Old Mutual - managed separation update
Old Mutual announced that the Court has today, 20 June 2018, sanctioned the First Scheme by which, inter alia, the Demerger Reduction of Capital and the Quilter Demerger will be effected.
Old Mutual has provided an undertaking to the Court (the ˘Undertaking÷) that it will continue to hold sufficient assets to meet its liabilities to creditors and contingent creditors as at the effective date of the Demerger Reduction of Capital, plus headroom of 10% surplus assets in excess of such liabilities. The assets held by Old Mutual pursuant to the Undertaking will comprise a portfolio of UK government issued gilts and cash or near cash instruments which are of a liquidity to ensure that Old Mutual can meet payments as and when they fall due (the ˘Permitted Assets÷) as well as 9.6% of Quilter shares (being the shares subject to the Quilter Share Sale) and Old MutualĂs shareholding in OM Group (UK) Ltd.
Under the terms of the Undertaking, Old Mutual may recalculate the amount of its liabilities on a quarterly basis commencing 1 October 2018 and, subject to retaining Permitted Assets in excess of 110% of Old MutualĂs liabilities to creditors and contingent creditors as at the effective date of the Demerger Reduction of Capital, will be permitted to deal with any surplus assets as it sees fit.
The Court has also confirmed that any proceeds realised in respect of the Quilter Share Sale in excess of GBP113.4 million are not subject to the Undertaking. Old Mutual may therefore consider any surplus proceeds arising in relation to the Quilter Share Sale in excess of this amount for distribution on the same basis as other surplus assets not subject to the Undertaking.
Any potential distribution by Old Mutual will need to take into account, inter alia, the developments and future assessments by the Board of Old Mutual, at such a point in time, of liabilities and contingent liabilities and in line with its fiduciary duties.
Subject to the fulfilment of the conditions set out in the circular published by Old Mutual on 20 April 2018 (the ˘Circular÷) including the Court order being delivered to the Registrar of Companies, the First Scheme Effective Time is expected to be 7.00 p.m. (London time) on 22 June 2018.
The Demerger Effective Time is expected to be 6.00 a.m. (London time) on 25 June 2018. At this time, Old Mutual plc will distribute 86.6% of the total issued share capital of Quilter plc to Old Mutual plc Shareholders.
It is expected that the Second Scheme Court Hearing will take place on 25 June 2018. Old Mutual expects Managed Separation to occur in accordance with the dates and times set out in the Circular.
Defined terms used but not defined in this announcement have the meanings set out in the Circular.
BofA Merrill Lynch is acting as joint financial adviser and sponsor to Old Mutual in connection with the managed separation.
Rothschild is acting as independent financial adviser to Old Mutual on its managed separation.