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buying property abroad
News and Information Article
$2.3 Billion Bridge Financing Fully Repaid
PHILADELPHIA, May 22 /-FirstCall/ -- Lincoln National
Corporation (NYSE: LNC) today announced the recent completion of its
offering of $800 million of 7% Capital Securities due 2066. Lincoln used
the proceeds of this offering along with the proceeds from its recent
offerings of senior notes, capital securities and cash from the sale of
various equity investments to repay the bridge facility used to finance the
cash portion of the merger consideration paid to shareholders of Jefferson
Pilot along with its accelerated stock repurchase program.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050830/LFLOGO )
"Despite the uncertainties in the capital securities market, we were
able to issue securities at very attractive rates and in a relatively short
time frame," said Fred Crawford, senior vice president and chief financial
officer of Lincoln Financial Group. "We implemented a very successful
financing strategy that will result in lower than anticipated financing
costs going forward," Crawford added.
Financing Structure
The financing of the $1.8 billion of cash consideration paid to
Jefferson Pilot shareholders and the $500 million accelerated share
repurchase program were originally funded with proceeds from a $2.3 billion
bridge loan. The bridge loan has now been repaid with the proceeds from the
following transactions:
* $500 million 3-year floating rate senior debt at 3-month LIBOR plus
11 basis points,
* $500 million 30-year fixed rate 6.15% senior debt,
* $275 million of 60-year, 6.75% capital securities (callable in year 5
at par),
* $800 million of 60-year capital securities (callable in year 10 at
par) with a fixed-rate coupon of 7% for the first 10 years, which
then converts to a floating rate of 3-month LIBOR plus 2.3575%
thereafter, and
* Liquidation of approximately $225 million of various equity
securities held at the former Jefferson Pilot holding company.
Lincoln continues to hold approximately $395 million of Bank of
America stock.
Financing Costs
Lincoln originally announced merger-related financing costs of $120
million to $125 million after-tax when the transaction was announced in
October of 2005. With the financing structure now in place, the annualized
merger-related financing costs are now projected to be approximately $95
million, after-tax, based on current interest rate levels and includes the
amortization of underwriting costs and derivative gains from interest rate
hedges. This approximation includes the cost of floating rate debt at its
current levels and excludes any additional financing contemplated as part
of LNCs ongoing capital planning. "We were able to lower our financing
costs while maintaining a capital structure that secures our strong AA
financial strength rating," said Crawford.
Lincoln Financial Group is the marketing name for Lincoln National
Corporation (NYSE: LNC) and its affiliates. With headquarters in
Philadelphia, Lincoln Financial Group had consolidated assets of $128
billion as of March 31, 2006, and had annual consolidated revenues of $5.5
billion in 2005. The company offers: annuities; life, group life and
disability insurance; 401(k) and 403(b) plans; savings plans; mutual funds;
managed accounts; institutional investments; and comprehensive financial
planning and advisory services. Company affiliates include: Lincoln
Financial Distributors, which provides wholesaling and marketing support;
Lincoln Financial Advisors, a national network of financial planners,
agents, and registered representatives; Delaware Investments, the marketing
name for Delaware Management Holdings, Inc. and its subsidiaries; Lincoln
Financial Media, which owns and operates three television stations, 18
radio stations, and the Lincoln Financial Sports production and syndication
business; and Lincoln UK. For more information please visit
http://www.LFG.com.
Forward-Looking Statements - Cautionary Language
Certain statements made in this release and in other written or oral
statements made by Lincoln or on Lincolns behalf are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995 ("PSLRA"). A forward-looking statement is a statement that is
not a historical fact and, without limitation, includes any statement that
may predict, forecast, indicate or imply future results, performance or
achievements, and may contain words like: "believe", "anticipate",
"expect", "estimate", "project", "will", "shall" and other words or phrases
with similar meaning in connection with a discussion of future operating or
financial performance. In particular, these include statements relating to
future actions, prospective services or products, future performance or
results of current and anticipated services or products, sales efforts,
expenses, the outcome of contingencies such as legal proceedings,
operations, trends or financial results. Lincoln claims the protection
afforded by the safe harbor for forward-looking statements provided by the
PSLRA.
