2014

Farmers Insurance Exchange, Fire Insurance Exchange and Truck Insurance Exchange Announce Total Consideration, Tender Offer Consideration, Early Tender Deadline Results, Modification of Financing Condition and Extension of Expiration Date for Previously Announced Cash Tender Offers

LOS ANGELES, Oct. 29, 2013 /PRNewswire/ -- Farmers Insurance Exchange, Fire Insurance Exchange and Truck Insurance Exchange (collectively, the "Exchanges") today announced the Total Consideration, the Tender Offer Consideration and the early tender deadline results for (1) Farmers Insurance Exchange's previously announced cash tender offer for any and all of its outstanding 8.625% Surplus Notes due 2024 (the "2024 Notes") and (2) the Exchanges' previously announced cash tender offer for up to the Maximum Tender Amount (as defined below) of Farmers Exchange Capital's outstanding 7.05% Trust Surplus Note Securities (the "7.05% Trust Notes") and 7.20% Trust Surplus Note Securities (the "7.20% Trust Notes" and, together with the 7.05% Trust Notes, the "Trust Notes" and, together with the 2024 Notes, the "Notes") in the priority set forth in the table below.  The "Maximum Tender Amount" is equal to $550.0 million aggregate liquidation amount of Trust Notes less the aggregate principal amount of 2024 Notes accepted for purchase by Farmers Insurance Exchange.  The "Tender Offers" refer, collectively, to Farmers Insurance Exchange's offer to purchase the 2024 Notes and the Exchanges' offer to purchase the Trust Notes.  The Tender Offers are being made pursuant to an Offer to Purchase dated October 9, 2013 (the "Offer to Purchase"), which sets forth a more detailed description of the Tender Offers. 

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The Exchanges also announced today that they had modified the Financing Condition (as defined in the Offer to Purchase) to require completion of one or more financing transactions on terms reasonably satisfactory to the Exchanges resulting in the issuance of surplus notes by the Exchanges in an aggregate principal amount of no less than $335 million, instead of $350 million, and receipt of the requisite regulatory approvals related thereto.  Farmers Exchange Capital II, a Delaware statutory trust formed by the Exchanges for the sole purpose of issuing trust surplus note securities, priced an offering of $335 million aggregate liquidation amount of its 6.151% Trust Surplus Note Securities today and the proceeds of this offering, which is subject to certain closing conditions, will be used to purchase an equivalent aggregate amount of surplus notes from the Exchanges. 

In addition, the Tender Offers, which were previously scheduled to expire at midnight, New York City time, on November 6, 2013, will now expire at midnight, New York City time, on November 12, 2013 (the "Revised Expiration Date").  The settlement date, which will occur promptly following the expiration of the Tender Offers, is expected to be on November 14, 2013.  Aside from the modification of the Financing Condition and the extension of the expiration date, all other terms of the Tender Offers are unchanged.

Holders who validly tendered their Notes before 5:00 p.m., New York City time, on October 28, 2013 (the "Early Tender Deadline") are eligible to receive the applicable Total Consideration.  The Total Consideration for each series of Notes validly tendered and accepted for purchase pursuant to the Tender Offers was determined by reference to the applicable fixed spread specified for such series of Notes in the table below over the yield based on the bid side price of the applicable U.S. Treasury Security specified below, as calculated by the Dealer Managers at 2:00 p.m., New York City time, on October 29, 2013.  Holders that validly tendered their Notes at or prior to the Early Tender Deadline and whose Notes are accepted for purchase will receive the applicable Total Consideration, and those who validly tender Notes after the Early Tender Deadline but at or prior to the Revised Expiration Date and whose Notes are accepted for purchase will receive the applicable Tender Offer Consideration, which is the Total Consideration less the early tender premium of $50.00 per $1,000 principal or liquidation amount, as applicable, of Notes.

The following table sets forth (i) the Total Consideration for each $1,000 principal or liquidation amount, as applicable, of each series of Notes validly tendered prior to the Early Tender Deadline and accepted for purchase pursuant to the Tender Offers, (ii) the Tender Offer Consideration for each $1,000 principal or liquidation amount, as applicable, of each series of Notes validly tendered after the Early Tender Deadline but at or prior to the Revised Expiration Date and accepted for purchase pursuant to the Tender Offers and (iii) the aggregate principal or liquidation amount, as applicable, of Notes validly tendered and not validly withdrawn at or prior to the Early Tender Deadline.

