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LONDON (Alliance News) - FBD Holdings PLC said Monday it has entered into an agreement to buy and cancel the EUR70.0 million 7% convertible notes currently held by Fairfax Financial Holdings Ltd for about EUR86 million cash.
The purchase will be funded through a combination of existing cash resources and a new issue of subordinated notes.
The purchase is subject to the existing notes is subject to "certain conditions".
As part of the transaction, FBD Insurance is proposing to issue EUR50.0 million of new callable dated deferrable subordinated notes due 2028.
FBD has appointed Goodbody Stockbrokers UC as sole lead manager and the new notes are expected to be placed with institutional investors.
At June 30, FBD had net assets of EUR280.4 million and held existing notes as a EUR53.3 million liability and EUR18.2 million in equity.
Following completion of the transaction, on an unaudited pro-forma basis as at June 30, FBD would have net assets of EUR247.6 million and FBD Insurance's solvency capital ratio remains in a "very healthy" position, above its target range of 120% to 140%.
Chief Executive Officer Fiona Muldoon said: "This transaction is a great result for our loyal shareholders. It avoids any dilution of their existing shareholdings and ensures that FBD continues to maintain a very strong capital position.
"Fairfax's investment in 2015 was a meaningful endorsement of our business when we needed it and they have been a fantastic partner. We wish them well. The staff, management team and I look forward to continuing to grow FBD as the only indigenous Irish insurer and to expanding our business in both urban and rural Ireland."
Shares in FBD Holdings were untraded Monday but last closed at EUR9.88 each.