(Alliance News) – M&G PLC said on Monday it would take a series of steps to reduce its debt by £450 million, including buying back bonds and not replacing them.
M&G shares were up 2.1% at 202.50 pence on Monday morning in London. The broader FTSE 100 index was down 0.5%.
The London-based investment manager said the action plan was part of its commitment to reduce its Solvency II debt ratio to 30% or less by 2025.
M&G said it would repay its £300m of dated, resettable Tier 2 bonds at 3.875% in full next month, and would not replace them. It will also launch takeover bids of up to £150 million for its four other Tier 2 bonds.
The company noted that its Solvency II coverage ratio stood at 203% at the end of March, even after paying the final dividend for 2023. M&G expects only a moderate impact from the deleveraging plan on this coverage ratio, saying it will remain “comfortably” above its target operating range of 160% to 190%.
In its annual results last March, M&G reported a £216 million restriction on Tier 2 and Tier 3 capital, and the deleveraging plan will address this, making it “immaterial”.
“Today’s announcement demonstrates the strength of our commitment to investors, and our continued focus on delivering on our three strategic priorities: financial strength, simplification and growth,” said Chief Executive Officer Andrea Rossi .
By Tom Waite, Alliance News Editor
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