or the MCS. The Issuers intend to apply for a listing of the MCS on a customary exchange for instruments of this nature within 6 months following the MCS Issue Date.

Merrill Lynch International is Joint Lead Manager and Bookrunner and Fortis Bank is Joint Lead Manager and co-Bookrunner for the offering.


STABILISATION/FSA.


THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED ("REGULATION S"). THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL. THE SECURITIES MENTIONED IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED IN THE UNITED STATES UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES IN THE UNITED STATES.

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO BUY ANY EXCHANGEABLE BONDS.

THIS ANNOUNCEMENT IS DIRECTED AT AND IS ONLY BEING DISTRIBUTED IN THE UNITED KINGDOM TO (I) PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"), (II) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED FALLING WITHIN ARTICLE 49 OF THE ORDER, AND (III) PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS COMMUNICATION MUST NOT BE READ, ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. BY READING THIS ANNOUNCEMENT, THE READER ACKNOWLEDGES THAT IT IS A PERSON EITHER (I) OUTSIDE THE UNITED KINGDOM OR (II) FALLING WITHIN ONE OF THE FOREGOING CATEGORIES.

IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA"), THIS ANNOUNCEMENT AND ANY OFFER IF MADE SUBSEQUENTLY IS DIRECTED ONLY AT PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"). ANY PERSON IN THE EEA WHO ACQUIRES THE SECURITIES IN ANY OFFER (AN "INVESTOR") OR TO WHOM ANY OFFER OF THE SECURITIES IS MADE WILL BE DEEMED TO HAVE REPRESENTED AND AGREED THAT IT IS A QUALIFIED INVESTOR. THIS ANNOUNCEMENT IS A SUMMARY ONLY, AND DOES NOT PURPORT TO IDENTIFY OR SUGGEST THE RISKS (DIRECT OR INDIRECT) WHICH MAY BE ASSOCIATED WITH YOUR INVESTMENT IN THE CCENS OR THE MCS.

THE BOOKRUNNERS ARE ACTING FOR THE ISSUERS IN CONNECTION WITH THE OFFERING, AND FOR NO-ONE ELSE AND WILL NOT BE RESPONSIBLE TO ANYONE OTHER THAN THE ISSUERS FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF THE BOOKRUNNERS OR FOR PROVIDING ADVICE IN RELATION TO THE OFFERING, AND THE BOOKRUNNERS MAKE NO REPRESENTATIONS AS TO THE ACCURACY OF AND TAKE NO RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT OR ANY MATTERS REFERRED TO HEREIN.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT TO BE RELIED UPON IN SUBSTITUTION FOR THE EXERCISE OF INDEPENDENT JUDGEMENT. IT IS NOT INTENDED AS INVESTMENT ADVICE AND UNDER NO CIRCUMSTANCES IS IT TO BE USED OR CONSIDERED AS AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY CCENS OR MCS OR A RECOMMENDATION TO BUY OR SELL ANY CCENS OR MCS. NEITHER THE BOOKRUNNERS NOR ANY OF THEIR RESPECTIVE AFFILIATES ACCEPTS ANY LIABILITY ARISING FROM THE USE OF OR MAKES ANY REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF THIS ANNOUNCEMENT.

EACH PERSON READING THIS ANNOUNCEMENT SHOULD CONSULT HIS/HER PROFESSIONAL ADVISER TO ASCERTAIN THE SUITABILITY OF THE CCENS OR MCS AS AN INVESTMENT. IN ADDITION, HAVING READ THIS ANNOUNCEMENT, EACH PROSPECTIVE INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT IT MUST BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE CCENS OR MCS FOR AN INDEFINITE PERIOD. NONE OF THE ISSUERS NOR THE BOOKRUNNERS MAKES ANY REPRESENTATION AS TO (I) THE SUITABILITY OF THE CCENS OR MCS FOR ANY PARTICULAR INVESTOR, (II) THE APPROPRIATE ACCOUNTING TREATMENT AND POTENTIAL TAX CONSEQUENCES OF INVESTING IN THE CCENS OR MCS OR (III) THE FUTURE PERFORMANCE OF THE CCENS OR MCS EITHER IN ABSOLUTE TERMS OR RELATIVE TO COMPETING INVESTMENTS.

IN CONNECTION WITH THE OFFERING, THE BOOKRUNNERS AND THEIR RESPECTIVE AFFILIATES MAY, FOR THEIR OWN ACCOUNT, ENTER INTO ASSET SWAPS, CREDIT DERIVATIVES OR OTHER DERIVATIVE TRANSACTIONS RELATING TO THE CCENS AND/OR MCS AND/OR THE UNDERLYING ORDINARY SHARES AT THE SAME TIME AS THE OFFER AND SALE OF THE CCENS OR MCS OR IN SECONDARY MARKET TRANSACTIONS. EACH OF THE BOOKRUNNERS OR ANY OF THEIR RESPECTIVE AFFILIATES MAY FROM TIME TO TIME HOLD LONG OR SHORT POSITIONS IN OR BUY AND SELL SUCH CCENS OR MCS OR DERIVATIVES OR THE UNDERLYING ORDINARY SHARES. NO DISCLOSURE WILL BE MADE OF ANY SUCH POSITIONS. THE AMOUNT OF ANY SUCH PURCHASES WILL BE DETERMINED AT THE TIME OF PRICING OF THE CCENS OR MCS AND WILL BE SUBJECT TO TOTAL DEMAND RECEIVED AND FINAL ALLOCATIONS. IN ADDITION, EACH OF THE BOOKRUNNERS AND THEIR RESPECTIVE AFFILIATES MAY PERFORM SERVICES FOR, OR SOLICIT BUSINESS FROM, THE ISSUERS MAY MAKE MARKETS IN THE SECURITIES OF THE ISSUERS AND/OR HAVE A POSITION OR EFFECT TRANSACTIONS IN SUCH SECURITIES.





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