Genworth Financial Inc. may use the value of its stake in its Canadian mortgage insurance unit, Genworth MI Canada Inc., to borrow $450 million from investors.
The Richmond, Virginia-based insurer announced Monday that it has started the process of seeking a $450 million senior secured term loan.
"As currently contemplated, the security package for the term loan would include a pledge of the publicly listed shares of Genworth's Canadian mortgage insurance subsidiary, Genworth MI Canada Inc., held by Genworth Financial International Holdings LLC, a wholly owned subsidiary of Genworth," Genworth said in the deal announcement.
Structuring the loan as a "senior" loan means that the lenders involved in the arrangement would come before some other classes of creditors if Genworth ran into problems with repaying the loan.
Providing security, or collateral, for the loan would give the lenders another layer of protection.
Genworth said it intends to use the proceeds from the term loan, along with cash on hand, to pay off debts, including expenses related to $600 million in senior unsecured notes that will come due in May. Those notes pay an interest rate of 6.515%.
Genworth plans to close on the term arrangement in early March.
China Oceanwide Holdings Group Co. Ltd., a Beijing-based real estate development and financial services company, has been trying to acquire Genworth since October 2016.
China Oceanwide "has expressed an interest in participating in the term loan," Genworth said. "Genworth and Oceanwide are in discussions to determine Oceanwide's potential involvement in the secured financing."
