Issue of Capital Notes: Insurance Australia Group Ltd (ASX: IAG) had earlier announced $300 million off-market share buy-back as part of the capital management program. The buy-back is funded from the existing cash and investments and IAG will maintain a strong balance sheet and regulatory capital position after the buy-back. Meanwhile, IAG has announced Capital Notes offer to raise $300m for latest hybrid offer with the ability to raise more or less, and this is a part of IAG's capital management strategy while the proceeds will be used for the general corporate purposes and to refinance some of the existing convertible preference shares (CPS) issued by IAG in May 2012. IAG will convert all Capital Notes if a Potential Acquisition Event occurs and may exchange all or some Capital Notes if a Tax Event or Regulatory Event occurs, in each case subject to certain conditions. Moreover, the eligible CPS Holders, who are registered as CPS holder on November 18, 2016 are invited to apply for some or all of their CPS (for $100 each) to be bought back on December 22, 2016 and have the buy-back proceeds applied to the Application Payment for Capital Notes. This means that no separate Application Payment is required under the Reinvestment Offer.
Finished Book Build and increase in transaction amount: IAG has successfully completed the Bookbuild for the offer of IAG Capital Notes, and has allocated $350 million (raised from $300 million due to the strong demand) of Capital Notes under the Broker Firm and Institutional Offers. The margin is set at 4.70% per annum, which is the bottom of the margin range of 4.70% - 4.90% per annum indicated at the launch of the Offer. The group increased the amount from $300 million owing to strong demand. Moreover, the Capital Notes offer will open on November 29, 2016 and the final size of the offer will depend on the volume of the applications received and accepted under the Reinvestment Offer (for Eligible CPS Holders). IAG also reserves the right to scale back applications received from CPS holder applicants. Additionally, a replacement prospectus containing the margin and an application form is expected to be lodged on November 29, 2016 and the Reinvestment Offer is expected to close on December 16, 2016. Meanwhile, IAG stock generated over 6% in the last five days (as of November 24, 2016).
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