Fortis holding, BNP Paribas, Fortis Bank and the Belgian State agree on funding arrangements for special purpose vehicle Royal Park Investments

BRUSSELS, BELGIUM -- (Marketwire) -- 04/26/09 -- Fortis holding, BNP Paribas, Fortis Bank and the Belgian state have reached an agreement on the financing structure for the special purpose vehicle Royal Park Investments (RPI).This agreement strikes a good balance between the low cost price of short term funding while securing at the same time longer term financing.

In line with the agreement of 12 March 2009 between the Fortis holding, BNP Paribas and the Belgian State, RPI will acquire a portion of the structured credits portfolio of Fortis Bank at an estimated cost of approximately EUR 11.4 billion, corresponding to a nominal amount of EUR 19.3 billion[1].

The financing of RPI consists of EUR 1.7 billion of equity and EUR 9.7 billion of debt. The debt component comprises of a super senior tranche and a senior tranche.

The super senior tranche of EUR 4.85 billion consists of a revolving loan provided by Fortis Bank which will carry an interest rate of IBOR (Inter Bank Offered Rate) plus a mark-up of 0.20%. All cash receipts from the assets in the portfolio will, after consideration for interest and costs, be applied as a first priority to the redemption of the super senior loan. It is anticipated that the super senior loan will be redeemed in full within a period of 4 years. As a result the average duration of the loan is expected to be less than 2 years.

To mitigate any currency risk the loan will be divided into sub-loans denominated in USD, EUR, GBP and AUD allocated on the basis of assets and expected cash-flows in each of these currencies.

The senior tranche of EUR 4.85 billion will consist of a loan from BNP Paribas (10%) and a Commercial Paper programme (90%) through which RPI will place commercial paper with institutional investors. The programme will benefit from a guarantee from the Belgian State and a firm underwriting commitment from Fortis Bank at a rate of IBOR. This means that in the event that the commercial paper programme fails to attract sufficient support from investors firstly Fortis Bank and ultimately the Belgian State will step in. The BNP Paribas portion of the senior loan will carry an interest rate of IBOR plus a margin equal to the guarantee fee charged by the Belgian State.

The fee charged by the Belgian State to RPI for providing a guarantee on the Commercial Paper Programme, is still subject to approval by the European Commission, but is expected to be 70 basis points. The set up of the Commercial Paper programme (which includes the legal framework for the issuance of the state guarantee, rating process, marketing)is expected to take 3 to 4 months. In the mean time Fortis Bank will provide a bridge loan. This bridge loan will be priced at IBOR and will also benefit from the State guarantee, described above. RPI is expected to generate an average interest income of IBOR plus 25 to 30 basis points on the nominal value of the portfolio of EUR 19.3 billion. At the same time, it is expected to pay IBOR plus an estimated average mark-up of60 basis points on the debt component of EUR 9.7 billion. Consequently, even in the current low (IBOR) interest rate environment, interest income for RPI is expected to exceed the financing costs. The expected net interest income will positively contribute to the net operating result of RPI.

At the time of closing Fortis will provide an update of the composition of the portfolio as well as details of the final financing structure, based on exchange rates and redemptions as at the cut-off date as well as further details on the governance and the accounting treatment of RPI.

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:

Brussels: +32 (0)2 228 82 92 Utrecht: +31 (0)30 226 32 61

Investor Relations:

Brussels: +32 (0)2 565 53 78 Utrecht: +31 (0)30 226 65 66

[1] All figures are subject to final changes in line with the exchange rate fluctuations and further redemptions between 31 August 2008 and the date of the closing of the agreement. Variations will be applied pro rata to the super senior and senior debt.

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

Copyright © Hugin AS 2009. All rights reserved.