Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on October 21, 2016, Genworth Financial, Inc. (the
"Company") entered into an agreement and plan of merger (the "Merger Agreement")
with Asia Pacific Global Capital Co., Ltd. ("Parent"), a limited liability
company incorporated in the People's Republic of China and a subsidiary of China
Oceanwide Holdings Group Co., Ltd., a limited liability company incorporated in
the People's Republic of China (together with its affiliates, "China
Oceanwide"), and Asia Pacific Global Capital USA Corporation ("Merger Sub"), a
Delaware corporation and a direct wholly-owned subsidiary of Asia Pacific
Insurance USA Holdings LLC ("Asia Pacific Insurance"), which is a Delaware
limited liability company owned by China Oceanwide, pursuant to which, subject
to the terms and conditions set forth therein, Merger Sub would merge with and
into the Company with the Company surviving the merger as a direct wholly-owned
subsidiary of Asia Pacific Insurance (the "Merger"). In addition to the Merger
Agreement, the Company, Parent and Merger Sub have entered into that certain
(i) Waiver and Agreement, dated as of August 21, 2017; (ii) Second Waiver and
Agreement, dated as of November 29, 2017; (iii) Third Waiver and Agreement,
dated as of February 23, 2018; (iv) Fourth Waiver and Agreement, dated as of
March 27, 2018; (v) Fifth Waiver and Agreement, dated as of June 28, 2018; (vi)
Sixth Waiver and Agreement, dated as of August 14, 2018; (vii) Seventh Waiver
and Agreement, dated as of November 30, 2018; (viii) Eighth Waiver and
Agreement, dated as of January 30, 2019; (ix) Ninth Waiver and Agreement, dated
as of March 14, 2019; (x) Tenth Waiver and Agreement, dated as of April 29,
2019; (xi) Eleventh Waiver and Agreement, dated as of June 30, 2019; (xii)
Twelfth Waiver and Agreement, dated as of August 12, 2019; (xiii) Thirteenth
Waiver and Agreement, dated as of December 22, 2019; and (xiv) Fourteenth Waiver
and Agreement, dated March 31, 2020. Capitalized terms used but not defined in
the Current Report on Form 8-K have the meanings ascribed to such terms in the
Merger Agreement.
On June 30, 2020, the Company, Parent and Merger Sub entered into a Fifteenth
Waiver and Agreement (the "Waiver Agreement") pursuant to which the Company and
Parent each agreed to extend the End Date by waiving its right to terminate the
Merger Agreement and abandon the Merger prior to the date that is the earliest
to occur of: (i) September 30, 2020; (ii) in the event that by August 31, 2020,
Parent has failed to provide the Company with evidence satisfactory to the
Company in its sole discretion that (A) Parent and/or its Affiliates,
collectively, have not less than $1.0 billion of funds on deposit with a
third-party financial institution in China, which funds will be available for
the payment of the aggregate Per Share Merger Consideration, and (B) one or more
third parties acceptable to the Company in its sole discretion has committed on
terms acceptable to the Company in its sole discretion to provide Parent or one
of its Affiliates, from sources outside the PRC, an aggregate of not less than
$1.0 billion of funds to be used for the payment of the aggregate Per Share
Merger Consideration, the date on which the Company notifies Parent expressly in
writing of the Company's decision to accelerate the End Date to the date of such
notice; (iii) after the Company has provided Parent a written notice of its
proposal to enter into final transaction documents relating to an Acquisition
Transaction (defined below) (the "Final Documents"), the date that is the
earlier to occur of (1) the date Parent notifies the Company that it will not
approve the Final Documents or (2) the fifth Business Day after the date on
which Parent received such notice, unless Parent has previously notified the
Company that it approves the Final Documents; (iv) the date on which Parent
notifies the Company expressly in writing that it does not approve in its sole
discretion any act or failure to act by the Company with respect to any of the
Specified Matters (as defined below); (v) in the event that after the date
hereof any Governmental Entity imposes or requires any term, condition,
obligation, restriction, requirement, limitation, qualification, remedy or other
action that applies to any member of the Parent Group or the Company Group
(each, a "Condition") in connection with any Parent Approval or Company Approval
(each as defined in the Merger Agreement) with respect to the Merger, that
(A) is materially and adversely different, individually or in the aggregate,
from the Conditions set forth in the orders, consents, approvals, permits or
authorizations issued by governmental entities with respect to the Merger that
are in effect on the date of the Waiver Agreement, (B) is materially and
adversely different, individually or in the aggregate, from the Conditions set
forth in such governmental entity's order, consent, approval, permit or
authorization with respect to the Merger as in effect on the date of the Waiver
Agreement, or (C) would require the Merger to be consummated on terms that are
materially and adversely different from those set forth in the filings and
applications (as amended) that were reflected prior to the date of the Waiver
Agreement in formal submissions to any governmental entity and that formed the
basis upon which such governmental entity heretofore issued its order, consent,
approval or authorization with respect to the Merger, including with respect to
the funding of the merger consideration to be paid at the closing of the Merger
(the "Closing"), the date on which Parent, in its sole discretion, notifies the
Company expressly in writing that it will not agree to any such Conditions; or
(vi) the date that each of Parent or the Company, in its sole and absolute
discretion, notifies the other party expressly in writing of its decision not to
close the Merger. Each of Parent and the Company has the right to terminate the
Merger Agreement after the End Date.
