Aegon and Vereniging Aegon ('the Association') have reached an agreement to cancel all
of Aegon's preferred shares, of which the Association is the sole owner. The agreement
will result in a simplified capital structure for Aegon while enabling the company to
maintain a high-quality capital base under new European solvency requirements, as well as
allowing the Association to substantially reduce its debt.
Under the agreement, all of Aegon's preferred shares will be exchanged for cash and
common shares. The value of all preferred shares, which have a book value of EUR 2.1
billion, has been determined at EUR 1.1 billion. The Association will receive EUR 400
million from Aegon in cash and the equivalent of EUR 655 million in common shares in
addition to a total of EUR 83 million of dividends on the preferred shares.
As a result of the transaction, the number of common shares outstanding will increase
by approximately 7%. The dilutive effect on earnings per share, however, is limited to
approximately 3% as there will be no preferred dividend payments following the
transaction.
The Association will relinquish its preferential rights with regard to dividends and
liquidation proceeds. In addition, the voting rights of the Association in ordinary course
will be reduced from the current 22.1% to approximately 14.9%, which will align its voting
rights and economic ownership in Aegon. However, the Association will maintain its current
32.6% voting rights in case of special cause.
The actual increase in the number of common shares will depend on the volume-weighted
average price of Aegon common shares on Euronext Amsterdam from February 15 up to, and
including, February 28, 2013.
Aegon CEO Alex Wynaendts said: "This agreement with Aegon's largest shareholder
represents a balanced approach for simplifying Aegon's capital structure in a manner that
minimizes the impact on existing common shareholders, while at the same time allowing the
Association to achieve its objectives."
Mr. Wim van den Goorbergh, Chairman of Vereniging Aegon said: "The agreement reflects
the special purpose of the Association to act in the interest of all Aegon's stakeholders.
Moreover, the transaction enables the Association to substantially reduce its debt.
Although the Association will relinquish its preferred status, we take this opportunity to
reaffirm our long-term commitment to Aegon."
Aegon's Supervisory Board will propose to approve the new capital structure at the
Annual General Meeting of Shareholders on May 15, 2013.
Appendix - details of the agreement between Aegon and Vereniging Aegon
The agreement between Aegon and Vereniging Aegon to simplify the company's capital
structure and maintain a high-quality capital base will be effectuated through a number of
steps as described below.
Steps related to implementation of conversion
<pre>
- The proposal to repay EUR 400 million in share premium on preferred shares
A.
- The proposal to amend the Articles of Association of Aegon N.V. to convert the
share capital and to reflect the new composition of that share capital. Subject to the
approval of the Annual General Meeting of Shareholders, the Aegon preferred shares A
and B will be converted into a combination of common shares and common shares B, each
with a nominal value of EUR 0.12. The financial rights attached to a common share B
are 1/40 of a common share. The combination of common shares and common shares B will
be determined such that the aggregate nominal value of the preferred shares which are
converted equals the aggregate nominal value of the common shares and common shares B
resulting from the conversion.
- The proposal to amend the Preferred Shares Voting Rights Agreement (Voting
Rights Agreement) between Aegon N.V. and Vereniging Aegon to ensure that under normal
circumstances the Association will only exercise 1 vote per 40 common shares B (voting
rights in normal circumstances will be equal to the financial rights of a common share
B) and that it will only exercise its full voting rights in case of a special cause.
- The proposal to amend the 1983 Merger Agreement (Vereniging AEGON Call Option)
to ensure that the Association can always maintain its special cause voting rights at
32.6% in the future.
</pre> Valuation of shares for purpose of conversion
The valuation of the preferred shares has been based on market parameters (as of
February 13, 2013) as agreed between Aegon and Vereniging Aegon:
<pre>
- the market value of the preferred shares will be calculated over the total
amount paid-up (nominal value plus share premium) on those preferred shares prior to
the payment of EUR 400 million in share premium by Aegon;
- the market value will be reduced by (i) EUR 400 million and (ii) the dividends
on the preferred shares; and
- this remaining value will be used for the purpose of the conversion of the
preferred shares into common shares and common shares B.
