RICHMOND, Va., Aug. 13, 2019 /PRNewswire/ -- Genworth Financial,
Inc. (NYSE: GNW) ("Genworth") and Brookfield Business Partners L.P.
(NYSE: BBU) (TSX: BBU.UN) ("Brookfield Business Partners") today
announced an agreement for Brookfield Business Partners to purchase
Genworth's majority interest in Genworth MI Canada Inc. (Genworth
Canada). Genworth Canada is the largest private sector
residential mortgage insurer in Canada.
Pursuant to the share purchase agreement, Genworth Financial
International Holdings, LLC (GFIH) and Genworth Mortgage Insurance
Corporation (GMIC), each wholly owned indirect subsidiaries of
Genworth, will sell all of the common shares in Genworth Canada
(TSX: MIC, Head office: 2060 Winston Park Drive, Suite 300,
Oakville, Ontario L6H 5R7) owned
by them to Brookfield Business Partners (the "Transaction").
Genworth's shares represent approximately 56.9% of Genworth
Canada's issued and outstanding common shares (the "Purchased
Shares").
GFIH currently holds 34,799,545 common shares, representing
approximately 40.5% of Genworth Canada's outstanding common shares,
and GMIC currently holds 14,145,100 common shares, representing
approximately 16.4% of Genworth Canada's outstanding common
shares. Upon closing of the Transaction, Genworth will no
longer have beneficial ownership, control or direction over the
Purchased Shares.
The purchase price is CAD$48.86
per share, reflecting a total transaction value of approximately
CAD$2.4 billion. The purchase
price is subject to certain adjustments, including for Genworth
Canada's payment of special dividends prior to the closing of the
Transaction. Net cash proceeds from the transaction after
adjusting for foreign exchange, fees and expenses are estimated to
be approximately USD$1.8 billion.
The sale is targeted to close by the end of 2019 and is subject
to other customary conditions, including approval under the
Insurance Companies Act (Canada) and Competition Act
(Canada).
Brookfield Business Partners also has agreed to provide Genworth
Financial, Inc., with up to USD$850
million in bridge financing in the event regulatory
approvals for the Transaction are not received by October 31, 2019.
As previously disclosed, Genworth is selling its stake in
Genworth Canada to increase the likelihood of subsequently
completing the acquisition of Genworth by China Oceanwide Holdings
Group Co., Ltd. (Oceanwide) and its affiliates (the "Oceanwide
Transaction"). Oceanwide has consented to the Transaction.
In connection with Oceanwide's consent to the Transaction,
Genworth and Oceanwide entered into the 12th Waiver and
Agreement extending the merger agreement deadline to not later than
December 31, 2019.
Once all other regulatory processes are complete, the
Oceanwide Transaction will still require clearance in
China for currency conversion.
Genworth also believes that the sale of its stake in Genworth
Canada would allow it to increase its financial flexibility,
whether or not the Oceanwide Transaction is consummated. If the
Transaction is not consummated, Genworth may decide to retain the
Purchased Shares for investment purposes or to explore alternatives
with respect to the Purchased Shares, which may include decreasing
its beneficial ownership, control and direction over common shares
of Genworth Canada through market transactions, private agreements
or otherwise.
"We are pleased to find such a high-caliber buyer for our
interest in Genworth Canada," said Tom
McInerney, president and CEO of Genworth Financial, noting
that Brookfield Business Partners has a strong reputation as a
long-term focused investor and offers deep expertise in the
insurance and residential real estate sectors. "We look
forward to working with Brookfield Business Partners through the
sale process and required regulatory approvals and, ultimately,
moving forward with our long-awaited closing of our merger with
Oceanwide."
Added LU Zhiqiang, chairman of Oceanwide: "We are pleased with
the quality of the buyer as well as the purchase price they have
offered. We share Genworth's commitment to bringing this process to
a successful conclusion and closing the transaction as soon as
possible."
Goldman Sachs & Co. LLC and Lazard Frères & Co. LLC are
acting as financial advisors to Genworth. Osler, Hoskin & Harcourt LLP and Sullivan
& Cromwell LLP are acting as legal advisors to Genworth and
Richards, Layton & Finger is acting as legal advisor to the
Genworth Board of Directors.
