The Association will sell 350 mln of its Aegon common shares: at least EUR 1.5 bln of Aegon common shares will be sold directly by the Association in an offering uotside the U.S.; the balance of the shares will be sold to Aegon and placed in the market by Aegon in an international offering. No new Aegon shares will be issued.
The Associaton will use the proceeds of the sale to reduce its debt by at least EUR 1.5 bln; the remaining proceeds will be reinvested in Aegon through an increase in paid-in capital on existing Aegon preferred shares held by the Association.
The voting interest of the Association will reduce from approx. 52% to approx. 33%.
The AssociationÂ'Â's Chairman, Prof. PÃ© Kohnstamm: 'We have taken this decision to ensure, in light of current market conditions, that the AssociationÂ'Â's debt is at sustainable and comfortable levels and to create a more stable asset base. This approach has the added advantage that it assists AEGON in a cost-efficient strengthening of its capital base. The Association will continue in its role as a stable and supportive long-term shareholder in AEGON following the transaction.'
AEGONÂ'Â's Executive Board Chairman, Don Shepard said: 'We fully support the AssociationÂ'Â's plans, which will also contribute to the development of AEGON. The benefits of this restructuring are threefold: AEGON gains a stronger capital base to support its strategy; the free float of our shares on the stock market increases substantially without any dilution to shareholders and there will be a better alignment of the capital and voting rights in AEGON.'
Benefits of the restructuring
Benefits to the Association
The Association will improve its financial position by reducing its debt and securing a more stable asset base.
After the restructuring, the Association will have assets of approximately EUR 4.5 billion (based on the closing share price of the AEGON common shares on Euronext Amsterdam on 13 September 2002 of EUR 11.00) and debt outstanding of less than EUR 2.0 billion, for which a committed bank facility with a maturity of three years has been arranged.
The Association is fully committed to AEGON as a long-term shareholder and intends to maintain its remaining common share ownership position in AEGON for the foreseeable future.
Benefits to AEGON
The financial restructuring of the Association will provide the opportunity for AEGON to strengthen its capital base without issuing new shares.
* AEGONÂ'Â's capital position will be substantially strengthened through a non-dilutive increase in the paid-in capital on the existing preferred shares.
* AEGON will use the proceeds of the increase in the paid-in capital on the existing preferred shares to strengthen its capital base by reducing short-term borrowings and to support growth. The proceeds will depend on the offering price and the amount by which the AssociationÂ'Â's debt is reduced. Based on the closing price of EUR 11.00 of AEGON common shares and assuming the AssociationÂ'Â's debt is reduced by EUR 1.5 billion, the proceeds to AEGON would be approximately EUR 2.35 billion. This amount would be higher if the offering price is higher or lower if the offering price is lower.
* There will be no dilution to AEGONÂ'Â's common shareholders, as no new common shares will be issued.
* Corporate governance will improve as a result of the better alignment of economic and voting interests arising from the increase in the paid-in capital on the preferred shares.
* The liquidity of AEGON common shares will increase as a result of an increase in the free float from approx. 63% to approx. 88%, which should have a positive impact on AEGONÂ'Â's weighting in stock market indices.
* AEGONÂ'Â's equity capital will increase to an appropriately strong level in the current volatile financial markets.
Details of the restructuring
The Association will sell 350 million AEGON common shares. These shares represent approx. 25% of AEGONÂ'Â's outstanding common shares. The offering of 350 million shares will consist of two