Assurant in $900m capital raise to seal Warranty Group deal
US-based Assurant, a provider of risk management solutions, will move closer to completing its acquisition of The Warranty Group, a provider of protection plans, for some $2.5 billion if it succeeds in completing a $900 million senior debt sale this week.
The two companies have been negotiating since last October but the deal’s structure was changed in January this year to reflect changes in US tax legislation. The deal is worth $1.9 billion in equity value or $2.5 billion in enterprise value.
Assurant will raise the $900 million via three tranches of senior notes each worth $300 million with maturities of 2021, 2023 and 2028 respectively. It will also issue $400 million of fixed-to-floating rate subordinated notes due in 2048.
The company said it intends to use the net proceeds of this offering, together with net proceeds from the March 12, 2018 issuance of 2,875,000 shares of its Mandatory Convertible Preferred Stock, available cash on hand and common stock consideration, to finance the TWG Acquisition, refinance its 2018 Notes and to pay related fees and expenses.
If the TWG Acquisition has not closed on or prior to December 17, 2018, it is required to redeem the 2021 Senior Notes, 2023 Senior Notes and the Fixed-to-Floating Rate Subordinated Notes, in whole but not in part, at a redemption price equal to 101 percent of the aggregate principal amount of such notes, plus accrued and unpaid interest on such notes to the date of redemption.
It is not required to redeem the 2028 Senior Notes and proceeds from the 2028 Senior Notes will be available for general corporate use.
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