F.b.d.hldgs Regulatory News (FBH)

NOT FOR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA) OR TO ANY U.S. PERSON (AS DEFINED IN REGULATION S OF THE UNITED STATES NOTES ACT OF 1933, AS AMENDED) OR IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT

This announcement contains a public disclosure of inside information under Regulation (EU) 596/2014. 

1 October 2018

FBD Holdings plc ("FBD" or "FBD Group")

FBD Insurance plc ("FBD Insurance")

Proposed purchase and cancellation of convertible debt and potential issuance of new €50m Tier 2 subordinated notes

FBD is pleased to announce that FBD Insurance has entered into an agreement to purchase and cancel the €70,000,000 7% Convertible Notes (the "Existing Notes") currently held by certain affiliates of Fairfax Financial Holdings Limited (collectively "Fairfax") for approximately €86 million in cash, which will be funded through a combination of existing cash resources and a new issue of subordinated notes (the "Transaction").

The purchase of the Existing Notes is subject to certain conditions (including any required regulatory approvals). As part of the Transaction, FBD Insurance is proposing to issue €50,000,000 of new Callable Dated Deferrable Subordinated Notes due 2028 (the "New Notes"). FBD has appointed Goodbody Stockbrokers UC as Sole Lead Manager (the "Manager") and the New Notes are expected to be placed with institutional investors.

Background to the Transaction

In 2015, FBD Insurance issued the Existing Notes to Fairfax, to strengthen FBD's capital position ahead of the implementation of Solvency II and to position it for future growth.

The Existing Notes carry a 7 per cent coupon and are convertible into ordinary shares in FBD at a conversion price (subject to adjustment in specified circumstances) of €8.50 per share at any time between 23 September 2018 and 23 September 2025 at the option of the holder. A mandatory conversion would occur if the 30-day volume weighted average price of FBD shares exceeds €8.50 per share for 180 days from 23 September 2018. On conversion, 8,235,294 new FBD shares would be issued to Fairfax.

Rationale for the Transaction

The consideration for purchase of the Existing Notes represents a discount of approximately 3 per cent to the 6 month volume weighted average price as at 28 September 2018, the last business day prior to this announcement.

The Transaction will have a number of benefits for shareholders:

§ Existing shareholders will not suffer any dilution;

§ It will optimise and simplify FBD's capital structure; and

§ It is expected to reduce ongoing interest costs, which over time should provide increased dividend potential for shareholders.

As at 30 June 2018, FBD had net assets of €280.4m and held the Existing Notes as a €53.3m liability and €18.2m in equity. Following completion of the Transaction, on an unaudited pro-forma basis as at 30 June 2018 FBD would have net assets of €247.6m and FBD Insurance's solvency capital ratio will remain in a very healthy position, above its target range of 120% to 140%.

Commenting on the transaction,

Fiona Muldoon, CEO of FBD 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."

Liam Herlihy, Chairman of FBD said:

"We would like to thank Fairfax for their investment in FBD. We are proud of FBD's 50 year heritage and we look forward to the future with confidence."

About FBD Holdings plc ("FBD")

FBD is one of Ireland's largest property and casualty insurers, looking after the insurance needs of farmers, consumers and business owners.  Established in the 1960s by farmers for farmers, FBD has built on those roots in agriculture to become a leading general insurer serving the needs of its direct agricultural, small business and consumer customers throughout Ireland. It has a network of 34 branches nationwide. 

Forward Looking Statements

Some statements in this announcement are forward-looking. They represent expectations for the Group's business, and involve risks and uncertainties. These forward-looking statements are based on current expectations and projections about future events. The FBD Group believes that current expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the FBD Group's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

Other Information

This Announcement does not constitute an offer of securities and it is not a prospectus or a prospectus "equivalent" document.

The distribution of this Announcement and the offering of the securities referred to in this Announcement in certain jurisdictions may be restricted by law. No action has been taken by FBD, FBD Insurance or the Manager that would permit an offering of such securities or possession or distribution of this Announcement or any other offering or publicity material relating to such securities in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the FBD, FBD Insurance and the Manager to inform themselves about, and to observe, such restrictions.

This Announcement is not for publication, distribution or release, directly or indirectly, in or into the United States (including its territories and dependencies, any State of the United States and the District of Columbia). None of the securities referred to in this Announcement have been or will be registered under the US Securities Act of 1933 (as amended) (the "Securities Act"), and may not be offered or sold in the United States or to, or for the account or benefit of, US persons except subject from an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Neither this Announcement nor the information contained herein constitutes or forms part of an offer to sell or the solicitation of an offer to buy securities in the United States. There will be no public offer of any securities in the United States or in any other jurisdiction.

In member states of the EEA, this announcement and any offer of securities if made subsequently is directed only at persons who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors"). Any person in the EEA who acquires securities in any offer of securities (an "investor") or to whom any offer of securities is made will be deemed to have represented and agreed that it is a Qualified Investor. Any investor will also be deemed to have represented and agreed that any securities acquired by it in the offer have not been acquired on behalf of persons other than Qualified Investors in Ireland and/or other Member States (where equivalent legislation exists) for whom the investor has authority to make decisions on a wholly discretionary basis, nor have the securities been acquired with a view to their offer or resale to persons other than such Qualified Investors.

The price of securities and any income from them may go down as well as up and investors may not get back the full amount invested on disposal of such securities.

Neither the content of FBD's website nor any website accessible by hyperlinks on the FBD's website is incorporated in, or forms part of, this Announcement.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Manager or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.