BNP Paribas’s Offer for Fortis Bank Notes Faces Opposition
January 27, 2012, 11:56 AM ESTBy John Martens
(Updates with comment from BNP Paribas in fourth paragraph, from Fortis Bank in fifth.)
Jan. 27 (Bloomberg) -- BNP Paribas SA, the majority owner of Fortis Bank SA/NV, faces opposition from a group of bondholders who say the price offered for subordinated notes sold by Fortis Bank doesn’t reflect BNP’s credit quality.
BNP Paribas, based in Paris, is offering 45 percent to 47.5 percent of face value for the 3 billion euros ($4.6 billion) of floating-rate, undated notes that can be handed over for Ageas shares. The offer, which began yesterday and ends on Jan. 30, is conditional upon BNP Paribas getting acceptances for at least 50 percent of the notes.
The offer price represents a discount of 40 percent to the average price of similar so-called Tier 1 bonds issued by BNP Paribas and values the notes at little more than what National Bank of Greece SA offered earlier this month to repurchase hybrid securities, a group of bondholders who say they own about 43 percent of the notes issued by Fortis Bank in 2007, said in a letter addressed to the board of BNP Paribas and dated Jan. 26.
BNP Paribas can waive the 50 percent acceptance condition “at any time, as specified in the tender offer memorandum,” the bank said in a document posted on its website today. A Paris-based spokesman declined to comment on the letter sent by the group of bondholders.
Quarterly Coupons
The offer, if fully successful, allows BNP Paribas’s Belgian bank unit to stop paying quarterly coupons of 200 basis points above the three-month euro interbank offered rate on 3 billion euros of bonds that will no longer count as bank capital under Basel III rules. The notes added 650 million euros to Fortis Bank’s Tier 1 capital totaling 19.7 billion euros at the end of 2010, Hilde Junius, a spokeswoman for Fortis Bank, said by phone from Brussels.
Should all of the bondholders accept the offer, BNP Paribas will convert the 3 billion euros of notes into 125.3 million Ageas shares, which are valued at 201.8 million euros based on yesterday’s closing price. France’s largest bank will also receive a compensation payment of as much as 475 million euros, Ageas said yesterday in a statement.
The transaction may cut Fortis Bank’s profit by as much as 120 million euros, the Brussels-based bank said in a statement published on its website.
--With assistance from Fabio Benedetti-Valentini in Paris. Editor: Jones Hayden
To contact the reporter on this story: John Martens in Brussels at jmartens1@bloomberg.net
To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net
