Mortgage insurance business may be sold to smooth path to merger
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Virginia-based Genworth Financial says its proposed merger with China Oceanwide Holdings has been delayed because of Canadian regulators.
Genworth said Monday that a lack of clarity surrounding Canadian scrutiny of the deal has meant the merger partners agreeing to delay their proposed tie-up beyond the June 30, 2019 deadline; and the potential sale of its Canadian mortgage insurance business.
"MI Canada is one of our top-performing businesses. However, the lack of transparent feedback or guidance from Canadian regulators about their review left us no choice but to look at strategic alternatives for MI Canada that would eliminate the need for Canadian regulatory approval of the Oceanwide transaction," said Tom McInerney, president and CEO of Genworth.
As well as smoothing the path to the merger, a sale in whole or part of Genworth MI Canada would also provide funds to satisfy future debt maturities, McInerney added.
He said that the firm is in talks with other regulators about the potential sale of the Canadian unit.
If a buyer is found for the business, Oceanwide will have to agree the terms of the transaction and there may be a further delay in the merger past the newly set November 30, 2019 deadline.
Oceanwide also needs approval from the Chinese regulator due to currency conversion rules.
Canadian unit reaction
Reacting to the news that the business may be sold, Stuart Levings, the president and CEO of Genworth MI Canada, said that the firm remains focused on its strategic priorities and meeting the needs of its stakeholders.
Our board of directors and the special committee of independent directors, which was established in 2016 in connection with the Genworth Financial - Oceanwide transaction, will continue to monitor the status of that transaction and, as necessary, engage with Genworth Financial and other parties regarding the potential disposition of its interest in the Company or other strategic alternatives."
