8-KOther EventsExhibits & Filings

ALLSTATE CORP 8-K Report, Corporate Update (Jan 10, 2013)

Filed January 10, 2013For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

The Allstate Corporation (ALL) filed an 8-K on January 10, 2013, reporting two significant events related to its debt structure. Firstly, the company successfully completed a public offering of $500 million in 5.100% Fixed-to-Floating Rate Subordinated Debentures due 2053. This issuance adds to the company's long-term debt. Secondly, the filing details changes to its Replacement Capital Covenants. The original covenants, established in 2007, were terminated and replaced with new covenants. The newly issued debentures became 'covered debt' under the original covenants, which were then terminated with the consent of the debenture holders. New Replacement Capital Covenants were subsequently put in place, primarily benefiting holders of the 6.75% Senior Debentures due 2018, by restricting the early repayment of certain junior subordinated debentures unless specific equity-based financing conditions are met.

Key Highlights

  • 1Allstate Corp. successfully issued $500 million of 5.100% Fixed-to-Floating Rate Subordinated Debentures due 2053.
  • 2The new debentures are subordinated debt, adding to the company's long-term liabilities.
  • 3The company terminated its existing Replacement Capital Covenants dated May 10, 2007.
  • 4The termination of the original covenants was approved by holders of the 'covered debt' at the time, which included the newly issued debentures.
  • 5New Replacement Capital Covenants were established, primarily benefiting holders of the 6.75% Senior Debentures due 2018.
  • 6These new covenants place restrictions on Allstate's ability to repay or repurchase certain junior subordinated debentures early, linking such actions to the receipt of specific net cash proceeds from equity or qualifying securities.
  • 7The new covenants are separate contractual arrangements and not part of the 2018 Senior Debentures' indenture.

Frequently Asked Questions

This 8-K filing announces the completion of a $500 million subordinated debenture issuance by Allstate Corporation and details changes to the company's Replacement Capital Covenants, including the termination of old covenants and the establishment of new ones.

The newly issued debentures have an aggregate principal amount of $500 million, carry a fixed interest rate of 5.100% that will convert to a floating rate, and mature in 2053. They are considered subordinated debt.

The new covenants restrict Allstate's ability to repay or repurchase certain junior subordinated debentures before their scheduled maturity, unless specific conditions related to equity financing are met. This aims to protect the interests of holders of the 6.75% Senior Debentures due 2018, who are the primary beneficiaries of these new covenants.

The issuance of $500 million in subordinated debentures increases Allstate's total debt and financial leverage. As subordinated debt, it ranks lower than senior debt in the event of liquidation but typically carries a higher interest rate to compensate for the increased risk.