More on ING and AEGON Stoppers

Added August 30th: A subsequent explains the argument supporting four Mandatory Payments on the Aegon hybrids subsequent to the payment made to the Dutch State in May 2009: Nail on the Head for Aegon Mandatory Payment Event?

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I have just about exhausted all that I can say about the Stopper provisions contained in the Aegon and ING prospectuses without having more knowledge about all of the provisions contained in the agreement. I will simply end my discussion until I have more concrete information by making these observations about the AEB Stopper provisions:

1. Once a Mandatory payment event occurs, Aegon has to pay all deferred dividends and the next four quarterly payments.

2. There are three possible Mandatory Payment Events that may come into play, possibly more:

(A) if Aegon declares, pays or distributes a dividend on any junior security;

(B) if Aegon declares, pays or distributes "a payment (other than a dividend in the form of Common Shares) on any of our Junior Securities". This is very broad, and could include virtually any payment made to a junior security holder no matter how it is labelled by the parties.

(C) if Aegon "redeems, purchases, or otherwise acquires for any consideration any of our Junior Securities, Parity Securities... " This one goes beyond Junior Securities to include Parity Securities.

Thus, it could be argued that any payment to a holder of a Junior Security now would require 4 subsequent quarterly payments on AEB. If that payment was made on 12/31/2009, and there was a deferral prior to that time on AEB, then that deferral would be subject to the Mandatory Payment Event. If Aegon bought a junior or parity security now, it would have to pay four quarterly payments.

www.sec.gov

If anyone disagrees, please let me know.

This is the Stopper in the ING hybrid IGK:

If a Mandatory Payment Event occurs then, except as described in the next paragraph, the accrued and unpaid interest payable on the Securities on each of the immediately succeeding four consecutive interest payment dates will be mandatorily due and payable in full on those interest payment dates, notwithstanding that any Deferral Notice has been given by us in relation to such accrued and unpaid interest or the occurrence or continuance of any Required Deferral Condition (other than a Required Deferral Condition that occurs after the occurrence of the relevant Mandatory Payment Event, in which case such accrued and unpaid interest shall not be due and payable). We are not required to pay any deferred interest upon a Mandatory Payment Event.

The preceding provision applies to the subsequent payments after the Mandatory Payment Event. This one is what applies to the past:

Dividend Stopper

Unless we have paid in full the accrued and unpaid interest on the Securities

	•	in respect of each of the immediately preceding four consecutive Interest Periods, or
	•	if four Interest Periods have not occurred since the Securities were issued, since the issue date,

we will not recommend to our shareholders, and to the fullest extent permitted by applicable law will otherwise act to prevent, any action that would constitute a Mandatory Payment Event or a Mandatory Partial Payment Event.

424B5

The Mandatory Payment Events are similar to the AEGON prospectus, almost worded identically as if coming from the same word processor except changing the names. A mandatory payment event occurs when:

		(a) we declare, pay or distribute a dividend or make a payment (other than a dividend in the form of ordinary shares) on any Junior Securities or make any payment on a Junior Guarantee; or
		(b) any of our subsidiaries (including any unincorporated entity in which we hold a majority interest) declares, pays or distributes a dividend on any security issued by it benefitting from a Junior Guarantee or makes a payment (other than a dividend in the form of ordinary shares) on any security issued by it benefitting from a Junior Guarantee; or
		(c) we or any of our subsidiaries redeems, purchases or otherwise acquires any Junior Securities, any Parity Securities or any securities issued by any subsidiary benefitting from a Junior Guarantee or Parity Guarantee, subject to certain exceptions and as further described in this prospectus supplement under “Description of the ING Perpetual Hybrid Capital Securities—Mandatory Interest Payment”.

Page S-6: 424B5

So, it looks like four forward and four back.

One thing to keep in mind with all of my POSTS is that I am thinking out loud with them. They are written in a stream of consciousness which is how I do my best thinking. It does cause an error or two to creep in the analysis and sometimes everything does not occur to me at once.

But it is important to Aegon owners of the hybrids that Aegon intends to buy back some of the shares issued in connection with its bailout. The Stopper works both forward and backward. So, I am reaching a higher comfort level on Aegon as I knock holes in my ING stopper argument, at least until somebody gives me new information about ING's deal with the Dutch government. Do they have to make any payment at all to the Dutch government, irrespective of what it is called, a penalty, a dividend, interest, just any payment may trigger that clause. .