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TORONTO, May 11, 2017 /CNW/ - Intact Financial Corporation
(TSX:IFC) ("IFC" or the "Company") announced today that it has
closed its previously announced bought deal offering of 4.5 million
Subscription Receipts (the "Offering") underwritten by a syndicate
of underwriters (the "Underwriters") led by CIBC Capital Markets
and TD Securities Inc., resulting in gross proceeds (including the
over-allotment option proceeds) to IFC of approximately
$414 million. Additionally, IFC
has completed the private placement (the "Private Placement") to
Caisse de dépôt et placement du Québec, Canada Pension Plan
Investment Board and Ontario Teachers' Pension Plan (collectively,
the "Private Placement Subscribers"), of an aggregate of 3.7
million Subscription Receipts for aggregate gross proceeds of
approximately $340 million.
IFC entered into an underwriting agreement dated May 4, 2017 with the Underwriters under which the
Underwriters agreed to purchase from IFC and sell to the public in
Canada and to qualified
institutional buyers in accordance with Rule 144A of the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act"), 3.9
million Subscription Receipts at a price of $91.85 per Subscription Receipt for gross
proceeds to IFC of approximately $360
million. The Underwriters have exercised their
over-allotment option and purchased at closing an additional 0.6
million Subscription Receipts at a price of $91.85 per Subscription Receipt for
additional gross proceeds to IFC of approximately $54 million.
IFC separately agreed with the Private Placement Subscribers to
concurrently issue an aggregate of 3.7 million Subscription
Receipts at a price of $91.85 per
Subscription Receipt (less a capital commitment fee). The escrow
release provisions of the private placement Subscription Receipts
are equivalent to those applicable to the public offering of
Subscription Receipts.
The net proceeds from the Offering and Private Placement will be
held in escrow and are intended to be used by IFC to fund a portion
of the purchase price for its previously announced acquisition (the
"Acquisition") of all of the issued and outstanding shares of
OneBeacon Insurance Group, Ltd. ("OneBeacon"). The closing of
the Acquisition is expected to occur in the fourth quarter of 2017
and is subject to approval by OneBeacon's shareholders and receipt
of required regulatory approvals.
Each Subscription Receipt will entitle the holder thereof to
receive, without payment of additional consideration or further
action, upon closing of the Acquisition prior to March 31, 2018, one common share ("Common Share")
of IFC.
In addition, while the Subscription Receipts remain outstanding,
holders will be entitled to receive cash payments ("Dividend
Equivalent Payments") per Subscription Receipt that are equal to
dividends declared by IFC on each Common Share. Such Dividend
Equivalent Payments will have the same record date as the related
Common Share dividend and will be paid to holders of Subscription
Receipts concurrently with the payment date of each such dividend.
Dividend Equivalent Payments will be paid first out of any interest
on the Escrowed Funds (defined below) and then out of the Escrowed
Funds.
The net proceeds from the sale of the Subscription Receipts (the
"Escrowed Funds") will be held in escrow by Computershare Trust
Company of Canada, as escrow agent
in accordance with the subscription receipt agreement and invested
as set forth in the subscription receipt agreement, provided that
Dividend Equivalent Payments may be made from the Escrowed Funds
and the interest credited or received thereon from time to time, as
described above.
The Subscription Receipts will commence trading today on the
Toronto Stock Exchange under the symbol IFC.R.
The Subscription Receipts and the Common Shares have not been,
and will not be, registered under the U.S. Securities Act, or the
securities laws of any state of the
United States and may not be offered, sold or delivered,
directly or indirectly, within the United
States, except in certain transactions exempt from, or not
subject to, the registration requirements of the U.S. Securities
Act and applicable state securities laws.
About Intact Financial Corporation
Intact Financial Corporation (TSX: IFC) is the largest provider
of property and casualty (P&C) insurance in Canada with over $8.0
billion in annual premiums. Supported by over 12,000
employees, the Company insures more than five million individuals
and businesses through its insurance subsidiaries and is the
largest private sector provider of P&C insurance in
British Columbia, Alberta, Ontario, Québec, Nova Scotia and Newfoundland & Labrador. The Company
distributes insurance under the Intact Insurance brand through a
wide network of brokers, including its wholly owned subsidiary,
BrokerLink, and directly to consumers through belairdirect.
Forward Looking Statements
This press release contains forward-looking statements. When
used in this press release, the words "may", "will", "would",
"should", "could", "expects", "plans", "intends", "trends",
"indications", "anticipates", "believes", "estimates", "predicts",
"likely", "potential" or the negative or other variations of these
words or other similar or comparable words or phrases, are intended
to identify forward-looking statements. This press release contains
forward-looking statements with respect to, among other things, the
financing structure for the transaction and the completion of and
timing for completion of the transaction.
