AXA prices bond offering for US life IPO ahead of XL acquisition

French insurer AXA has priced its offering of $750 million of bonds mandatorily exchangeable for a number of shares of common stock of its US subsidiary AXA Equitable Holdings (AEH).

The bonds will bear interest at a fixed rate of 7.25 percent per annum, payable semi-annually.

At maturity on May 15, 2021, the bonds will be exchanged into a minimum of 31,914,894 shares if the AEH share price is greater than or equal to $23.50 per share, and a maximum of 37,500,000 shares if the AEH share price does not exceed the initial public offering (IPO) price.

AXA wants to use the proceeds of the IPO of its US subsidiary (Life & Savings and Alliance Bernstein) to help financing the acquisition of Bermuda-based re/insurer XL Group for $15.3 billion.

AXA has already received $3.2 billion following the completion of a reorganisation transactions ahead of the planned IPO of its US operations.

The restructuring deal included the repayment of all internal loans provided by AXA Group and the purchase of Alliance Bernstein units previously owned by AXA and its affiliates.

Earlier in March, rating agency Fitch had threatened to downgrade AXA following the plan to acquire XL Group due to financing risks related to the planned IPO of its US subsidiary.

AXA said it expects to finance the cash consideration via €3.5 billion available cash resources, €6 billion from the IPO of AXA's US operations planned in the second quarter of 2018, and related pre-IPO transactions and €3 billion via issuance of subordinated debt.

The target completion period for the acquisition is the second half of 2018, subject to regulatory approvals and approval by XL shareholders.

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