Fortis Shareholders Urge Belgium to Renegotiate Carve-up

A state-led deal to carve up financial group Fortis should be renegotiated following a court ruling that has suspended the transactions, a lawyer for a group of the company’s shareholders said on Sunday.

Mischael Modrikamen, representing some 2,000 shareholders, said the Belgian and Dutch governments as well French bank BNP Paribas SA, due to buy much of the Belgian operations, should find a deal that gives better value for shareholders.

“I appeal to the government … to sit round the table with the Netherlands, BNP, Fortis and shareholders and find a constructive solution that is fair to all,” Modrikamen told a news conference.

He spoke after the appeal court in Brussels ruled on Friday that the state-led dismantling of the group will be suspended until February 12 and that shareholders must be given a say.

The court on Friday froze decisions made by the Fortis board on October 3, 5 and 6 on the company’s carve-up until after a meeting of shareholders to be held by Feb. 12.

BNP Paribas was expected to have completed its deal this month to buy Fortis assets in Belgium, while the Dutch government already has the Dutch assets of Fortis.

The deals came within a week of an €11.2 billion ($15.1 billion) cash injection by the Belgian, Dutch and Luxembourg governments that failed to calm investors. “BNP is not a savior but an asset stripper,” commented Modrikamen.

Belgian Prime Minister Yves Leterme confirmed on Sunday his government would decide on Monday on a next course of legal action, saying an appeal to the Supreme Court or a bid to enter the case as an affected third party were the likely options. Modrikamen argued that these channels were unlikely to be successful.

Fortis Chief Executive Officer Filip Dierckx said on Saturday he had been surprised by the court decision, saying he believed the break-up operation would be successful. “We believe we can create value and it is important for our clients. We have to follow that way,” he said.

According to the court decision, the Belgian State would be forbidden to sell Fortis assets to BNP Paribas before Feb. 16, 2009, and would face a €5 billion ($6.74 billion) penalty if it did.

BNP would be obliged to maintain its interbank support for Fortis Bank, the arm in which it was to buy a majority stake.

Shares in Fortis have fallen to less than one Euro (app.$1.35) from almost €30 ($40.45) in April 2007 when it launched its ill-fated joint bid for Dutch rival ABN AMRO, prompting the legal action.

(Writing by Marcin Grajewski; Editing by Derek Caney)