They’re busy little beavers over at the Great-West Lifeco treasury! Hard on the heels of the GWO.PR.X redemption call, they have unveiled two financing announcements today. The first is the announcement of a 30-year debenture issue:
Great-West Lifeco Inc. (Lifeco) announced earlier today that it had entered into an agreement with a syndicate of agents co-led by RBC Capital Markets and BMO Capital Markets for the sale on an agency basis of $200 million aggregate principal amount of debentures maturing November 16, 2039 (the “Debentures”).
The Debentures will be dated November 16, 2009, will be issued at par and will mature on November 16, 2039. Interest on the Debentures at the rate of 5.998% per annum will be payable semi-annually in arrears on May 16 and November 16 in each year, commencing May 16, 2010, until November 16, 2039. The Debentures are redeemable in whole or in part at the greater of the Canada Yield Price and par, together in each case with accrued and unpaid interest. The Debenture offering is expected to close on or about November 16, 2009. The net proceeds will be used by the Company for general corporate purposes and to augment the Company’s current liquidity position.
The syndicate of agents will include RBC Capital Markets, BMO Capital Markets, CIBC World Markets Inc., Scotia Capital Inc., TD Securities Inc., Merrill Lynch Canada Inc., National Bank Financial Inc., Casgrain & Company Limited, and Desjardins Securities Inc.
They have also announced another issue of long debs – at least, I think it’s a different issue, the press release is not entirely clear – in an exchange offer for Innovative Tier 1 Capital:
Great-West Lifeco Inc. (Lifeco) announced today that it is making an offer to acquire (the “Offer”) up to 170,000 of the outstanding Great-West Life Trust Securities – Series A (“GREATs”) of Great-West Life Capital Trust and up to 180,000 of the outstanding Canada Life Capital Securities – Series A (“CLiCS”) of Canada Life Capital Trust. If more than 170,000 GREATs or 180,000 CLiCS are tendered to the Offer, the tenders will be subject to pro ration.
Lifeco also announced today that it has entered into an agreement with a syndicate of agents co-led by RBC Capital Markets and BMO Capital Markets for the sale of $200 million aggregate principal amount of debentures on an agency basis (the “Debentures”).
Pursuant to the Offer, holders of GREATs and CLiCS will have the opportunity to tender all or a portion of their GREATs and/or CLiCS, as applicable, for the applicable GREATs or CLiCS purchase price payable, at the election of the depositing securityholder, either in (a) cash, or (b) debentures with a term to maturity of approximately 30 years plus cash equal to the amount, if any, by which the GREATs purchase price (described below) or CLiCS purchase price (described below), as the case may be, exceeds the debenture price (described below).
The purchase price for the GREATs will provide a yield on each GREATs to December 31, 2012 equal to the yield of the 2% Government of Canada bond due September 1, 2012, as determined one business day prior to the expiration of the Offer, plus a spread of 1.20%. The purchase price for the CLiCS will provide a yield on each CLiCS to June 30, 2012 equal to the yield of the 3.75% Government of Canada bond due June 1, 2012, as determined one business day prior to the expiration of the Offer, plus a spread of 1.05%. In addition, the debentures to be issued under the Offer will provide a yield to maturity equal to the yield to maturity of a 5% Government of Canada due June 1, 2037 plus an equivalent credit spread to the Debentures to be determined and included in the Offer to Purchase and Circular to be mailed to all holders of the GREATs and CLiCS shortly.
The Company will publicly announce the determination of the purchase prices for the GREATs and the CLiCS as well as other details regarding the debentures offered as consideration payable for the GREATs and CLiCS by way of a news release and will post such release on the Company’s website not later than 5:00 p.m. (Toronto time) on the business day immediately prior to the expiration date of the Offer (such date currently expected to be December 15, 2009).
According to the 2008 Annual Report (which is copy-protected because it’s SECRET), there were $350-million GREATs outstanding, which are Tier 1 Capital of GWL. There was a total of $450-million CLiCS outstanding, $300-million of which were Series A. They disclose that subsidiaries of GWO held $167-million of the total, but do not provide a breakdown of his holding into Series A & B. CLiCS are Tier 1 Capital of Canada Life.
CLiCS were issued in February 2002 with a 6.679% coupon and the Series A were due to mature 2012-6-30 according to the prospectus on SEDAR.
The GREATs were issued in December 2002 and have a pretend-maturity of 2012-12-31 according to SEDAR.
GWO seems to be rejigging its capital structure somewhat! We will see if this is a normal term-extension type of refinancing (the GWO debs will be worse credits than the CLiCs & GREATs), or whether there’s something else cooking….