EXOR capital structure has no bearing on PartnerRe rating: S&P

by Artemis on June 16, 2015

Ratings agency Standard & Poor’s has confirmed that EXOR’s capital structure and that its debt, and that of its investee companies, would have no bearing on reinsurance firm PartnerRe’s ratings should EXOR be successful in its mission to acquire the firm.

The board of reinsurer PartnerRe had said that EXOR’s debt may pose a threat to the rating of the reinsurance firm, if indeed the investment holding company was to be successful in its all-cash bid to buy it.

S&P affirmed that EXOR is rated as an investment holding company and that therefore its rating and that of its investee companies is considered to be independent of each other. The debt of EXOR and the investee companies are likewise not attributable to each other.

EXOR said that PartnerRe’s published calculations tried to show that the debt of EXOR and the companies it invests in would be aggregated, but it notes that this is incorrect and does not follow S&P’s methodology.

Importantly for the preferred shareholders of PartnerRe, this means; “For PartnerRe preferred shareholders, this means that should PartnerRe accept EXOR’s binding offer for the Company, EXOR’s capital structure will not affect the ratings of PartnerRe, including the BBB rating of PartnerRe preferred securities.”

EXOR said that PartnerRe “misrepresented” the proposed transaction by claiming that EXOR’s debt and any taken on to complete the transaction could pose a risk to the reinsurance firms rating.

EXOR notes; “Under the proposed EXOR transaction, PartnerRe would be a financially stronger company than a combined AXIS/PartnerRe. PartnerRe’s debt level would be unchanged and preferred shares’ current rating, terms, rights, listing and registration requirements would be maintained, along with the same tax treatment and financial reporting. In addition, preferred shareholders would benefit from lower leverage compared to the AXIS transaction and from EXOR’s commitment to a more conservative dividend and capital distribution policy, without bearing any post-merger integration risk.”

As a result EXOR accuses the PartnerRe board of accepting an inferior transaction, in the AXIS Capital merger and says the board are misleading the shareholders. EXOR called on the board to furnish PartnerRe shareholders with accurate information so they can make an informed decision about the deal.

EXOR said it will begin meeting with shareholders and analysts to explain its all-cash offer of $137.50 per share for PartnerRe.

And so the three-way tussle between EXOR, reinsurance firm PartnerRe and re/insurer AXIS Capital continues. Expect a response from the other side, which no doubt will solicit another response from the other side. This could run on and on until the vote on the 24th July, when shareholders will finally get their chance to express their preferences.

For the full story see our previous articles, most recent first:

EXOR accuses PartnerRe board of “engineering” AXIS transaction.

PartnerRe Board urges Preferred Shareholders to vote for AXIS merger.

Bermuda court rules against Exor’s shareholder detail request.

PartnerRe shareholders should vote to go with AXIS: KBW analysts.

PartnerRe says Exor’s lawsuit claims “without merit”.

Exor sues to gain access to PartnerRe shareholder details.

PartnerRe-AXIS : $60m fees from third-party reinsurance capital by 2017.

EXOR welcomes PartnerRe shareholder vote, Sandell questions Board.

PartnerRe rejects EXOR again, to proceed with vote on AXIS merger.

EXOR says will engage with PartnerRe board, but not on price.

AXIS prepared to go it alone if PartnerRe deal breaks up.

PartnerRe board wants improved EXOR bid, or it’s back to AXIS.

AXIS unlikely to sweeten PartnerRe offer to match EXOR: Reuters.

Shareholders hold key to PartnerRe’s future, EXOR bid preferred.

EXOR increases offer for PartnerRe, becomes largest shareholder.

Exor to consider increasing bid for PartnerRe, reports.

AXIS, PartnerRe committed on merger. EXOR commits to its offer.

Major shareholder prefers EXOR’s bid for PartnerRe over AXIS’.

EXOR bids $6.4B for PartnerRe, to get into reinsurance.

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