Manulife announces Limited Recourse Capital Notes issue

Rhea-AI Summary

Manulife Financial Corporation (MFC) plans to issue $1.2 billion in 4.10% Limited Recourse Capital Notes Series 2, with a maturity date of March 19, 2082. The interest will be paid semi-annually until March 19, 2027, after which it will reset every five years based on the 5-year Government of Canada Yield plus 2.704%. MFC will also issue 1,200,000 Non-Cumulative Fixed Rate Reset Class 1 Shares Series 28 as part of this offering. The proceeds will be used for general corporate purposes.

Positive

• Issuance of $1.2 billion in Limited Recourse Capital Notes, indicating strong market confidence.
• Interest rate of 4.10% is competitive for a long-term debt instrument, likely attracting investors.

Negative

• The long maturity date of March 19, 2082 may present refinancing risks in the future.
• The structure limits recourse for noteholders, potentially raising concerns about security.

C$ unless otherwise stated                                 
TSX/NYSE/PSE: MFC     SEHK: 945

TORONTO, Nov. 5, 2021 /PRNewswire/ - Manulife Financial Corporation ("MFC") announced today that it intends to issue $1.2 billion principal amount of 4.10% Limited Recourse Capital Notes Series 2 (Subordinated Indebtedness) (the "Notes"). MFC intends to file a prospectus supplement to its existing base shelf prospectus in respect of this issue.

The Notes will bear interest at a fixed rate of 4.10% annually, payable semi-annually, for the initial period ending on, but excluding, March 19, 2027. Thereafter, the interest rate on the Notes will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 2.704%. The Notes mature on March 19, 2082.

In connection with the issuance of the Notes, MFC will issue 1,200,000 Non-Cumulative Fixed Rate Reset Class 1 Shares Series 28 (the "Series 28 Shares") to be held by Computershare Trust Company of Canada as trustee of Manulife LRCN Limited Recourse Trust (the "Limited Recourse Trust"). In case of non-payment of interest on or principal of the Notes when due, the recourse of each noteholder will be limited to that holder's proportionate share of the Limited Recourse Trust's assets in respect of the Notes, which will consist of Series 28 Shares except in limited circumstances.

Subject to prior regulatory approval, MFC may redeem the Notes, in whole or in part on not less than 15 nor more than 60 days' prior notice by MFC, during the period from February 19 to and including March 19, commencing in 2027 and every five years thereafter at a redemption price equal to par, together with accrued and unpaid interest up to, but excluding, the date of redemption.

The offering is being done on a best efforts agency basis by a syndicate co-led by RBC Capital Markets, Scotiabank and TD Securities. The offering is expected to close on November 12, 2021.

The Notes will be issued under a trust indenture to be dated as of the closing date of the offering between MFC and BNY Trust Company of Canada.

MFC intends to use the net proceeds from the offering for general corporate purposes, including investment in subsidiaries and potential future redemptions of existing securities.

Neither the Notes nor the Series 28 Shares have been, nor will be, registered in the United States under the United States Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state of the United States and may not be offered, sold or delivered, directly or indirectly in the United States or to, or for the account or benefit of, a "U.S. person" (as defined in Regulation S under the Securities Act) absent registration under the Securities Act or an applicable exemption from such registration requirements. This press release does not constitute an offer to sell or a solicitation to buy securities in the United States or in any other jurisdiction where such offer or solicitation would be unlawful.

About Manulife

Manulife Financial Corporation is a leading international financial services provider that helps people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we operate as Manulife across our offices in Canada, Asia, and Europe, and primarily as John Hancock in the United States. We provide financial advice, insurance, and our global wealth and asset management segment, Manulife Investment Management, serves individuals, institutions and retirement plan members worldwide. At the end of 2020, we had more than 37,000 employees, over 118,000 agents, and thousands of distribution partners, serving over 30 million customers. As of September 30, 2021, we had $1.4 trillion (US$1.1 trillion) in assets under management and administration, and in the previous 12 months we made $31.6 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 155 years. We trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges and under '945' in Hong Kong.

View original content:https://www.prnewswire.com/news-releases/manulife-announces-limited-recourse-capital-notes-issue-301417845.html

SOURCE Manulife Financial Corporation

FAQ

What is the interest rate for the new Limited Recourse Capital Notes from MFC?

The interest rate is 4.10%, payable semi-annually.

When do the MFC Limited Recourse Capital Notes mature?

They mature on March 19, 2082.

How much is MFC raising through the new securities?

MFC is raising $1.2 billion through the issuance.

What will MFC use the proceeds from the Notes for?

The proceeds will be used for general corporate purposes.

What are the redemption terms of the MFC Notes?

MFC may redeem the Notes starting February 19, 2027, with prior notice.