AXA Asia Pacific Holdings Limited (AXA APH) today announced that it will sell its holding of Non-Convertible Redeemable Preference Shares in the capital of AXA China Region, raising US$459.8 million to fund the repayment to AXA SA of existing debt. These Non-Convertible Redeemable Preference Shares will be created by the conversion of ordinary shares in AXA China Region already held by AXA APH. The sale of these preference shares will lower the group’s gearing ratio, and is in accordance with a strategic objective to improve overall capital management performance. The offer of sale will be wholly taken up by AXA SA. Some important details of the preference shares and the terms are set out below.

In describing the sale Matthew Slatter, Chief Finance Officer of AXA APH said; “The sale of these non-convertible preference shares will help us achieve important capital management objectives. It will lower our gearing ratio, help maintain a satisfactory overall cost-of-funds and support matching of currency exposures. Additionally we improve the funding maturity profile by using hybrid equity, which is longer-term, instead of debt to support the investment in AXA China Region.

“The preference shares being sold cannot be converted to ordinary shares in AXA China Region, are redeemable at the option of the issuer and are classified as non-voting. In making this offer and accepting 100 per cent subscription by AXA SA we considered a number of debt or equity financing options, took independent advice and ensured that we will achieve an outcome for all AXA Asia Pacific shareholders that we believe is the best the company could have achieved from any funding option.

“The dividends to be paid by AXA China region on the new preference shares are based on USD interest rates plus a commercial margin.

“The existing debt, which will be repaid from the proceeds of this sale, was originally incurred to fund the purchase of the AXA China Region minority interests in late 1999 and was also sourced from AXA SA in a commercial arrangement. It was due for renewal, and as part of our normal capital management considerations we decided to see whether there was a more effective way of funding the investment.

“AXA China Region is a strong and dynamic business with great prospects in a very exciting and rapidly developing market. It is already a very major contributor to the earnings and market worth of AXA Asia Pacific Holdings and we expect it will continue to grow and prosper to the benefit of all our shareholders. This preference share issue and sale is a step in ensuring that the overall capital and financing profile of the AXA Asia Pacific group is best suited to our operations, strategic plans and shareholders interests.”



Enquiries:

Robin Burns General Manager, Corporate Affairs
(03) 9616 3631
0413 085 443


Francine McMullen Manager, Corporate Relations
(03) 9618 4985



Extract of terms of the Issue:

Shares 574,804,516 US$0.80 Non-Convertible Redeemable Preference Shares (NCRPS)

Issuer AXA China Region Ltd.

Dividend Quarterly dividend at USD Libor plus a margin. NCRPS dividends rank before ordinary dividends subject to the amount of the NCRPS dividend not exceeding distributable profits of the issuer.

Status The NCRPS will rank senior to ordinary shares of AXA China Region.

Redemption The NCRPS may be redeemed by the issuer on 20 days notice after 5 years or following specified external events or a change in control.

Voting rights The shares carry limited voting rights (on resolutions to wind up the company, dispose of all or substantially all of the property, business or undertaking of AXA China Region or alter the rights of NCRPS holders) but are classified non-voting under The Corporations Law.

Conversion The NCRPS carry no conversion rights.

Winding up Rank senior to ordinary shares only.