Industrial Alliance Announces an Offering of $400 million of 3.30% Fixed/Floating Subordinated Debentures
Not for distribution to U.S. newswire services or for dissemination in the United States.
Industrial Alliance Insurance and Financial Services Inc. (“Industrial Alliance” or the “Company”) announced today an offering of $400 million principal amount of 3.30% fixed/floating subordinated debentures (the “Debentures”) due September 15, 2028 (the “Offering”).
The Debentures will mature on September 15, 2028. Interest on the Debentures at the rate of 3.30% per annum will be payable in arrears in equal semi-annual installments on September 15 and March 15, in each year, commencing on September 15, 2017 and continuing until September 15, 2023, with a short first interest payment in the amount of $6,509,589.04 payable on March 15, 2017. After September 15, 2023, interest on the Debentures will be payable at a rate per annum equal to the 3-month bankers’ acceptance rate (CDOR) plus 2.14% payable quarterly in arrears on the 15th day of each of March, June, September, and December in each year, commencing on December 15, 2023.
The Offering is being done on a best efforts agency basis by a syndicate of agents led by TD Securities Inc. as sole lead and bookrunner, and consisting of CIBC World Markets Inc., RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., Industrial Alliance Securities Inc., National Bank Financial Inc. and Scotia Capital Inc.
The Offering is made under the short form base shelf prospectus dated April 16, 2015, which provides for the issue of up to $2 billion principal amount of securities. Complete details of the Offering are set out in the prospectus supplement dated September 13, 2016, which will be filed with the Canadian securities regulatory authorities and will be available on SEDAR at www.sedar.com and on the Company’s website at www.ia.ca.
The Offering is expected to close on or about September 16, 2016. The net proceeds will be added to the Company’s general funds and will be used for general corporate purposes (including, subject to the prior approval of the Autorité des marchés financiers, the redemption of Industrial Alliance’s outstanding 4.75% Subordinated Debentures due December 14, 2021 (the “4.75% Subordinated Debentures”), which Industrial Alliance currently intends to effect on December 14, 2016 (the “Subordinated Debentures Redemption”)).
On a pro forma basis, after giving effect to the Offering and the Subordinated Debentures Redemption, the Company estimates that, as at June 30, 2016: (i) its debt ratio would increase from 16.5% to 18.9% if only its outstanding debentures are considered “debt”; (ii) its debt ratio would increase from 23.8% to 26.0% if its outstanding debentures and preferred shares are considered “debt”; and (iii) its solvency ratio would increase by 6 percentage points to 205%.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offering, solicitation or sale would be unlawful.
The Debentures have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state of the United States of America, and may not be offered, sold or delivered, directly or indirectly, within the United States, its territories, its possessions and other areas subject to its jurisdiction or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act), except in certain transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within the United States.
This press release may contain statements relating to strategies used by Industrial Alliance or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may”, “will”, “could”, “should”, “would”, “suspect”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate”, and “continue” (or the negative thereof), as well as words such as “objective” or “goal” or other similar words or expressions. Such statements constitute forward-looking statements within the meaning of securities laws. Forward-looking statements include, but are not limited to, information concerning the Company’s possible or assumed future operating results. These statements are not historical facts; they represent only the Company’s expectations, estimates and projections regarding future events.
Although Industrial Alliance believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Factors that could cause actual results to differ materially from expectations include, but are not limited to: general business and economic conditions; level of competition and consolidation; changes in laws and regulations including tax laws; liquidity of Industrial Alliance including the availability of financing to meet existing financial commitments on their expected maturity dates when required; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; accuracy of accounting policies and actuarial methods used by Industrial Alliance; insurance risks including mortality, morbidity, longevity and policyholder behaviour including the occurrence of natural or man-made disasters, pandemic diseases and acts of terrorism.
Additional information about the material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found under “Risk Factors” in Industrial Alliance’s most recent annual information form, in Industrial Alliance's most recent management’s discussion and analysis under “Risk Management”, in the “Management of Risks Associated with Financial Instruments” and “Insurance Contract Liabilities” notes to Industrial Alliance’s most recent audited consolidated financial statements, and elsewhere in Industrial Alliance’s filings with Canadian securities regulators, which are available for review at www.sedar.com.
The forward-looking statements in this news release reflect the Company’s expectations as of the date of this document. Industrial Alliance does not undertake to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as required by law.
About Industrial Alliance
Founded in 1892, Industrial Alliance offers life and health insurance products, mutual and segregated funds, savings and retirement plans, RRSPs, securities, auto and home insurance, mortgages and car loans and other financial products and services for both individuals and groups. It is one of the four largest life and health insurance companies in Canada and one of the largest publicly-traded companies in the country. Industrial Alliance stock is listed on the Toronto Stock Exchange under the ticker symbol IAG.
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