Forward-looking statements are based on estimates and
assumptions made by management based on management's experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors that management
believes are appropriate in the circumstances. Many factors could
cause the Company's actual results, performance or achievements or
future events or developments to differ materially from those
expressed or implied by the forward-looking statements, including,
without limitation, the following factors: the timing and
completion of the Acquisition; expected competition and regulatory
processes and outcomes in connection with the Acquisition; the
Company's ability to implement its strategy or operate its business
as management currently expects; its ability to accurately assess
the risks associated with the insurance policies that the Company
writes; unfavourable capital market developments or other factors
which may affect the Company's investments, floating rate
securities and funding obligations under its pension plans; the
cyclical nature of the property and casualty insurance industry;
management's ability to accurately predict future claims frequency
and severity, including in the Ontario personal auto line of business, as
well as the evaluation of losses relating to the Fort McMurray wildfires, catastrophe losses
caused by severe weather and other weather-related losses;
government regulations designed to protect policyholders and
creditors rather than investors; litigation and regulatory actions;
periodic negative publicity regarding the insurance industry;
intense competition; the Company's reliance on brokers and third
parties to sell its products to clients and provide services to the
Company; the Company's ability to successfully pursue its
acquisition strategy; the Company's ability to execute its business
strategy; the Company's ability to achieve synergies arising from
successful integration plans relating to acquisitions; the terms
and conditions of the Acquisition; management's expectations in
relation to synergies, future economic and business conditions and
other factors and resulting effect on the metrics used by
management in relation to the Acquisition; the Company's financing
plans for the Acquisition, including the availability of equity and
debt financing in the future; various other actions to be taken or
requirements to be met in connection with the Acquisition and
integrating the Company and OneBeacon after completion of the
Acquisition; the Company's participation in the Facility
Association (a mandatory pooling arrangement among all industry
participants) and similar mandated risk-sharing pools; terrorist
attacks and ensuing events; the occurrence of catastrophe events,
including a major earthquake; the Company's ability to maintain its
financial strength and issuer credit ratings; access to debt
financing and the Company's ability to compete for large commercial
business; the Company's ability to alleviate risk through
reinsurance; the Company's ability to successfully manage credit
risk (including credit risk related to the financial health of
reinsurers); the Company's ability to contain fraud and/or abuse;
the Company's reliance on information technology and
telecommunications systems and potential failure of or disruption
to those systems, including cyber-attack risk; the Company's
dependence on key employees; changes in laws or regulations; the
exercise of the over-allotment option in connection with the
Offering; general economic, financial and political conditions; the
Company's dependence on the results of operations of its
subsidiaries and the ability of the Company's subsidiaries to pay
dividends; the volatility of the stock market and other factors
affecting the trading prices of the Company's securities (including
the Subscription Receipts); the Company's ability to hedge
exposures to fluctuations in foreign exchange rates; future sales
of a substantial number of its common shares; changes in applicable
tax laws, tax treaties or tax regulations or the interpretation or
enforcement thereof; and further to the Offering, the timing of the
distribution of Common Shares upon closing of the Acquisition.
Certain material factors or assumptions are applied in making
these forward-looking statements, including that the
additional financing of the Acquisition is completed; that the
Acquisition will be completed in the fourth quarter of 2017; that
the anticipated benefits of the Acquisition to IFC will be
realized, including the impact on growth and accretion in various
financial metrics; that reserves will be strengthened following
closing of the Acquisition; that the protection we have purchased
against adverse reserve developments will be sufficient; the
accuracy of certain cost assumptions, including with respect to
employee retention matters; and the amounts that will be recovered
from certain obligations and litigation matters.
All of the forward-looking statements included or incorporated
by reference in this press release are qualified by these
cautionary statements, those made in the "Risk Management" sections
of management's discussion and analysis of operating and financial
results for the year ended December 31,
2016 and the three months ended March
31, 2017 and those made in the prospectus supplement dated
May 4, 2017 filed in respect of the
Offering. These factors are not intended to represent a complete
list of the factors that could affect the Company. These factors
should, however, be considered carefully. Although the
forward-looking statements are based upon what management believes
to be reasonable assumptions, the Company cannot assure investors
that actual results will be consistent with these forward-looking
statements. When relying on forward-looking statements to make
decisions, investors should ensure the preceding information is
carefully considered. Undue reliance should not be placed on
forward-looking statements made in this press release. The Company
has no intention and undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
SOURCE Intact Financial Corporation (News Releases)