</pre> Certain financial advisory services were provided to Aegon by Keefe, Bruyette & Woods
Limited in connection with Aegon's valuation of the preferred shares.
On February 15, 2013, a period of 10 business days will commence, during which the
volume-weighted average price of Aegon common shares will be calculated on the basis of
all transactions in those shares on Euronext Amsterdam over that period. In respect of an
Aegon common share B, the volume-weighted average price will be deemed to be 1/40 of the
volume-weighted average price of an Aegon common share.
For the purpose of the conversion, the value of preferred shares A and B has been
calculated to be EUR 5.303 and EUR 0.133 respectively (the latter being 1/40 of the value
of preferred shares A). Using the current number of preferred shares A (211,680,000) and
preferred shares B (118,093,000), the total value of the preferred shares A and B can be
calculated to be EUR 1,122,564,108 and EUR 15,656,529 respectively.
The total value of the preferred shares is subsequently reduced by the payment of EUR
400 million in share premium and approximately EUR 83 million in dividends payable on the
preferred shares related to the full year 2012 and the first half of 2013.
The remaining value of the preferred shares is EUR 655 million. This value will be
converted into common shares and a newly created share class, common shares B, based on
the volume-weighted average price of the common shares on Euronext Amsterdam from February
15 up to, and including, February 28, 2013.
Numerical example
Based on an assumed volume-weighted average price of the common shares of EUR 4.75 per
share, the following conversion calculation can be performed.
The conversion of the total remaining value of the preferred shares into common shares
only would result in the creation of 138 million common shares. However, in order to
maintain special cause voting rights of 32.6%, Aegon will also introduce common shares B.
A common share B has the same full voting rights as a common share, but the financial
rights attached to the common share B are 1/40 of a common share. Upon conversion a
portion of the preferred shares will be converted into common shares B. The number of
common shares B required to maintain special cause voting rights can be calculated by
assessing the number of common shares plus common shares B required to be held by
Vereniging Aegon in order to represent 32.6% of outstanding shares.
This number of common shares B can be calculated to be 563 million. As a common share
B has a value of 1/40 of a common share, the Association will need to surrender 14.1
million common shares in order to create these common shares B. As a result of this,
Vereniging Aegon will receive 123.8 million common shares (with a total value of EUR 588
million) and 563 million common shares B (with a total value of EUR 67 million).
Following the conversion, Vereniging Aegon will hold a total of 296 million common
shares and 563 million common shares B. Vereniging Aegon will have approximately 14.9% of
the voting rights in ordinary course.
DISCLAIMER
Forward-looking statements
The statements contained in this document that are not historical facts are
forward-looking statements as defined in the US Private Securities Litigation Reform Act
of 1995. The following are words that identify such forward-looking statements: aim,
believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on,
plan, continue, want, forecast, goal, should, would, is confident, will, and similar
expressions as they relate to Aegon. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that are difficult to
predict. Aegon undertakes no obligation to publicly update or revise any forward-looking
statements. Readers are cautioned not to place undue reliance on these forward-looking
statements, which merely reflect company expectations at the time of writing. Actual
results may differ materially from expectations conveyed in forward-looking statements due
to changes caused by various risks and uncertainties. Such risks and uncertainties include
but are not limited to the following:
<pre>
- Changes in general economic conditions, particularly in the United States,
the Netherlands and the United Kingdom;
- Changes in the performance of financial markets, including emerging markets,
such as with regard to:
- The frequency and severity of defaults by issuers in Aegon's fixed income
investment portfolios;
- The effects of corporate bankruptcies and/or accounting restatements on the
financial markets and the resulting decline in the value of equity and debt securities
Aegon holds; and
- The effects of declining creditworthiness of certain private sector securities
and the resulting decline in the value of sovereign exposure that Aegon holds;
