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GNW > SEC Filings for GNW > Form 8-K on 21-May-2014All Recent SEC Filings

Show all filings for GENWORTH FINANCIAL INC

Form 8-K for GENWORTH FINANCIAL INC


21-May-2014

Entry into a Material Definitive Agreement, Completion of Acquisition or D


Item 1.01 Entry into a Material Definitive Agreement.

As previously announced, on May 15, 2014, the holding company for Genworth Financial, Inc.'s ("Genworth Financial") Australian mortgage insurance business, Genworth Mortgage Insurance Australia Limited ("Genworth Australia"), priced the initial public offering (the "Offer") of its ordinary shares. On that date, Genworth Financial, Genworth Holdings, Inc. and the joint lead managers of the Offer agreed that 220,000,000 of Genworth Australia's ordinary shares would be issued (subject to customary closing conditions) at an initial public offering price of AUD$2.65 per ordinary share, and 20,000,000 of those ordinary shares were designated as "over-allocation shares" that may be reacquired by Genworth Financial entities as a result of market stabilization activities prior to June 18, 2014. We cannot predict whether any over-allocation shares will be reacquired by the Genworth Financial entities. The Offer was conducted pursuant to the terms of the Offer Management Agreement entered into among Genworth Australia, Genworth Financial, Genworth Financial Mortgage Insurance Pty Limited, Genworth Financial Mortgage Indemnity Limited, and the joint lead managers named therein. The Offer closed on May 21, 2014. Following completion of the Offering, Genworth Financial beneficially owns approximately 66% of the ordinary shares of Genworth Australia. If all of the over-allocation shares are reacquired, Genworth Financial will beneficially own approximately 69% of the ordinary shares of Genworth Australia.

The net proceeds of the Offer will be used by Genworth Australia to repay certain intercompany funding arrangements with subsidiaries of Genworth Financial and those funds will then be distributed to Genworth. The gross proceeds of the Offer (before payment of fees and expenses) are approximately $535 million, based on an assumed exchange rate of 0.92 for the Australian dollar, and assuming no ordinary shares that have been designated as "over-allocation shares" are reacquired by Genworth Financial entities as a result of market stabilization activities. If all 20,000,000 ordinary shares that have been designated as "over-allocation shares" are reacquired by Genworth Financial entities as a result of market stabilization activities, the gross proceeds of the Offer (before payment of fees and expenses) are projected to be approximately $485 million, based on the same factors noted above. Fees and expenses in connection with the Offer are currently estimated at approximately $30 million, using the same assumed exchange rate.

Concurrently with the completion of the Offer, Genworth Australia, Genworth Financial and certain subsidiaries of Genworth Financial entered into a shareholder agreement (the "Shareholder Agreement"). The principal provisions of the Shareholder Agreement are discussed below.

Director designations and appointments

Genworth Financial and its subsidiaries (other than Genworth Australia and its subsidiaries) (together, the "Genworth Financial Group") will be entitled to designate a specified number of directors to the board of directors of Genworth Australia (the "Board"), rounded to the nearest whole number, determined by the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia, as set forth in the table below.

If the number of directors the Genworth Financial Group is entitled to designate decreases because of a reduction in the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia, the number of directors that the Genworth Financial Group is entitled to designate will not subsequently increase even if the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia subsequently exceeds a greater designation threshold (unless such subsequent increase occurs within 90 days after the date on which the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia decreased below the relevant threshold).

                                                           Number of
              Beneficial Ownership Designation Threshold   Directors

              Greater than or equal to 50%                    5/9
              Less than 50% but not less than 40%             4/9
              Less than 40% but not less than 30%             3/9
              Less than 30% but not less than 20%             2/9
              Less than 20% but not less than 10%             1/9
              Less than 10%                                  None


The Board must, subject to approval of the designees by the relevant committee of the Board acting reasonably, appoint those designees as directors.

