Hanover holders tender $152.88 million of 8.207% bond, 7.625% bonds

By Susanna Moon

Chicago, June 30 - Hanover Insurance Group, Inc. said it completed the tender offer for a portion of the 8.207% series B capital securities issued by AFC Capital Trust I and Hanover's 7.625% senior debentures due 2025.

The tender offer expired at 11:59 p.m. ET on June 29. The company said it would spend up to $125 million total on the offer, excluding accrued interest.

As of the expiration, investors had tendered $69,282,000 liquidation amount of capital securities, which were all accepted for purchase at a price of $800 per $1,000 liquidation amount.

Investors tendered $83,594,000 principal amount of the 7.625% bonds, and the company accepted for purchase $77.31 million of the bonds. Acceptance of the bonds was prorated, Hanover said, using a proration factor of 92.5%. Holders will receive $900 per $1,000 principal amount of the bonds, including a $30 premium for bonds tendered by 5 p.m. ET on June 15.

All tendered 8.207% capital securities were accepted before any of the tendered 7.625% debentures.

After settlement of the offer, there will be $165,712,000 liquidation amount of the capital securities and $122.69 million principal amount of the bonds outstanding.

Hanover said on June 16 that it amended the tender offer so that the total payout for the 8.207% securities would include the $30 early tender premium for securities tendered by the expiration of the tender offer.

The company will also pay accrued distributions or interest up to but excluding the settlement date.

The company expected to settle the offer Tuesday.

Hanover previously said it expected to fund the offer with its cash and cash equivalents on hand. It plans to then replace that cash with the proceeds of a loan from the Federal Home Loan Bank of Boston to its subsidiary, Hanover Insurance Co.

Goldman, Sachs & Co. (800 828-3182 or collect 212 357-4692) is the dealer manager, and Okapi Partners LLC (212 297-0720 or 877-796-5274) is the information agent.

Hanover is a Worcester, Mass.-based holding company for a group of insurers.

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