Fortis break-up faces shareholder legal action

BRUSSELS (Reuters) - Fortis FOR.BRFOR.AS shareholders will launch a legal challenge in the next two weeks against the troubled financial services group's break-up by Belgium, Luxembourg and the Netherlands.

"We are interested in knowing what went wrong and we want better economic treatment for the Fortis shareholders," Peter Paul de Vries, president of Euroshareholders, told a news conference on Monday.

Euroshareholders, a European umbrella group for national small investor associations, said that it would ask the Dutch enterprise court in Amsterdam to rule whether the break-up should be allowed without shareholder approval.

It also wants the court to determine if Fortis management misled investors about the company's health and whether its problems were the result of mismanagement.

Fortis made no immediate comment.

The Netherlands nationalised the Dutch parts of Fortis for 16.8 billion euros ($22.82 billion) on Oct. 3, less than a week after an 11.2 billion euros public bailout. BNP Paribas (BNPP.PA) agreed two days later to buy Fortis assets in Belgium and Luxembourg in a share swap with the governments there.

What remains of Fortis Group are the international insurance business and a 66 percent holding of a 10.4 billion euro portfolio of structured credit products.

Fortis shares have not traded since the deals were unveiled. Worth almost 30 euros in April 2007, when Fortis revealed its desire to buy the Dutch parts of ABN AMRO, the shares last closed at 5.422 euros and are indicated at well below 2 euros.

Euroshareholders argue that, including share issues, Fortis had lost some 50 billion euros in the past 18 months.

De Vries said over 7,000 individuals had registered to join the planned legal action, together with Dutch shareholders group VEB, with holdings from 50 to 1 million Fortis shares. Euroshareholders wants that to swell beyond 10,000 people.

Under Dutch law, any corporate action affecting at least a third of the business requires shareholder consent. De Vries said that the governments could not simply claim force majeure.

The Dutch enterprise court last year blocked the sale of ABN AMRO's U.S. unit after VEB made a legal challenge, as the takeover battle for ABN began. The Dutch Supreme Court eventually overturned its ruling that a shareholder vote was required for the sale.

Belgium announced on Sunday that shareholders would receive a part of any profit it made on its investment in BNP Paribas but only in 2014, only for those who bought Fortis shares by July 1 and only covering up to 5,000 shares per person.

"I would call it in some ways amateuristic," De Vries said.

Paul Huybrechts, chairman of the VFB Flemish shareholders association, argued that it would be fairer if a part of the Belgian state's stake in BNP Paribas were transferred to Fortis Group.

He said the VFB was contacting Belgian shareholder activist group Deminor to assess what action could be taken in Belgium.

Euroshareholders also wants a much small independent group of individuals to replace Fortis's current board members.

"If they put in any efforts they will do it to defend their interests and their reputations," De Vries said.

(Reporting by Philip Blenkinsop; Editing by Erica Billingham)