8-KMaterial AgreementsOther EventsExhibits & Filings

ALLSTATE CORP 8-K Report, Material Agreement (May 9, 2007)

Filed May 9, 2007For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

This 8-K filing from The Allstate Corporation, dated May 9, 2007, reports on two significant financial events that occurred on May 3rd and May 8th, 2007. The company entered into a new $1.0 billion unsecured revolving credit facility, replacing an existing $1.0 billion facility. This new credit agreement matures in 2012 and includes options for two one-year extensions, offering flexibility in managing its liquidity. Additionally, Allstate announced the underwriting of $1.0 billion in junior subordinated debentures, split equally between Series A (6.50%) and Series B (6.125%) fixed-to-floating rate debentures due in 2067. These actions indicate strategic financial management, including the refinancing of debt and the issuance of long-term capital.

Key Highlights

  • 1Allstate entered into a new $1.0 billion unsecured revolving credit facility, effective May 8, 2007.
  • 2The new credit facility replaces a previous $1.0 billion facility and has an initial five-year term expiring in 2012.
  • 3The new credit agreement includes options for two one-year extensions, subject to lender approval.
  • 4Allstate has the ability to increase the credit facility by an additional $500 million, subject to syndication.
  • 5The company also entered into an underwriting agreement on May 3, 2007, for $1.0 billion in junior subordinated debentures.
  • 6The debentures are comprised of $500 million Series A (6.50% Fixed-to-Floating Rate) and $500 million Series B (6.125% Fixed-to-Floating Rate), both due 2067.
  • 7These actions reflect Allstate's active management of its debt structure and liquidity position.

Frequently Asked Questions

The new $1.0 billion unsecured revolving credit facility is intended to provide Allstate with continued access to liquidity and replaces an existing credit facility. It offers a five-year term with options for extensions, providing financial flexibility for the company.

Allstate is issuing $1.0 billion in aggregate principal amount of junior subordinated debentures. This is split into $500 million of Series A Debentures with a 6.50% fixed-to-floating rate and $500 million of Series B Debentures with a 6.125% fixed-to-floating rate. Both series mature in 2067.

The new credit agreement is also a $1.0 billion unsecured revolving credit facility, similar in size to the one it replaces. However, the new agreement has an initial term of five years expiring in 2012 with extension options, whereas the previous agreement was a five-year facility dated June 4, 2004. Allstate incurred no material termination penalties when replacing the older agreement.

The fixed-to-floating rate structure means that the interest rate on the debentures will initially be fixed for a period and then may convert to a floating rate based on a benchmark interest rate. This can offer potential advantages depending on future interest rate movements, allowing Allstate to benefit if rates fall after the initial fixed period.