If the members of the Genworth Financial Group beneficially hold 33% or more of the ordinary shares of Genworth Australia, Genworth Financial will be entitled to designate one member to each committee of the Board. However, once the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia decreases to below that threshold, the Genworth Financial Group will no longer be entitled to designate a member to any of the committees of the Board (unless the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia increases to above that threshold within 90 days after the date on which the beneficial ownership in aggregate of Genworth Financial in the ordinary shares of Genworth Australia decreased below the threshold).

Rights and obligations at various levels of beneficial ownership in aggregate of members of the Genworth Financial Group

If members of the Genworth Financial Group maintain specified levels of beneficial ownership in aggregate in the ordinary shares of Genworth Australia, Genworth Financial will have the rights and Genworth Australia will have the obligations as set forth in the table below.

However, in respect of the rights and obligations set forth in the table below under the heading "Special approval rights of Genworth Financial", once the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia decreases below the relevant threshold such that Genworth Financial is no longer entitled to certain rights and Genworth Australia is no longer required to undertake certain obligations, a subsequent increase in the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia will not result in the recommencement of those rights and obligations (unless such subsequent increase occurs within 90 days after the date on which the beneficial ownership in aggregate of members of the Genworth Financial Group in the ordinary shares of Genworth Australia decreased below the relevant threshold).

Relevant Interest Rights and obligations

Special approval rights of Genworth Financial

At least 50% of     Genworth Australia is required to seek the prior written consent
the Ordinary        of Genworth Financial to take any of the following actions,
Shares              whether directly or indirectly through a subsidiary, except if
                    and to the extent that action is required by applicable law:

                       Adopt any proposal for a winding up of Genworth Australia or
                        any of its subsidiaries or commence any proceeding relating
                        to insolvency or relief of debtors;

                       Buy back any of its ordinary shares or reduce or reorganize
                        its capital or the capital of any of its subsidiaries;

                       Make any reductions in the dividend policy of Genworth
                        Australia;

                       Approve the annual business plan of Genworth Australia and
                        its subsidiaries on a consolidated basis, and any material
                        amendments to or material departure from it, which business
                        plan will be provided for approval reasonably in advance and
                        consistent with the annual operating cycle for Genworth
                        Financial;

                       Enter into any agreement to complete an asset or business
                        acquisition, or sell any assets, for consideration equal to
                        or greater than AUD$25 million, other than any agreement
                        relating to acquisition or disposal of investment assets made
                        in the ordinary course of business by Genworth Australia or
                        any of its subsidiaries which is consistent with the
                        investment policy approved by the Board;


--------------------------------------------------------------------------------
                     Appoint or remove the chief executive officer of Genworth
                      Australia;

. . .


Item 2.01 Completion of Acquisition or Disposition of Assets.

The information required by this item is included in Item 1.01 and incorporated herein by reference.



Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed consolidated balance sheet of Genworth Financial, Inc. as of March 31, 2014 and notes thereto and the unaudited pro forma condensed consolidated statements of income of Genworth Financial, Inc. for the three months ended March 31, 2014 and for the year ended December 31, 2013 and notes thereto are filed as Exhibit 99.1 hereto and incorporated by reference herein.

(d) Exhibits.

The following are filed as exhibits to this report:

Number                                   Description

 2.1*       Offer Management Agreement among Genworth Mortgage Insurance Australia
            Limited, Genworth Financial, Inc., Genworth Financial Mortgage
            Insurance Pty Limited, Genworth Financial Mortgage Indemnity Limited
            and the joint lead managers named therein.

99.1        Unaudited Pro Forma Condensed Consolidated Balance Sheet of Genworth
            Financial, Inc. as of March 31, 2014 and notes thereto and Unaudited
            Pro Forma Condensed Consolidated Statements of Income of Genworth
            Financial, Inc. for the three months ended March 31, 2014 and for the
            year ended December 31, 2013 and notes thereto.

* Schedules to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Genworth Financial hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.


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