Partnership Assurance Group PLC GBP100 million bond issue via private placing (3227G)
03 March 2015 - 6:02PM
UK Regulatory
TIDMPA.
RNS Number : 3227G
Partnership Assurance Group PLC
03 March 2015
Partnership announces GBP100 million bond issue via private
placing
Partnership Assurance Group plc ('Partnership' or 'the Group')
today announces an agreement to issue a GBP100 million bond ('the
Bond Issue') to funds managed by Cinven Capital Management
('Cinven'), its majority shareholder.
Commenting on the Bond Issue, Steve Groves, CEO, stated
"In January 2015, we held a series of meetings with fixed income
investors to explore the potential for a public bond issue. Given
Partnership's debt-free balance sheet, it was logical to explore
the opportunities to diversify the Group's sources of funding, but
we elected not to proceed with a transaction at that time.
"Today we are announcing a GBP100 million bond issue to Cinven,
our majority shareholder. This provides us with further financial
flexibility as we pursue our strategy to grow the business in the
UK retail, Defined Benefit and US Care markets.
"By introducing a prudent amount of leverage, we have
diversified and strengthened our previously entirely equity funded
capital structure and remain conservatively leveraged with a
gearing ratio of 17%.(1)(2)
"At 31 December 2014, our economic capital position of 134% was
in excess of the Board's minimum target of 125%. This transaction
increases the proforma economic capital coverage ratio by 25
percentage points to 159%(1) , and provides a further cushion
against unforeseen market stresses and allows us to pursue the
growth opportunities we have identified. As a result, the Board
believes the bond issue is in the best interests of all
shareholders."
Key terms and conditions
- GBP100 million 10 year bullet structure with possible
redemption at option of Partnership at fifth anniversary or on any
interest payment date thereafter, in each case subject to PRA
consent
- Tier 2 qualifying regulatory capital instrument under existing
solvency regulations and Solvency II compliant following
implementation of the Solvency II regime on 1 January 2016
- Bond issued by Partnership, the Group's listed holding company
with a guarantee provided by Partnership Life Assurance Company
Limited, the Group's main regulated life company and operating
subsidiary
- Annual interest rate of 9.5% payable annually in arrears from the issue date
- The transaction is anticipated to complete during March 2015
Further information
- Partnership continues to pursue its business strategy in line
with its business plan, as set out at its recent investor day, in
the UK retail, Defined Benefit and US Care markets where
significant opportunities for profitable growth have been
identified
- As part of Partnership's risk management approach, the Group
has entered into hedging arrangements to limit the financial impact
of future reductions in risk-free rates on the economic capital
position
- Partnership intends to list the Bonds by 31 May 2015
- Partnership intends to only issue further debt if i) it is
junior to the Bond Issue and has a later maturity date or ii) it
ranks pari passu to and has a later maturity date than the Bond
Issue subject to a gearing ratio(2) limit of 20%
Background
In January 2015, Partnership held a series of meetings with
fixed income investors to explore the potential for a public bond
issue but elected not to proceed with a transaction at that
time.
Subsequently, Partnership's majority shareholder, Cinven, which
owns 52% of Partnership's issued share capital, has agreed to fund
a GBP100 million Bond Issue via a private placing. The Bond Issue
builds upon the preparatory work done for the proposed transaction
in January 2015.
The Board does not consider there to be any infringement of the
terms, and in particular, the independence provisions, of the
relationship agreement entered into with Cinven, as a result of the
Bond Issue, given that the transaction is on normal commercial
terms and that it believes it to be in the best interests of all
shareholders.
Notes:
(1) Proforma represents position as at 31 December 2014 adjusted
to take into account the GBP100 million Bond Issue, as if it had
taken place at that date
(2) Gearing calculated as Total debt/Group Market Consistent
Embedded Value
Enquiries:
Investors Media
Katherine Jones Jim Boyd Citigate Dewe Rogerson
Director of Investor Relations Director of Corporate Grant Ringshaw,
+44 (0) 207 444 8040 Affairs Shelly Chadda
katherine.jones@partnership.co.uk +44 (0) 207 618 2744 +44 (0) 207 638
pressoffice@partnership.co.uk 9571
This information is provided by RNS
The company news service from the London Stock Exchange
END
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