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Under the Waiver Agreement, following the satisfaction or waiver of the
conditions to Closing (other than those conditions that by their nature are to
be satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions), Parent and the Company shall mutually agree on a Closing Date for
the Merger. Either Parent or the Company may, in its sole discretion, propose
any date after the satisfaction or waiver of all such conditions as the Closing
Date and/or withhold its consent for the date selected by the other party as the
Closing Date. In addition, notwithstanding the satisfaction or waiver of the
conditions to Closing, each of Parent and the Company may, in its sole and
absolute discretion, unilaterally determine not to close the Merger.
Pursuant to the Waiver Agreement, Parent and Merger Sub waive compliance by the
Company and its Subsidiaries and Representatives with any provision of the
Merger Agreement to the extent the same would restrict or prohibit them from
(i) engaging in or otherwise participating in any discussions or negotiations
regarding the settlement of, or settling, the lawsuit entitled AXA S.A. v.
Genworth Financial International Holdings, LLC et.al; or (ii) engaging in or
otherwise participating in any discussions or negotiations regarding,
documenting or consummating any offering or offerings of debt or equity
securities by the Company or any of its Subsidiaries (the "Specified Matters").
The Company is required to keep Parent reasonably informed about such matters.
Under the Merger Agreement, the Company and Parent agree to use their
commercially reasonable efforts to find a solution acceptable to each party, in
its sole discretion, in the event Parent requests the Company's assistance in
obtaining additional financing for the Merger. In addition, in the event the
Closing occurs on or before September 30, 2020, Parent agrees that the
previously contemplated capital contributions of $1.5 billion to the Company
would be made in three equal transactions of $500,000 by January 31, 2021,
April 30, 2021 and July 30, 2021, subject to any applicable regulatory notice,
filing, consent, approval or authorization.
Pursuant to the Waiver Agreement, Parent and the Company agree that upon a valid
termination of the Merger Agreement by either Party, each Party releases the
other and members of its affiliated group from any claim or cause of action
based upon facts or circumstances relating in any way to the Merger Agreement,
the transactions contemplated thereunder and the termination thereof, including
any claims under laws, claims alleging breach of the Merger Agreement (including
any willful or intentional breach) or claims for payment of termination fees.
In addition, pursuant to the Waiver Agreement, each of Parent and Merger Sub, on
the one hand, and the Company, on the other hand, acknowledges that as of
June 30, 2020, there has been no breach of the Merger Agreement on the part of
the other party and irrevocably waives any claim against such other party based
upon or arising out of any actual or alleged breach of any representation,
warranty, covenant or agreement set forth in the Merger Agreement based upon the
facts or circumstances existing or occurring on or prior to June 30, 2020.
The foregoing description of the Waiver Agreement is qualified in its entirety
by reference to the Waiver Agreement, a copy of which is filed as Exhibit 2.1
hereto and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
2.1 Fifteenth Waiver and Agreement, dated as of June 30, 2020, among the
Company, Parent and Merger Sub
99.1 Press Release issued by the Company, dated June 30, 2020
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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Cautionary Note Regarding Forward-Looking Statements
This communication includes certain statements that may constitute
"forward-looking statements" within the meaning of the federal securities laws,
including Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Forward-looking statements
may be identified by words such as "expects," "intends," "anticipates," "plans,"
"believes," "seeks," "estimates," "will" or words of similar meaning and
include, but are not limited to, statements regarding the closing of the
transaction with China Oceanwide, the receipt of required approvals relating
thereto and any capital contribution resulting therefrom. Forward-looking
statements may be identified by words such as "expects," "intends,"
"anticipates," "plans," "believes," "seeks," "estimates," "will" or words of
similar meaning and include, but are not limited to, statements regarding the
closing of the transaction with China Oceanwide, China Oceanwide's funding plans
and transactions Genworth is pursuing to address its near-term liabilities and
financial obligations, including resolution of the lawsuit entitled AXA S.A. v.
