U.K. insurer Prudential PLC (PRU.LN) is spending around GBP850 million to pay the banks underwriting its GBP14.5 billion rights issue and to prepare it rights-issue prospectus, the document itself showed Tuesday.

Under the Miscellaneous section of the 940-page document, Prudential said: "The total costs and expenses payable by the Prudential Group in connection with the negotiation, preparation and implementation of the transactions, including the issue of this prospectus and the circular but excluding any costs associated with hedging the consideration amount are estimated to amount to approximately GBP850 million."

The bulk of the GBP850 million bill comes from the underwriting fee of up to GBP507.5 million, which would be paid to the banks supporting the rights issue.

The GBP507.5 million is derived from the 3.5% fee being paid to the banks. Of that rate, 0.5% is discretionary and may be paid upon completion of Prudential $35.5 billion purchase of AIA Group Ltd. in the third quarter of the year, a company spokesman said.

The document showed that the underwriters will share between them a commission of 2.50% on the proceeds of the rights issue.

The joint global coordinators--Credit Suisse (CS), HSBC Holdings PLC (HBC) and JP Morgan Cazenove--will share between them a commission of 0.5% of the proceeds.

The extra 0.5% consists of a further discretionary commission of 0.25% for the underwriters and another 0.25% discretionary commission for the joint global coordinators.

The GBP850 million bill also includes the cost of a GBP5.5 billion subordinated debt taken out by Prudential to help boost its capital surplus. The prospectus showed that the cost is $200 million.

Part of the bill will also go to the lawyers and accountants involved in the deal.

The prospectus, released Tuesday morning, will now be reviewed by shareholders in preparation of a vote June 7.

Prudential needs 75% of votes to have the rights issue approved.

-By Vladimir Guevarra, Dow Jones Newswires. Tel. +44 (0) 2078429486, vladimir.guevarra@dowjones.com
Global Industrial (NYSE:GIC)
Historical Stock Chart
From Jun 2024 to Jul 2024 Click Here for more Global Industrial Charts.
Global Industrial (NYSE:GIC)
Historical Stock Chart
From Jul 2023 to Jul 2024 Click Here for more Global Industrial Charts.