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Phoenix To Raise GBP250 Mln, To Restructure Bank Debt, Shares Surge

Phoenix Group Holdings (PHNX.L), a consolidator of closed life and pension funds, Wednesday said it plans to raise 250 million pounds in equity offering and intends to restructure its bank debt facilities. The stock is gaining nearly 8 percent. According to the company, ''This fund raising and refinancing package brings the Group greater strategic and financial flexibility, and positions it for further growth.''

The firm announced firm placings and an open offer to raise gross proceeds of 250 million pounds through the issue of 50 million new ordinary shares at 500 pence per share. This represents a 15.4 percent discount to the closing price on the London Stock Exchange on January 29.

Sixteen million new Phoenix shares will be placed with certain Och-Ziff funds under the firm placings, which comprise a first placing of 7.8 million new Phoenix shares and a second placing of 8.2 million new Phoenix shares.

Additionally, an open offer of 34 million new Phoenix shares will be made to Phoenix ordinary shareholders, who will be able to subscribe for new ordinary shares pro rata to their existing shareholdings, or 0.194745 open offer shares for every 1 existing share.

The open offer is fully underwritten by Deutsche Bank and J.P. Morgan Cazenove with the Och-Ziff Funds taking any economic exposure.

The joint underwriters have informed that certain entities affiliated or connected with TDR Capital, Sun Capital and certain other shareholders have irrevocably and unconditionally agreed to exercise their rights to subscribe for their entitlements under the open offer in respect of an aggregate of 43 percent of Phoenix's current share capital.

The group has agreed to pay the joint underwriters a commission of 1.75 percent of the gross proceeds of the open offer.

Phoenix is scheduled to hold a meeting of its shareholders on February 19 to approve some aspects of the equity raising.

Two business days after the completion of the equity raising, the company plans early repayment of 450 million pounds of its Impala bank debt facilities. This will reduce total bank debt from 2.369 billion pounds as at June 30, 2012 to 1.857 billion pounds.

Phoenix has reached an agreement with its lending banks to restructure its bank debt facilities. The key terms include mandatory amortization on Impala facility reduced from 125 million pounds per annum to 60 million pounds annually and target amortization of 120 million pounds per annum on Impala facility.

Further, Phoenix said its trading performance for the year ended December 31, 2012 was in line with management expectations. The group remains on track to meet its 2012 target to reduce gearing to 43 percent on the basis of the existing gearing calculation.

The Board expects to declare a final dividend of 26.7 pence per share for 2012, representing a 27 percent increase over last year. The revised bank debt facility allows for future growth in the Group's dividend.

The stock is currently climbing 7.8 percent at 637 pence.

by RTT Staff Writer

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