Genworth Financial International Holdings, LLC et.al ("AXA litigation"), which
may include raising debt through its mortgage insurance subsidiaries and/or
transactions to sell a percentage of its ownership interests in its mortgage
insurance businesses. Forward-looking statements are based on management's
current expectations and assumptions, which are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to predict.
Actual outcomes and results may differ materially from those in the
forward-looking statements and factors that may cause such a difference include,
but are not limited to, risks and uncertainties related to: (i) the risk that
China Oceanwide will be unable to raise funding and that the transaction with
China Oceanwide may not be completed in a timely manner or at all, which may
adversely affect Genworth's business and the price of Genworth's common stock,
and the risk that Genworth will be unable to address its near-term liabilities
and financial obligations, including the risks that it will be unable to resolve
the AXA litigation on favorable terms or at all, and that it will be unable to
raise new debt financing and/or sell debt or equity in its subsidiaries to
refinance its bonds maturing in 2021; (ii) the parties' inability to obtain
regulatory approvals, clearances or extensions, or the possibility that such
regulatory approvals or clearances may further delay the transaction with
Oceanwide or will not be received prior to September 30, 2020 (and either or
both of the parties may not be willing to further waive their end date
termination rights beyond September 30, 2020) or that materially burdensome or
adverse regulatory conditions may be imposed or undesirable measures may be
required in connection with any such regulatory approvals, clearances or
extensions (including those conditions or measures that either or both of the
parties may be unwilling to accept or undertake, as applicable) or that with
continuing delays, circumstances may arise that make one or both parties
unwilling to proceed with the transaction with China Oceanwide or unable to
comply with the conditions to existing regulatory approvals or one or both of
the parties may be unwilling to accept any new condition under a regulatory
approval; (iii) the risk that the parties will not be able to obtain other
regulatory approvals, clearances or extensions, including in connection with a
potential alternative funding structure or the current geo-political
environment, or that one or more regulators may rescind or fail to extend
existing approvals, or that the revocation by one regulator of approvals will
lead to the revocation of approvals by other regulators; (iv) the parties'
inability to obtain any necessary regulatory approvals, clearances or extensions
for the post-closing capital plan, and/or the risk that a condition to the
closing of the transaction with China Oceanwide may not be satisfied or that a
condition to closing that is currently satisfied may not remain satisfied due to
the delay in closing the transaction with China Oceanwide or that the parties
are unable to agree upon a closing date following receipt of all regulatory
approvals and clearances; (v) potential legal proceedings that may be instituted
against Genworth related to the transactions with China Oceanwide; (vi) the risk
that the proposed transaction disrupts Genworth's current plans and operations
as a result of the announcement and consummation of the transaction;
(vii) potential adverse reactions or changes to Genworth's business
relationships with clients, employees, suppliers or other parties or other
business uncertainties resulting from the announcement of the transaction or
during the pendency of the transaction, including but not limited to such
changes that could affect Genworth's financial performance; (viii) certain
restrictions during the pendency of the transaction that may impact Genworth's
ability to pursue certain business opportunities or strategic transactions;
(ix) continued availability of capital and financing to Genworth before the
consummation of the transaction; (x) further rating agency actions and
downgrades in Genworth's financial strength ratings; (xi) changes in applicable
laws or regulations; (xii) Genworth's ability to recognize the anticipated
benefits of the transaction; (xiii) the amount of the costs, fees, expenses and
other charges related to the transaction; (xiv) the risks related to diverting
management's attention from Genworth's ongoing business operations; (xv) the
impact of changes in interest rates and political instability; and (xvi) other
risks and uncertainties described in the Definitive Proxy Statement, filed with
the SEC on January 25, 2017, and Genworth's Annual Report on Form 10-K, filed
with the SEC on February 27, 2020. Unlisted factors may present significant
additional obstacles to the realization of forward-looking statements.
Consequences of material differences in results as compared with those
anticipated in the forward-looking statements could include, among other
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things, business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could have a material
adverse effect on Genworth's consolidated financial condition, results of
operations, credit rating or liquidity. Accordingly, we caution you against
relying on any forward-looking statements. Further, forward-looking statements
should not be relied upon as representing Genworth's views as of any subsequent
date, and Genworth does not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date they were made,
whether as a result of new information, future events or otherwise, except as
may be required under applicable securities laws.
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