About Genworth Financial
Genworth Financial,
Inc. (NYSE: GNW) is a Fortune 500 insurance holding company
committed to helping families achieve the dream of homeownership
and address the financial challenges of aging through its
leadership positions in mortgage insurance and long term care
insurance. Headquartered in Richmond, Virginia, Genworth traces its roots
back to 1871 and became a public company in 2004. For more
information, visit genworth.com.
From time to time, Genworth releases important information via
postings on its corporate website. Accordingly, investors and other
interested parties are encouraged to enroll to receive automatic
email alerts and Really Simple Syndication (RSS) feeds regarding
new postings. Enrollment information is found under the "Investors"
section of genworth.com. From time to time, Genworth's
publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth
Mortgage Insurance Australia Limited, separately release financial
and other information about their operations. This information can
be found at http://genworth.ca and
http://www.genworth.com.au.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be identified by
words such as "expects," "intends," "anticipates," "plans,"
"believes," "seeks," "estimates," "will" or words of similar
meaning and include, but are not limited to, statements regarding
the sale of Genworth Canada and the closing of the China Oceanwide
Transaction. Forward-looking statements are based on
management's current expectations and assumptions, which are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and
results may differ materially from those in the forward-looking
statements and factors that may cause such a difference include,
but are not limited to, risks and uncertainties related to:
(i) the risk that the Transaction may not be completed in a
timely manner or at all, which may adversely affect Genworth's
business and the price of Genworth's common stock and the Purchased
Shares; (ii) the ability of the parties to obtain regulatory
approvals, or the possibility that they may delay the Transaction
or that materially burdensome or adverse regulatory conditions may
be imposed in connection with any such regulatory approvals;
(iii) the risk that a condition to closing of the Transaction
may not be satisfied or the risk that the China Oceanwide
Transaction might not close regardless of a sale of Genworth
Canada; (iv) continued availability of capital and financing
to Genworth before the consummation of the Transaction; (v) changes
in applicable laws or regulations; (vi) Genworth's ability to
recognize the anticipated benefits of the Transaction;
(vii) Genworth's and/or Oceanwide's inability to obtain
regulatory approvals or clearances, or the possibility that
regulatory approvals may further delay the Oceanwide Transaction or
will not be received prior to December 31, 2019 (and either or
both of the parties may not be willing to further waive their End
Date termination rights beyond December 31, 2019) or that
materially burdensome or adverse regulatory conditions may be
imposed in connection with any such regulatory approvals or
clearances (including those conditions that either or both of the
parties may be unwilling to accept) or that with continuing delays,
circumstances may arise that make one or both parties unwilling to
proceed with the Oceanwide Transaction or unable to comply with the
conditions to existing regulatory approvals; (viii) the impact
of changes in interest rates and political instability; (ix)
further rating agency actions and downgrades in Genworth's
financial strength ratings; (x) the amount of the costs, fees,
expenses and other charges related to the commitment letter from
Brookfield Business Partners; (xi) market conditions that may make
it difficult to obtain funding; (xii) potential further impairments
to Genworth's access to funding due to its credit or financial
strength ratings and its financial condition; (xiii) the
sufficiency of Genworth's internal liquidity sources to meet its
needs and its access to capital may be limited or unavailable;
(xiv) the risk that the Oceanwide Transaction may not be
completed in a timely manner or at all; (xv) the parties'
inability to obtain regulatory approvals or clearances, or the
possibility that regulatory approvals may further delay the
Oceanwide Transaction; and (xvi) the risk that existing and
potential legal proceedings may be instituted against Genworth in
connection with the Transaction or the Oceanwide Transaction that
may delay the Transaction or the Oceanwide Transaction, make them
more costly or ultimately preclude them. Unlisted factors may
present significant additional obstacles to the realization of
forward-looking statements. Actual results may vary materially from
those contained in the forward-looking statements. Accordingly,
forward-looking statements should not be relied upon as
representing Genworth's views as of any subsequent date, and
Genworth does not undertake any obligation to update
forward-looking statements to reflect events or circumstances after
the date they were made, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
To obtain a copy of the report filed in connection with the
Transaction pursuant to National Instrument 62-103 - The Early
Warning System and Related Take-Over Bid and Insider Reporting
Issues, containing the information required on Form 62-103F1,
please contact Investor Relations at
investorinfo@genworth.com.
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SOURCE Genworth Financial, Inc.