Henrico County-based insurer Genworth Financial Inc. is facing more regulatory hurdles and another delay in its proposed $2.7 billion acquisition by a China-based company.
Genworth, a seller of mortgage insurance and long-term care insurance with thousands of employees in Virginia, has been trying for months to get approval from the United States and other government regulators to complete its merger with China Oceanwide Holdings Group Co. Ltd., a privately held financial company based in Beijing.
On Monday, the companies said they are expecting another delay and will have to take additional "mitigation" steps to get approval. Genworth's top executive said the company is "evaluating options" in case the deal cannot be closed.
Genworth shares fell 48 cents, or 12.5 percent, to close at $3.37 Monday on the New York Stock Exchange.
The acquisition was announced nearly a year ago - late October 2016 - and Genworth shareholders approved it in March.
Since then, however, the companies have postponed the planned completion because of regulatory reviews, including an ongoing review by the Committee on Foreign Investment in the United States, or CFIUS, a joint committee of federal agencies that scrutinizes transactions resulting in control of a U.S. business by a foreign entity.
The companies have twice withdrawn and refiled their joint voluntary notice to CFIUS, to answer questions and give the committee more time to review the transaction.
On Monday, Genworth said the companies have again withdrawn their application with the intent to refile it and offer additional "mitigation approaches," including potentially working with a U.S. third-party service provider.
A spokeswoman for Genworth said Monday that she could not comment on what mitigation might be required because the CFIUS review process is confidential.
The refiling will delay the review process for at least another 30-day period, and potentially an additional 45 days after that.
"We continue to work diligently to secure all required regulatory approvals necessary to complete the transaction," said Tom McInerney, president and CEO of Genworth, in a statement from the company.
The chairman of Oceanwide, Lu Zhiqiang, also said in the statement that the acquisition of Genworth remains a key part of his company's strategy to offer long-term care and other insurance services in China, "and we are therefore working hard with them to find ways to successfully complete the transaction as soon as possible."
While the CEOs of both companies have expressed optimism in completing the deal, the companies also have warned shareholders that there can be no assurances that CFIUS will ultimately clear it on terms acceptable to the parties.
McInerney said Genworth is evaluating options to address its upcoming debt maturities if the deal does not close. The company has about $600 million in debt that matures in May 2018, with no additional maturities until 2020.
A major element of the proposed deal, besides the $2.7 billion purchase price, is that Oceanwide promised a $1.1 billion infusion of cash and debt reduction for Genworth.
Genworth said its options might include refinancing, asset sales or using current holding company cash.
"We are also evaluating options to insulate our U.S. mortgage insurance business from additional ratings pressure in the absence of a transaction with Oceanwide," McInerney said.
(804) 775-8123
The post Genworth To Refile Proposed Deal With Chinese Company appeared first on InsuranceNewsNet.
0 Response to " Genworth To Refile Proposed Deal With Chinese Company "
Post a Comment