Fortis Bank 8.75% convertibles holders request 20-year term extension

By Jennifer Chiou

New York, Oct. 8 - Investment funds managed by QVT Financial LP and Third Point LLC announced a proposal under which the maturity date of Fortis Bank SA/NV's €2 billion of 8.75% mandatory convertible securities due 2010 would be prolonged to Dec. 7, 2030.

Fortis SA/NV and Fortis NV (now Ageas) and Fortis Bank Netherlands (now ABN Amro) issued the convertibles on Dec. 7, 2007.

According to a news release, QVT and Third Point hold over 50% of the securities. They issued the proposal to BNY Corporate Trustee Services Ltd. as trustee, and a meeting is to be held by Nov. 1.

In addition to the extension, a second resolution, if passed, would cancel certain conversion features of the securities.

Under the existing terms, the securities are scheduled to be converted into roughly 107 million ordinary Ageas shares on Dec. 7. The release said that a conversion at the current Ageas share price would "crystallize the approximate 90% loss in the value of the [securities] since their issuance."

The investors added in the release that they are taking steps to prevent further losses on the securities.

Also, on Oct. 1, the investors said that they filed a writ with the Brussels Commercial Court, in which they are challenging the transfer by Fortis of almost all its activities without their consent and arguing that the proposed resolutions, if approved by the needed holders, are binding on the issuers of the convertibles.

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