Fortis Holding (Fortis) has announced that the company faces a legal claim for €362.5 million from Fortis Capital (FCCL), a former unit of Fortis now owned by the Dutch state.
The dispute is regarding the settlement of €450 million Class A1 preference shares issued by FCCL in 1999, to boost the capital of Dutch state owned Fortis Bank Nederland (FBNH). The shares have a first call date of June 29, 2009.
FCCL’s stand not to cancel its outstanding Class A1 preference shares, leaves the shareholders with two options. Firstly, redemption on demand of the holders through delivery by Fortis holding to FCCL of cash, and secondly, redemption on demand of the holders through delivery by Fortis holding to FCCL of new shares. FCCL had opted for cash settlement.
As per the instrument issued in 1999, Fortis said that it should obtain compensation in the form of new shares to be issued by FBNH, when meeting their obligations towards FCCL in the framework of Cash Settlement. However, the Dutch state is not allowing that to happen.
Fortis said: The company understands the reluctance of the Dutch State to see Fortis re-enter the capital of FBNH. However, this is the pre-agreed result of its decision not to call the instrument. Fortis is open to discuss any acceptable alternative form of compensation.
FCCL is expected to file summary proceedings to claim €362.5 million in cash from Fortis holding without accepting any compensation rights.
Fortis holding will challenge this position and will do whatever appropriate to make sure that its legitimate rights and the interests of its shareholders are protected, the company said.