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August 14, 2018 at 06:06 PM
The Chinese company trying to acquire Genworth Financial Inc. has agreed to extend the deal completion deadline and update the deal terms, Genworth said today.
Genworth and China Oceanwide Holdings Group Co. Ltd. have agreed to extend the deadline to Dec. 1, from the previous deadline of Aug. 15.
The deadline extension is the sixth the companies have negotiated since they first announced the $2.7 billion deal, in October 2016.
(Related: Genworth Executive Says China Oceanwide Deal Is Still on Track)
China Oceanwide has also agreed to acquire Genworth with the understanding that a life and annuity-issuing unit will continue to be a subsidiary of a unit that has issued large amounts of stand-alone long-term care insurance (LTCI). Genworth had hoped to separate the life and annuity unit, which is currently viewed as being more attractive than the LTCI unit, from the LTCI unit through a process called “unstacking.”
Genworth decided against proceeding with the unstacking effort after it and regulators in Delaware were unable to agree on the fair market value of one of the two entities involved.
Originally, China Oceanwide has said it would contribute $525 million for the unstacking, and provide $600 million in cash that Genworth could use to pay debt-related bills that came due in May, on top of the purchase price.
Instead, Genworth made the May debt payments with its own cash.
China Oceanwide has now agreed to replace the $1.125 billion in unstacking and debt payment help with $1.5 billion in contributions to Genworth that would be made over time, from around the time of the deal consummation to March 31, 2020, according to Genworth.
The move would, in effect, increase the total deal value by about $375 million.
“The contribution would be used to further improve Genworth’s financial stability, which may include retiring Genworth’s debt due in 2020 and 2021 or enabling future growth opportunities,” Genworth says in the deadline extension announcement.
Genworth and China Oceanwide have received deal approvals from many key regulators, including a key U.S. national security agency, the Committee on Foreign Investment in the United States.
