Representatives from Genworth Financial and a U.S. unit of China Oceanwide Holdings Group Co. were talking seriously enough about a deal in March to sign a confidentiality agreement.
China Oceanwide, a Beijing-based real estate and financial services company with $30 billion in assets, has agreed to pay $2.7 billion in cash for Genworth, and provide about $1.1 billion in cash to help the company restructure its operations and deal with notes set to come due in 2018.
Genworth, which is based in Richmond, Virginia, mentions the confidentiality agreement in a document filed Monday with the U.S. Securities and Exchange Commission.
Genworth says it and China Oceanwide’s U.S. unit, China Oceanwide USA Holdings Co. Ltd., also signed another confidentiality agreement on Sept. 9.
In the document, an agreement and plan of merger, the company also talks about breakup fees each company might have to pay if the deal falls apart.
If the companies fail to consummate the deal by Aug. 31, 2017, which is designated as the deal end date, Genworth could have to pay China Oceanwide a termination fee of $105 million. Genworth might also have to pay the fee if its board rescinds approval of the deal, or it gets acquired by another suitor.
China Oceanwide might have to pay Genworth a termination fee of $210 million if China Oceanwide breaches the deal or regulators in China, Hong Kong, Macau or Taiwan block the deal.
In another section of the document, Genworth talks about one strategy it is using to try to get the company restructuring approved.
The Genworth unit that writes life insurance and annuities is currently a child of the long-term care insurance unit. Genworth wants to turn the life and annuity unit into a sister of the long-term care insurance unit, to help insulate the life and annuity unit from the effects of the pricing problems at the long-term care insurance unit.
Genworth says it will try to “destack” the long-term care insurance unit and the life and annuity unit, but that it will not guarantee that it can destack GLICNY, its New York state long-term care insurance unity.
Genworth will “take other reasonable actions to explore the feasibility” of destacking the New York state unit, Genworth says.
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