By Susan Schindhette
July 25, 2005 12:00 PM

His Serene Highness the Prince of Monaco’s official accession to the throne on July 12 was a storybook case of royal pageantry: fluttering banners, feathered hats and a 25-minute fireworks display. But for all the pomp and circumstance, the really breathtaking event had taken place six days earlier. On the afternoon of July 6, a fax on legal letterhead arrived at the offices of the wire service Agence France-Presse, ending months of speculation with startling news: Prince Albert, the 47-year-old sovereign of the tiny principality, officially acknowledged that he is indeed the father of 22-month-old Alexandre Eric Stéphane, an out-of-wedlock son with Nicole Coste, 33, a former Air France flight attendant with whom he’d had a five-year relationship. “I’ve faced up to my responsibilities,” he told French television five days later. “This child will never want for anything.”

Not cash-wise, anyway. The paternity acknowledgment doesn’t give Alexandre rights to the Grimaldi name or throne (Albert’s successor is technically now his sister Princess Caroline, 48), but it does have a whopping repercussion: As stipulated by French law, the boy is guaranteed to inherit half of Albert’s fortune—estimated at between $1 and $2 billion. The baby “will have the same right, same claim to inheritance as the Prince’s other children should there be other children,” says Albert’s lawyer Thierry Lacoste.

In the wake of the announcement, Coste—a divorcée originally from Togo who met the Prince in 1997 and is also the mother of two children by her ex-husband, a French researcher—”feels a tremendous sense of relief” now that the matter is settled, says a friend. “She got what she wanted, and she’s glad it’s over.”

For Albert’s part, he has now admitted that he signed a secret affidavit acknowledging paternity months after Alexandre’s birth, gives Coste $12,000 a month in financial support and has deeded a $2.5 million house in the South of France to their son. He also said that his son is already “totally part of my private life,” and plans to see him regularly in the future. In light of all that, Monegasques seem unruffled by the revelations. “Albert’s handled the situation in the only way he could,” says author and veteran royal watcher Isabelle Rivère. “The right way.”

Still, there may be more little surprises to come. In 1993, a paternity suit against Albert alleging that he was the father of a 13-year-old daughter by Tamara Rotolo, 43, a former secretary who met the Prince during a European vacation, was dismissed by California courts for lack of jurisdiction. And on July 11, in an interview on French television, Albert sidestepped what could—literally—be the billion-dollar question. “Are you prepared for other similar…revelations?” the interviewer asked.

“I know there are other people who have nearly the same cases,” Albert replied with a stammer. “We’ll answer that when the time comes.”

Susan Schindehette. Peter Mikelbank in Paris