Mortgage insurer, Genworth Financial, Inc. and China Oceanwide Holdings Group Co., have announced that Oceanwide has reached an agreement with Hony Capital on the key commercial terms and conditions of its $1.8 billion offshore financing plan to complete the acquisition of Genworth.
The key commercial terms and conditions include its $1.8 billion offshore financing plan to complete the acquisition, and that Oceanwide has provided satisfactory information regarding its funding plan for the portion of the funds being sourced from Mainland China.
Whilst Oceanwide has made significant progress towards finalising its financing plan for the proposed transaction, it has not reached a final agreement with Hony Capital on all terms and conditions.
This is due to the logistical challenges presented by the global pandemic, including travel restrictions and mandatory quarantine requirements. In particular, these challenges have significantly lengthened the time required for Oceanwide and Hony Capital to hold in-person discussions to finalise these terms and conditions.
Previously, Genworth said that it was satisfied with the funding plans for the $2.7 billion deal, expressed no intention to exercise its right to terminate the merger agreement as of August 31, 2020.
Because of the delays, the parties have also announced that they have agreed to a 16th waiver and agreement of each party’s right to terminate their previously announced merger agreement. The 16th waiver extends the previous deadline of September 30, 2020 to no later than November 30, 2020.
Oceanwide has confirmed that their existing financing arrangement for debt funding of up to $1.8 billion through Hony Capital has been extended through December 31, 2020.
The parties also agreed to an interim checkpoint on October 31, 2020, by which time Oceanwide needs to provide Genworth with satisfactory evidence that the necessary funding will be available to close the transaction by November 30.
LU Zhiqiang, chairman of Oceanwide noted: “We have overcome many hurdles during the past four years, demonstrating time and again our unwavering commitment to this transaction.
“The COVID-19 pandemic has presented a unique set of challenges to deal-making that traditionally relies on face-to-face communications, which is why the additional time is necessary to finalise these remaining steps. Despite these latest challenges, we remain committed to securing financing for the transaction in order to close the transaction as soon as possible.”
Tom McInerney, Genworth president and CEO added: “As we extend the waiver and agreement again, it is important to remember that it wasn’t until the end of March 2020 that we received substantially all the regulatory approvals needed to close the transaction.
“That put Oceanwide in the difficult position of completing the funding process in the middle of a global pandemic. I recognize that this has been an extraordinarily long road to travel for our shareholders, regulators, employees and other stakeholders, and we greatly appreciate their patience. We are committed to continuing to work with Oceanwide to close the transaction because we believe that the transaction represents the best value for Genworth’s shareholders.”