Forward-looking statements involve risks and uncertainties that may
cause actual results to differ materially from the results contained in the
forward- looking statements. Risks and uncertainties that may cause actual
results to vary materially, some of which are described within the
forward-looking statements, include among others:
* Problems arising with the ability to successfully integrate our and
Jefferson-Pilot Corporations businesses, which may affect our
ability to operate as effectively and efficiently as expected or to
achieve the expected synergies from the merger or to achieve such
synergies within our expected timeframe;
* Legislative, regulatory or tax changes, both domestic and foreign,
that affect the cost of, or demand for, Lincolns products, the
required amount of reserves and/or surplus, or otherwise affect our
ability to conduct business, including changes to statutory reserves
and/or risk-based capital requirements related to secondary
guarantees under universal life and variable annuity products such as
Actuarial Guideline 38; restrictions on revenue sharing and 12b-1
payments; and the potential for U.S. Federal tax reform;
* The initiation of legal or regulatory proceedings against Lincoln or
its subsidiaries and the outcome of any legal or regulatory
proceedings, such as: (a) adverse actions related to present or past
business practices common in businesses in which Lincoln and its
subsidiaries compete; (b) adverse decisions in significant actions
including, but not limited to, actions brought by federal and state
authorities, and extra-contractual and class action damage cases; (c)
new decisions that result in changes in law; and (d) unexpected trial
court rulings;
* Changes in interest rates causing a reduction of investment income,
the margins of Lincolns fixed annuity and life insurance businesses
and demand for Lincolns products;
* A decline in the equity markets causing a reduction in the sales of
Lincolns products, a reduction of asset fees that Lincoln charges on
various investment and insurance products, an acceleration of
amortization of deferred acquisition costs, the value of business
acquired, deferred sales inducements and deferred front-end loads and
an increase in liabilities related to guaranteed benefit features of
Lincolns variable annuity products;
* Ineffectiveness of Lincolns various hedging strategies used to
offset the impact of declines in the equity markets;
* A deviation in actual experience regarding future persistency,
mortality, morbidity, interest rates or equity market returns from
Lincolns assumptions used in pricing its products, in establishing
related insurance reserves, and in the amortization of intangibles
that may result in an increase in reserves and a decrease in net
income;
* Changes in accounting principles generally accepted in the United
States that may result in unanticipated changes to Lincolns net
income;
* Lowering of one or more of Lincolns debt ratings issued by
nationally recognized statistical rating organizations, and the
adverse impact such action may have on Lincolns ability to raise
capital and on its liquidity and financial condition;
* Lowering of one or more of the insurer financial strength ratings of
Lincolns insurance subsidiaries, and the adverse impact such action
may have on the premium writings, policy retention, and profitability
of its insurance subsidiaries;
* Significant credit, accounting, fraud or corporate governance issues
that may adversely affect the value of certain investments in the
portfolios of Lincolns companies requiring that Lincoln realize
losses on such investments;
* The impact of acquisitions and divestitures, restructurings, product
withdrawals and other unusual items, including Lincolns ability to
integrate acquisitions and to obtain the anticipated results and
synergies from acquisitions;
* The adequacy and collectibility of reinsurance that Lincoln has
purchased;
* Acts of terrorism or war that may adversely affect Lincolns
businesses and the cost and availability of reinsurance;
* Competitive conditions, including pricing pressures, new product
offerings and the emergence of new competitors, that may affect the
level of premiums and fees that Lincoln can charge for its products;
* The unknown impact on Lincolns business resulting from changes in
the demographics of Lincolns client base, as aging baby-boomers move
from the asset-accumulation stage to the asset-distribution stage of
life;
* Loss of key management, portfolio managers in the Investment
Management segment, financial planners or wholesalers; and
* Changes in general economic or business conditions, both domestic and
foreign, that may be less favorable than expected and may affect
foreign exchange rates, premium levels, claims experience, the level
of pension benefit costs and funding, and investment results.
The risks included here are not exhaustive. Lincolns annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
other documents filed with the SEC include additional factors which could
impact Lincolns business and financial performance. Moreover, Lincoln
operates in a rapidly changing and competitive environment. New risk
factors emerge from time to time and it is not possible for management to
predict all such risk factors.
Further, it is not possible to assess the impact of all risk factors on
Lincolns business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained
in any forward-looking statements. Given these risks and uncertainties,
investors should not place undo reliance on forward-looking statements as a
prediction of actual results. In addition, Lincoln disclaims any obligation
to update any forward-looking statements to reflect events or circumstances
that occur after the date of this report.
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