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MetLife Wins Debt Vote as Investors Opt for Sweetened Fee

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MetLife Inc.’s bondholders agreed to forfeit their right to prevent the insurer from paying a stock dividend or repurchasing shares, even if the company’s losses swell.

The insurer will pay $26 million to debtholders, the New York-based company said Monday in a statement. MetLife offered $10 for every $1,000 in principal to win their support. That’s up from the initial proposal of $2.50, which was opposed by top investors. The deal covers about $3.2 billion in securities.

(Related: MetLife Offers Bondholders Extra to Forfeit Dividend Power)

Chief Executive Officer Steve Kandarian sought approval from the investors after spinning off a U.S. retail unit that had about $220 billion in assets. Recent losses, and the decline in stockholders’ equity tied to the transaction, could have given bondholders more power over capital allocation.

One of the triggers was the company being unprofitable in a 12-month period, under generally accepted accounting principles. MetLife reported a net loss in the fourth quarter of 2016 that was wider than the profit in the first six months of this year.

The $2.50 offer had drawn protest from holders including Spectrum Asset Management, which called it “materially underwhelming.” Spectrum didn’t agree to the offer, according to Chief Investment Officer Phil Jacoby. Bondholders who voted no won’t receive the consent fee, saving MetLife about $6 million in potential payouts to holders of those securities who disagreed.

The consent solicitation on that proposal was set for Aug. 18 then moved to Aug. 23, the date on which MetLife eventually announced it was sweetening the offer.

More than 80% of holders approved the offer, which covers four outstanding securities, exceeding the majority required. The company expects to pay the consent fee on Tuesday, Aug. 29.

The company also scheduled a special meeting of its common stock shareholders for Oct. 19 to approve changes to so-called dividend payment tests as a result of the spinoff of Brighthouse Financial Inc.

— Read Even if You’re Goldman, Getting Out of Pensions Is Hard on ThinkAdvisor.


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