Genworth Financial Inc. is taking a public step toward selling its Canadian mortgage insurance business, and its mortgage insurance businesses elsewhere in the world.
The Richmond, Virginia-based company has announced an effort to change the terms governing $3.2 billion in notes.
The effort — a consent solicitation — would give Genworth official authorization, under the terms of notes’ “indentures,” to sell all or part of the company’s non-U.S. mortgage insurance businesses and assets, including the Genworth Canada business.
Genworth has agreed to pay the note holders who give their consent $2.50 per $1,000 of note principal.
Consents are due at 5 p.m. Eastern Daylight Time Aug. 9.
Genworth was a major player in the U.S. life, annuity and mortgage insurance markets, and it helped create the U.S. market for stand-alone long-term care insurance.
The company continues to sell new mortgage insurance in the United States, Canada and Australia.
The company has suspended sales of new life insurance and annuities. The company appears to be selling some new LTCI coverage, but it has stopped reporting on new LTCI sales.
China Oceanwide Holdings Group Co. Ltd., a Beijing-based real estate developer and financial services company, agreed in October 2016 to buy Genworth.
The companies have pushed the deal completion deadline back many times. The current deadline is Nov. 30. The companies say they have now received most of the regulatory approvals they need to complete the deal. They said when they announced the latest deadline extension that one obstacle has been Canadian regulators’ concerns about how the companies would protect Genworth customers’ personally identifiable information.
Genworth said when it announced the latest deadline extension that it might cope with the delays in Canada by selling Genworth Canada, or by disposing of the Canadian business in some other way.
The Consent Solicitation Statement
Genworth says in a description of the purpose of the consent solicitation, included in the official consent solicitation statement, that it believes selling Genworth Canada will increase the likelihood of it completing the China Oceanwide transaction.
“We also believe that the sale of Genworth Canada would allow us to reduce our outstanding indebtedness and increase our financial flexibility, whether or not the China Oceanwide transaction is consummated,” the company says.
Genworth says that, in addition to the notes, Genworth’s overall indebtedness also includes $200 million owed to Genworth Life Insurance Company.
The company says that it needs to do more to complete the China Oceanwide transaction than to get permission from Canadian regulators, and that there’s no guarantee that selling Genworth Canada would lead to completion of the China Oceanwide deal.
“Moreover, a disposition of all or any portion of our businesses and assets may materially alter our business by, inter alia, changing our credit profile or ratings, concentrating our operations in the remaining insurance businesses by eliminating potential future cash flow streams from the disposed businesses and assets,” the company says.
The solicitation agent for the consent solicitation is Bank of America Merrill Lynch.
A packet of documents related to the non-U.S. mortgage insurance unit sale consent solicitation is available here.
— Read Genworth Has Canada Problems, on ThinkAdvisor.