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Suez transformed by Fortis sell-off

Issuer: France Telecom Size: e16 billion Bookrunners: ABN Amro Rothschild, Goldman Sachs, BNP Paribas

Fortis share price

 
Source: Reuters

French conglomerate Suez had another busy month in the equity markets as it took advantage of a rally in the insurance sector to dispose of almost all its holdings in Fortis, the Belgian/Dutch bancassurer. The innovative disposal, managed by UBS, took the form of a combined mandatory exchangeable and block trade. It achieved a number of firsts and broke a number of records.   The e1.19 billion three-year mandatory exchangeable into 75 million Fortis shares is the second largest mandatory exchangeable in Europe ever, after the Allianz/Miles deal in December 2000, also managed by UBS. It was fully underwritten at an issue price of e15.30 and offered a coupon of 4.5% and an exchange premium of 31%.

The mandatory was structured with two innovative features. It has a rare issuer call option that will allow Suez to force an early exchange if the Fortis share price goes above 120% of the exchange price, giving Suez the chance to benefit more if Fortis shares do well. Issuer call options are common on other equity-linked deals but not on mandatories.

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