On 7 May 2021, LifeStar Insurance plc (‘LifeStar Insurance’) published a Prospectus in relation to the issuance of €10 million 4% unsecured subordinated bonds maturing between 2026 and 2031 which are also subject to an over-allotment option of €3 million in the event of over-subscription. LifeStar Insurance is licensed by the MFSA to carry out Class I (Life and Annuity) and Class III (Linked Long Term) business. The company provides life insurance products offering a comprehensive range of protection, savings, investment and pension products. It also provides both single premium and regular premium interest-sensitive saving products, unit-linked insurance-based investment products, pension products as well as protection products including level and decreasing term, critical illness and group life policies.
The salient details of the new bonds are as follows:
€10 million (nominal), subject to an over-allotment option of €3 million in the event of over-subscription
€100 per bond
Minimum Subscription Amount:
€5,000 and multiples of €100 thereafter
Interest Payment Date/s:
Annually on 2 June (with the first interest payment date being 2 June 2022)
The bonds will mature at 100% (par) on 2 June 2031. However, LifeStar Insurance reserves the right to redeem all the bonds on any one of the following early redemption dates subject to MFSA approval and subject to LifeStar Insurance giving bondholders at least sixty days’ notice: 2 June 2026, 2 June 2027, 2 June 2028, 2 June 2029, or 2 June 2030.
Regardless of the above, provided that certain conditions as set out in Section 15.11.1 of the Prospectus are not met, the redemption of the bonds may be delayed beyond the maturity date for an indefinite period of time. In this case, bondholders will, subject to any mandatory deferral of interest, continue to receive interest but will not receive any additional compensation for the postponement of the redemption. The bonds do not contain any event of default provisions that would allow bondholders to accelerate the bonds if redemption is delayed beyond the maturity date in circumstances where the relevant conditions are not met. Moreover, in case of a Regulatory Deficiency Interest Deferral Event, interest on the bonds will not be due and payable on the scheduled interest payment date and will be deferred. Any such deferral of payment will not constitute a default of the company or any other breach of its obligations under the bonds or for any other purpose, and will not give bondholders any right to accelerate repayment of the bonds or take any other action under the bonds. Interest deferred will constitute arrears of interest. Bondholders will not receive any additional interest or compensation for the mandatory deferral of payments. In particular, the resulting arrears of interest will not bear interest.
Plan of Distribution:
The bonds are open for subscription by:
- ‘Preferred Applicants’ in the following order: (a) holders of the 5% unsecured LifeStar Holding plc bonds as at close of trading on 5 May 2021 who will also have the option to exchange part or all of their bonds with the new bonds being issued by LifeStar Insurance; (b) LifeStar Holding shareholders as at close of trading on 5 May 2021; (c) LifeStar Group employees; and (d) LifeStar Policyholders; and
- Authorised Intermediaries and the general public through the Intermediaries’ Offer in respect of any balance of the bonds not subscribed to by ‘Preferred Applicants’.
The bonds (their repayment and the payment of interest thereon) will constitute the general, direct, subordinated, unsecured and unconditional obligations of LifeStar Insurance to the bondholders, and will at all times rank pari passu, without any priority or preference among themselves. In the event of an Insolvent Insurer winding-up, the claims of bondholders in respect of the payment of capital and interest on the bonds will be subordinated to the claims of all policyholders and beneficiaries and other unsubordinated secured and unsecured creditors of the company, and will not be repaid until all policyholders and beneficiaries and other unsubordinated debt outstanding at the time has been settled in full.
The bonds are complex investment products and are only suitable for investors who have a high tolerance to risk and with a holding period of not less than 5 years and up to an indefinite period of time in the event that the redemption of the bonds is delayed beyond the maturity date. An investment in the bonds is not suitable for investors who are risk averse or have no risk tolerance. Authorised Intermediaries must distribute the bonds to retail clients and/or elective professional clients on an advisory basis or discretionary portfolio management basis only. As a result, Authorised Intermediaries are required to conduct a ‘Suitability Test’ in respect of Applicants that qualify as retail clients and/or elective professional clients. This requirement will also be applicable when it comes to secondary trading in the bonds.
Limited Recourse Obligations:
The bonds are the obligations of LifeStar Insurance only and do not establish any liability or other obligation of any other person. Moreover, there will be no events of default in respect of the bonds. In the event of a winding-up of the company, the bonds will, when permitted by applicable law, become immediately due and payable at their nominal value, together with interest accrued up to the date of repayment, if any, in accordance with the ranking established by law only if the payment of the relevant amount would not itself cause the insolvency of the company or accelerate the process of the company becoming insolvent. The remedies under the bonds are, therefore, more limited than those typically available to the company’s unsubordinated creditors.
Use of Proceeds:
The net proceeds from the bond issue estimated at €9.7 million (or €12.7 million in the event of exercise of the over-allotment option in full) are earmarked for: (i) the purpose of strengthening the capital base and the Solvency Capital Requirement (‘SCR’) ratio of the company to support its future growth; and (ii) for general corporate purposes. Under the general corporate purposes, LifeStar Insurance will be providing a credit facility to LifeStar Holding plc of up to €13 million under a ‘Credit Facility Agreement’ dated 5 May 2021. The credit facility provided by LifeStar Insurance to LifeStar Holding will be used for the following purposes and in the following order of priority: (i) funding the redemption of the 5% unsecured LifeStar Holding plc bonds 2021 (in the event of a shortfall in the net proceeds raised by LifeStar Holding plc from the IPO of LifeStar Insurance); and (ii) in the event that the 5% unsecured LifeStar Holding plc bonds are redeemed in full, to repay the €3 million BOV MDB Covid-19 Assist Loan.
In the event that the total amount of subscriptions for the new LifeStar Insurance bonds is less than €5 million, no allotment of the bonds will be made and all money received from applicants will be returned by LifeStar Insurance acting through the Registrar by latest 31 May 2021. In the event that the total amount of subscriptions exceed €5 million but less than €10 million, LifeStar Insurance will proceed with the listing of the amount of bonds subscribed for and will apply the net proceeds received in the manner and order of priority as set out above.
Offer Period – ‘Preferred Applicants’:
10 May 2021 to 19 May 2021 by 15:00 hours. Any balance of the bonds not subscribed for by ‘Preferred Applicants’ will be made available for subscription by Authorised Financial Intermediaries through an Intermediaries’ Offer.
Offer Period – Intermediaries’ Offer:
21 May 2021 by 12:00 hours (noon)
Official List of the Malta Stock Exchange
The value of investments may increase as well as decrease and past performance is not an indication of future performance. Prospective investors are urged to read the Prospectus issued by LifeStar Insurance plc dated 6 May 2021 including the ‘Risk Factors’ which are found in on pages 29 to 45. Prospective investors are urged to consult an independent financial adviser for advice prior to investing in the bonds.
This webpage has been prepared based on the Prospectus dated 6 May 2021 issued by LifeStar Insurance plc and NO representations or guarantees are made by Rizzo, Farrugia & Co. (Stockbrokers) Ltd with respect to the accuracy of the data. This webpage is for information purposes only. It is NOT intended to be and should NOT be construed as an offer or solicitation to acquire or dispose of any of the securities or issues mentioned herein. Rizzo, Farrugia & Co. (Stockbrokers) Ltd accepts NO responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this webpage.