Thomas McInerney, CEO,Genworth  (Photo: Victor J. Blue/BB)

Genworth Financial Inc. says China Oceanwide Holdings Group Co.Ltd. of Beijing is having trouble nailing down the financing itneeds to pay to acquire Genworth.

China Oceanwide—a financial services and real estate developmentcompany based in Beijing—has been trying to acquire Genworth forabout four years. The company is in the process of closingon a $1.8 billion financing arrangement from Hony Capital, a big,Hong Kong-based private equity firm.

"Oceanwide has indicated that the financing has been delayed dueto the Covid-19 pandemic and uncertain macroeconomic conditions,"Genworth said in a comment included in the announcement of thefinancing delay.

Genworth is a Richmond, Virginia-based company that is a largeplayer in the mortgage insurance markets in the United States andAustralia. It sells some standalone long-term care insurance(LTCI), and it has been a major player in the life, annuity, andLTCI markets. The company has $1 billion in debt coming due in 2021and potential liabilities related to litigation with AXA.

China Oceanwide has major developments in the center of Wuhan,which was hit especially hard by the Covid-19 outbreak. Genworthand China Oceanwide said they will push the deal completiondeadline back to Sept. 30, from June 30. The extension is the 15ththe companies have announced.

Because of the delay, Genworth is preparing to handle its debtpayments by borrowing money and, possibly, by selling a 19.9percent stake in the U.S. mortgage insurance business through aninitial public offering (IPO), Genworth said.

The new deal extension calls for China Oceanwide to showGenworth, by Aug. 31, that China Oceanwide has $1 billion infunding from sources in China to pay for the deal and $1 billion infinancing from Hony Capital or other sources.

"If these conditions are met, the merger agreement will remainin place until Sept. 30, 2020. If the conditions are not met,Genworth has the right, in its sole discretion, to terminate themerger agreement as of Aug. 31, 2020," according to the extensionannouncement.

Thomas McInerney, Genworth's CEO, said in a comment on the dealextension that the company heard stakeholders would like greaterassurance that the China Oceanwide deal is moving toward closing.The financing confirmation provision should address that concern,McInerney said.

"We continue to believe the transaction represents the best andmost certain value for Genworth's shareholders," McInerneysaid.

Lu Zhiqiang, the chairman of China Oceanwide, said in a commentof his own that he's still committed to the deal.

"We have overcome many hurdles during the past three and halfyears and continue to persevere because of the future value ofGenworth to our vision of pursuing the significant opportunitiesfor long term care insurance in the U.S., China, and the rest ofAsia," Lu said. "We remain committed to securing financing for thetransaction in order to close the transaction as soon aspossible."

From: ThinkAdvisor