(RTTNews) - New York-based insurance broker Wills Group Holdings Ltd. (WSH: News ) announced signing of a definitive agreement with Astorg Partners, a private equity fund, to reorganize the capital of French insurance broker Gras Savoye & Cie. Wills, which acquired a 33% ownership interest in 1997, currently holds 48.6% of voting rights or 46.2% of outstanding shares of Gras Savoye.

Under the terms of the transaction, Astorg Partners will be acquiring 33.3% of the voting rights or 31.8% of outstanding shares of a new holding company, while Willis and Gras Savoye family shareholders will sell part of their stakes to the private equity fund and roll over their remaining shares into the new holding company.

Willis noted that this transaction values its existing 46.2% holding in Gras Savoye at about $343 million. Willis will roll over approximately $135 million in equity and convertible debt and also lend about $48 million to the new holding company at a rate of 6% per annum. Willis expects to generate nearly $160 million of tax-free net cash proceeds from this transaction, and plans to use it for debt reduction.

Following the transaction, Willis, the family shareholders of Gras Savoye, and Astorg each will hold equal stakes of 31.8% in the new holding company and have equal representation of 33.3% of the voting rights of the Board. The remaining 4.5% will be held by a large pool of Gras Savoye managers. Patrick Lucas will continue to head Gras Savoye as Chairman and Chief Executive Officer.
Willis also specified that this agreement also gives an option to for it buy 100% of the capital in the new holding company in 2015, if it elects to do so, with notification in 2014.

The company stated that an existing put option, which gave family shareholders an option to sell their stake to Willis between now and 2011, will be canceled at the closing of the transaction, which is expected to occur in the fourth quarter of 2009, subject to customary approvals and completion of financing.

WSH closed Wednesday's trading session at $27.90, down 4 cents, or 0.14%.

To receive FREE breaking news email alerts for Willis Group Holdings Ltd and others in your portfolio

by RTT Staff Writer

For comments and feedback: contact editorial@rttnews.com