April 18, 2012 5:52 PM
Cleary, SC, Davis Polk on Hand as The Hartford Pays Back Allianz for ’08 Rescue
Posted by Brian Baxter
The Hartford Financial Services Group has finalized a $2.43 billion transaction to buy back outstanding warrants and subordinated debt held by German financial services giant Allianz, which rescued the insurer with a $2.5 billion cash infusion in 2008.
The deal comes as The Hartford faces pressure from its largest shareholder, hedge fund billionaire John Paulson, who owns roughly 8 percent of the company, to split itself into separate property-casualty and life insurance businesses.
The Hartford, which is based in the Connecticut capital city of the same name, raised $2.15 billion earlier this month to repay most of the crisis assistance it received from Allianz four years ago. Munich-based Allianz, one of the world’s largest insurers, bought $2.5 billion in Hartford stock and debt, along with warrants to purchase up to 20 percent of The Hartford, as the company struggled with losses stemming from mortgage-backed securities and tight credit markets.
Allianz, advised by Sullivan Cromwell, still retains a 5 percent equity stake in The Hartford. SC corporate partners William Torchiana and Andrew Soussloff, European corporate counsel Joram Lietaert Peerbolte, and bank regulatory partner Michael Escueâ€”who recently penned a banking column for sibling publication the New York Law Journalâ€”are representing Allianz on the transaction.
Allianz is a longtime SC client, having turned to the firm more than a decade ago for its $3.3 billion acquisition of a 70 percent stake in U.S. asset manager Pimco. SC subsequently advised Allianz on its bailout of The Hartford in 2008. (The firm also advised Commerzbank, the second-largest bank in Germany, on its $14.4 billion acquisition of Allianz’s former Dresdner Bank subsidiary that same year.)
Cleary Gottlieb Steen Hamilton corporate partners Craig Brod, John Palenberg, and David Lopez are leading a team from the firm advising The Hartford. The Cleary team also includes tax partner Erika Nijenhuis, employee benefits partner Arthur Kohn, corporate counsel Helena Grannis, and senior corporate attorney Elizabeth Chang.
Alan Kreczko serves as general counsel for The Hartford, which listed in a final prospectus related to the Allianz transaction the common and restricted stock holdings of its top in-house lawyer. Davis Polk Wardwell global capital markets practice head Richard Sandler and corporate counsel Jean Weng are advising underwriters on the debt and warrants repurchase deal.
Paul Kirk, Jr., a former chairman of the Democratic National Committee, onetime U.S. senator from Massachusetts after the death of Ted Kennedy in 2009, and a retired Sullivan Worcester partner, is a member of The Hartford’s board of directors. Kirk is joined on the board by fellow lawyer H. Patrick Swygert, a professor at the Howard University School of Law.
The Hartford CEO Liam McGee said in a statement this week that the closing to “repurchase the debentures and warrants represent” an important step for the company, which is considering the sale of its life insurance unit, as part of an effort to streamline its operations.
Make a comment
Save Share: Facebook
Report offensive comments to The Am Law Daily.