EUROPE - Zurich Financial Services has launched a new market instrument aimed at institutional investors.
The Swiss firm is introducing around CHF 600m Market Index-Linked Exchangeable Securities (MILES). The MILES, exchangeable into new Zurich shares, will expire in three years and are linked to the SMI total return index (SMIC index).
The structure of the MILES allows investors to fully participate in the performance of the SMIC total return index (SMIC). In addition, investors receive an annual out-performance premium in cash of 1% of the SMIC index level fixed at issue.
The instrument is exchangeable at any time until maturity into Zurich shares. The number of shares delivered will depend on the performance of the Zurich shares relative to the SMIC index.
Günther Gose, Zurich’s chief financial officer, said: The MILES exchangeable into our own stock is an attractive instrument for index-oriented institutional investors and is an innovative tool for the management of Zurich's capital base.
“The MILES strengthens our balance sheet by increasing our equity, provides liquidity and reflects our confidence in the future performance of the Zurich share price.”
Bookbuilding lasts until January 21, 2002. Preliminary trading of the MILES is expected on January 25, 2002.
UBS Warburg is acting as lead manager and sole bookrunner of the transactions.
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