Report of the Executive Board
As announced in our press release of
December 15, 1986, it was with pleasure that we
learned of the proposal by AEGON N.V to make
a public offer for the common stock of FGH and,
on condition that the company proceeded with
the offer, to guarantee' the mortgage bank bonds
and other ordinary liabilities of FGH.
When, on April 25, 1986, simultaneously
with the notice of meeting for the annual general
meeting of stockholders held on May 14 last year,
we sent an announcement to stockholders con
cerning the participation by AEGON N.V and
Postbank N.V in the capital of FGH and the
transfer of less profitable assets to a separate legal
entity, Transveer B.V, we had no means of know
ing that the solution opted for would be rapidly
overtaken by new developments and events.
All the proposed transactions referred to in
the announcement, incidentally, were gradually
implemented during the course of the year,
although the formalization of the transfer of
assets to Transveer B.V took more time and effort
than originally envisaged.
We reported on progress in our half-year
report and announced at the same time the
achievement of a net profit, albeit a modest one,
for the first six months of 1986.
We also have to report the amendment to
the articles of incorporation by a deed executed
on June 5, 1986, whereby the existing structural
status of the company ceased to apply, as result of
which the entry, as referred to in Section 153 (2)
of Book 2 of The Netherlands Civil Code, at the
office of the Register of Companies was canceled.
It was a great disappointment to us to be
forced to announce on November 27, 1986, that
FGH again faced unexpected setbacks.
Extra amounts needed to be reserved to
further strengthen the Reserve for General Con
tingencies and in order to meet expected losses
and those already identified, and this ultimately
led to a loss amounting to NLG 110.3 million.
The extra additions to reserves were neces
sary because of a number of unforeseen problems
had arisen affecting the receivables portfolio and
our realty activities at home and abroad. It
should also be pointed out that the pressure on
the results due to the Transveer operation was
greater than expected, partly as a consequence of
the delay in implementing this sizable operation.
As regards solvency, the effect was more or
less compensated for by the fact that AEGON
N.V and Postbank N.V, on the same date,
declared their readiness to grant new subordi
nated loans of NLG 50 million each, thus making
a total of NLG 100 million, so that the capital
base remained virtually unaltered.
Even this fact, however, was not sufficient
to bring a return of the necessary tranquillity. On
the contrary, after a short period during which
the price of FGFI stock fell sharply and on the
secondary market for mortgage bank bonds,
again owing to tumbling prices, the return on
FGH bonds rose sharply, it was concluded after
consultation with the two major stockholders
that FGH s interests would be better served if one
of them were to acquire an outright majority
holding in FGH rather than continuing with the
existing collaboration.
This decision led to the public offer being
made by AEGON N.V for the FGH stock, as refer
red to in the introduction to this report, and this
offer was discussed at length at an extraordinary
general meeting of stockholders specially con
vened for the purpose on February 6, 1987, at
which the board of directors and the executive
board explained their reasons for recommending
to stockholders that they accepte* 1 the offer.
After a resolution amending the articles of
incorporation in connection with the offer had
been passed and other conditions preventing the
deal from going ahead had been met, AEGON
N.V announced on February 18 that it was to
proceed with the offer, despite the fact that
