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Novae to issue 6.5% notes in exchange offer for fixed-to-floaters
By Susanna Moon
Chicago, March 12 - Novae Group plc said it launched an exchange offer to issue fixed-rate notes in exchange for its £100 million of subordinated callable fixed-to-floating notes due 2017.
Under the offer, the company will issue £900 nominal value of 6.5% notes due April 27, 2017 for each £1,000 nominal value of fixed-to-floating notes tendered by the end of the offer on March 16.
The new notes will be issued on March 21.
The coupon for the fixed-to-floating notes is 8.375% until April 27 and then Libor plus 313 basis points. The notes are redeemable at par on April 27, 2017. They were issued on April 27, 2007, and there is about £69.375 million of the notes outstanding.
The new bonds are expected to be rated Baa3 by Moody's Investors Service. If they are downgraded to junk, or Ba1 or lower, the coupon steps up to 7.75%. They will revert to 6.5% if the group is subsequently upgraded back to investment grade.
The new bonds will be putable at par following a change of control resulting in a rating downgrade, the release noted.
The members of the Special Committee of the Association of British Insurers hold about 52% of the fixed-to-floating notes. The members of the committee have informed Novae that they plan to participate in the exchange offer, according to a company press release.
For 2013 and subsequent financial years, and assuming all the outstanding existing notes are accepted for exchange, the annualized financing cost for the new bonds and the amortization of associated transaction costs is expected to be about £4.4 million, the release noted.
Barclays Capital (020 7773 8990) is the dealer manager, and Lloyds TSB Bank plc is the co-dealer manager. Bank of New York Mellon (020 7694 4958) is the exchange agent.
Novae is a London-based risk-taking insurance business.
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