- Changes in the performance of Aegon's investment portfolio and decline in
ratings of Aegon's counterparties;
- Consequences of a potential (partial) break-up of the euro;
- The frequency and severity of insured loss events;
- Changes affecting mortality, morbidity, persistence and other factors that may
impact the profitability of Aegon's insurance products;
- Reinsurers to whom Aegon has ceded significant underwriting risks may fail to
meet their obligations;
- Changes affecting interest rate levels and continuing low or rapidly changing
interest rate levels;
- Changes affecting currency exchange rates, in particular the EUR/USD and
EUR/GBP exchange rates;
- Changes in the availability of, and costs associated with, liquidity sources
such as bank and capital markets funding, as well as conditions in the credit markets
in general such as changes in borrower and counterparty creditworthiness;
- Increasing levels of competition in the United States, the Netherlands, the
United Kingdom and emerging markets;
- Changes in laws and regulations, particularly those affecting Aegon's
operations, ability to hire and retain key personnel, the products Aegon sells, and
the attractiveness of certain products to its consumers;
- Regulatory changes relating to the insurance industry in the jurisdictions in
which Aegon operates;
- Changes in customer behavior and public opinion in general related to, among
other things, the type of products also Aegon sells, including legal, regulatory or
commercial necessity to meet changing customer expectations;
- Acts of God, acts of terrorism, acts of war and pandemics;
- Changes in the policies of central banks and/or governments;
- Lowering of one or more of Aegon's debt ratings issued by recognized rating
organizations and the adverse impact such action may have on Aegon's ability to raise
capital and on its liquidity and financial condition;
- Lowering of one or more of insurer financial strength ratings of Aegon's
insurance subsidiaries and the adverse impact such action may have on the premium
writings, policy retention, profitability and liquidity of its insurance subsidiaries;
- The effect of the European Union's Solvency II requirements and other
regulations in other jurisdictions affecting the capital Aegon is required to
maintain;
- Litigation or regulatory action that could require Aegon to pay significant
damages or change the way Aegon does business;
- As Aegon's operations support complex transactions and are highly dependent on
the proper functioning of information technology, a computer system failure or
security breach may disrupt Aegon's business, damage its reputation and adversely
affect its results of operations, financial condition and cash flows;
- Customer responsiveness to both new products and distribution channels;
- Competitive, legal, regulatory, or tax changes that affect profitability, the
distribution cost of or demand for Aegon's products;
- Changes in accounting regulations and policies may affect Aegon's reported
results and shareholders' equity;
- The impact of acquisitions and divestitures, restructurings, product
withdrawals and other unusual items, including Aegon's ability to integrate
acquisitions and to obtain the anticipated results and synergies from acquisitions;
- Catastrophic events, either manmade or by nature, could result in material
losses and significantly interrupt Aegon's business; and
- Aegon's failure to achieve anticipated levels of earnings or operational
efficiencies as well as other cost saving initiatives.
</pre> Further details of potential risks and uncertainties affecting Aegon are described in
its filings with the Netherlands Authority for the Financial Markets and the US Securities
and Exchange Commission, including the Annual Report. These forward-looking statements
speak only as of the date of this document. Except as required by any applicable law or
regulation, Aegon expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to reflect any
change in Aegon's expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
ABOUT AEGON
As an international life insurance, pensions and asset management company based in The
Hague, Aegon has businesses in over twenty markets in the Americas, Europe and Asia. Aegon
companies employ approximately 25,000 people and have nearly 47 million customers across
the globe. Further information: aegon.com
[http://www.aegon.com/Documents/aegon-com/Governance/Governance-documents/EB-and-MB/Employment-agreement-Nooitgedagt.pdf ]
.
<pre>
Media relations
Greg Tucker
+31(0)70-344-8956
[email protected]
Investor relations
Willem van den Berg
+31(0)70-344-8305
[email protected]
</pre> PRN NLD
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