Royal & SunAlliance announced that the initial public offering of shares in the Promina Group, its Australian and New Zealand subsidiaries, will raise around £662 million ($1.062 billion) for R&SA and A$150 million (U.S. $97 million) for Promina, after costs and expenses. The total value of the offering, the biggest IPO so far in 2003, is estimated to be around A$1.9 billion (U.S.$1.22 billion).
The shares, which are not registered for sale in the U.S., were priced above the “mid-range,” at A$1.80 (U.S. $1.16). According to market reports they opened higher, at A$1.94 (U.S.$1.25) on the Sydney Stock Exchange Monday, and hit a high of A$2.00 (U.S.$ 1.29) before closing slightly lower. More than 257 million shares worth A$496 million (U.S.$320 million) were reportedly traded.
Andy Haste, Royal & SunAlliance Group Chief Executive, stated: “I am delighted by the success of the IPO and the excellent demand for Promina shares. There was a strong level of oversubscription and the register is of high quality. The IPO will deliver a major component of the actions we are taking to reshape the Group and to strengthen our capital position. Through the IPO, we will successfully unlock the significant value of our Australian and New Zealand businesses.”
R&SA could retain up to 10 percent of the offered shares, but will still receive a much-needed capital injection. The company revealed last March that its risk-based capital had a shortfall of as much as £700 million ($1.12 billion) as of the end of 2002. “The capital release from the IPO, together with the release of capital from the sale of our UK Healthcare and Assistance business last month, will significantly improve our risk based capital position. It will also greatly increase our statutory surplus,” Haste indicated.
R&SA may need some of that money soon. A judgment by the U.K. high court on Friday found that R&SA was responsible for payments to some former employees of Turner & Newall, a subsidiary of Federal-Mogul Corp., who have become ill with asbestos related diseases. The ruling was, however, preliminary, and R&SA said it would present a defense to the claims, based on the fact Turner & Newall did not disclose the liabilities. It also said it has sufficient reserves to cover them, if necessary.
Was this article valuable?
Here are more articles you may enjoy.