2024 Notes Tender Offer

Title of Security

CUSIP Numbers

Principal Amount Outstanding

Reference
Treasury
Security

Reference Yield

Fixed Spread
(basis points)

Total
Consideration(1)

Tender Offer
Consideration(1)

Aggregate Principal Amount Tendered as of the Early Tender Deadline

8.625% Surplus Notes due 2024

309601AA0

U3135PAA1

$300,000,000

2.500% U.S. Treasury Note due August 15, 2023

2.509%

185

$1,355.37

$1,305.37

$96,549,000

Trust Notes Tender Offer

Priority Level

Title of Security

CUSIP Numbers

Liquidation Amount Outstanding(2)

Reference Treasury Security

Reference Yield

Fixed Spread (basis points)

Total
Consideration(3)

Tender Offer
Consideration(3)

Aggregate Liquidation Amount Tendered as of the Early Tender Deadline

1

7.05% Trust Surplus Note Securities

309588AC5
U31359AB5

$500,000,000

2.500% U.S. Treasury Note due August 15, 2023

2.509%

215

$1,252.08

$1,202.08

$125,041,000

2

7.20% Trust Surplus Note Securities

309588AE1

$150,000,000

2.875% U.S. Treasury Note due May 15, 2043

3.648%

240

$1,166.26

$1,116.26

$11,535,000

_________________

(1)

Per $1,000.00 principal amount of 2024 Notes.

(2)

Liquidation amount $1,000 per Trust Note.

(3)

Per $1,000.00 liquidation amount of Trust Notes.

Holders who have not already tendered their Notes may continue to do so at any time at or prior to the Revised Expiration Date.  However, such Holders will not be entitled to receive any early tender payment, except in the case of any Notes that were tendered and not validly withdrawn prior to the Early Tender Deadline and which are accepted for purchase.  No tenders will be valid if submitted after the Revised Expiration Date, unless the expiration of one or more of the Tender Offers is further extended.  Tendered Notes may no longer be withdrawn from the Tender Offers.

As described in the Offer to Purchase, the amount of each series of Trust Notes that is purchased in the Trust Notes Tender Offer will be based on the Maximum Tender Amount and the acceptance priority for such series as set forth in the table above.  All validly tendered 2024 Notes will be accepted for purchase.  All 7.05% Trust Notes validly tendered and not validly withdrawn will be accepted before any 7.20% Trust Notes are accepted. If the aggregate liquidation amount of 7.05% Trust Notes tendered and accepted in the Trust Notes Tender Offer equals or exceeds the Maximum Tender Amount, then 7.20% Trust Notes will not be accepted. If the aggregate liquidation amount of Trust Notes tendered exceeds the Maximum Tender Amount, then the Exchanges will accept for purchase an aggregate liquidation amount of Trust Notes equal to the Maximum Tender Amount, and the Exchanges will accept the Trust Notes of the series last accepted for purchase on a pro rata basis (with adjustments to avoid the purchase of Trust Notes in a liquidation amount other than in integral multiples of $1,000).  Accordingly, Trust Notes validly tendered prior to the Early Tender Deadline may be subject to proration in the event that additional 2024 Notes or additional Trust Notes are tendered after the Early Tender Deadline and prior to the Revised Expiration Date.

The Tender Offers are subject to the satisfaction or waiver of certain conditions set forth in the Offer to Purchase.  If any of these conditions are not satisfied, none of the Exchanges would be required to purchase any of the Notes tendered. 

The complete terms and conditions of the offer are set forth in the Offer to Purchase.  Holders of the Notes are urged to read the Offer to Purchase carefully before making any decision with respect to the Tender Offers.

Questions regarding the Tender Offers may be directed to the Dealer Managers, Citigroup Global Markets Inc. at (800) 558-3745 (toll-free) or (212) 723-6106 (collect), or RBS Securities Inc. at (203) 897-6145 (collect) or (877) 297-9832 (toll-free).  Requests for documents may be directed to Global Bondholder Services Corporation, the information agent and depositary for the Tender Offers, at (212) 430-3774 (for banks and brokers) or (866) 807-2200 (toll-free).

This press release is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell with respect to the Notes, nor is this press release an offer to sell, a solicitation to buy or an offer to purchase or sell any securities.  The Tender Offers are being made only pursuant to the Offer to Purchase and only in such jurisdictions as is permitted under applicable law.

The 6.151% Trust Surplus Note Securities will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

About the Exchanges

The Exchanges are three reciprocal insurers owned by their policyholders, and together with their subsidiaries and affiliates comprise the Farmers Insurance Group of Companies®.  The Farmers Insurance Group of Companies is the country's fourth largest insurance group offering both personal lines passenger automobile and homeowners insurance and is a leading insurer of small businesses in the United States, and also provides a wide range of other insurance and financial services products.  Farmers is proud to serve more than 10 million households with approximately 19.9 million individual policies across all 50 states through the efforts of over 50,000 exclusive and independent agents.  Farmers Group, Inc. and its subsidiaries, in their capacity as attorneys-in-fact, provide administrative and management services to the Exchanges.  "Farmers®" is a trade name of the Exchanges and their subsidiaries and affiliates.

For more information about Farmers, visit its Web site at www.farmers.com or at www.Facebook.com/FarmersInsurance.

For questions specific to the Exchanges, please contact Mark Toohey at mark_toohey@farmersinsurance.com or 805.907.2216.

SOURCE Farmers Insurance



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