British insurer Prudential unveiled its $21 billion cash call as it tries to put its takeover of AIG's Asian unit back on track, launching a charm offensive to woo wary shareholders.Britain's Financial Services Authority forced the country's largest insurer to tweak its $35.5 billion offer for AIA in an embarrassing and unprecedented last-minute delay nearly two weeks ago, telling it to boost capital.Prudential Chief Executive Tidjane Thiam -- in the job less than a year -- on Monday laid out his agreement with the British watchdog, a key step to rescue the deal that will help bailed-out rival AIG to repay the U.S. government.Shareholders remained sceptical of the heavily discounted share sale, the largest ever to finance a takeover. But Thiam was confident of his plans to make Prudential the largest foreign-owned insurer in rapidly growing Asia."We were a little bit like a fighter fighting with one arm behind his back. We were handicapped, we weren't able to answer a lot of questions," Thiam said of conversations with shareholders in recent weeks, adding investors had given Prudential "the benefit of the doubt.""Overall we feel confident they will support this. We always knew this would be a long, complex and challenging process -- what we are attempting has never been attempted before."Prudential will benefit from money already set aside when AIG was considering an IPO of its Asian unit American International Assurance (AIA), Thiam said.Prudential will sell new shares at 104 pence, a 39 percent discount to the theoretical ex-rights price (TERP) -- in line with rights issues in the financial sector through the crisis -- and an almost 81 percent discount to Friday's close.But modest improvements to synergies and hints at Asian disposals may not be enough to win over the 75 percent shareholder support needed to secure the deal and salvage the tarnished credibility of its top management."The vote is a really, really difficult one to call... It's a big issue and we are at a very volatile point in markets," said one top-20 investor, declining to be named.Shareholders will vote on June 7.As part of the charm offensive, Prudential and its banks will offer fund managers a fat sub-underwriting fee of 2 percent, sources familiar with the situation told Reuters. They normally get 1.5-1.75 percent out of a total 3.5 percent.Shares in Prudential, supported in recent weeks on bets the rights issue could be cancelled, were down in early trade but recovered to trade roughly flat at around 542 pence, underperforming the European sector.Despite speculation on the market, frantic negotiations over the past few weeks have not resulted in changes to the value of Prudential's record offer, but it has tweaked the terms to boost the level of capital held by the group and reassure regulators.Prudential will also issue one or more bonds to help finance the deal. AIG has agreed to buy up to $1.88 billion worth of the debt if Prudential cannot sell it to the market. This would lower the roughly $25 billion cash component.Beyond the deal, Prudential has secured a 1 billion pound debt facility -- dubbed the "armageddon fund" -- to lift its solvency capital if it hits trouble.Prudential raised its synergy targets, saying it now expects annualised new business profit revenue synergies of $800 million from an initial $700 million and cost synergies of $370 million, up from $340 million, during 2013.Those numbers are unlikely to blow away investors, but the insurer hinted at scope for further capital releases and confirmed the expected disposal of assets including AIG's unit in India -- where Tata Group has a right of first refusal and is already in "very advanced talks around price".A sale of the enlarged group's assets in China -- where it will not be allowed to retain 100 percent of the business -- could take longer, but the Indian unit could be sold around the time of completion in the third quarter.Thiam declined to comment on speculation Prudential could sell its British unit as it continues to focus on Asia, but said discipline would be applied across the board.Prudential gave no update on changes to its management structure as a result of the deal, but said it would bring in "appropriate" retention plans to secure key employees. Together, AIG and Prudential employ 550,000 sales agents across Asia.The rights issue is underwritten by Credit Suisse, HSBC and JP Morgan. Boutique Ondra Partners provided advice to Prudential. Nomura and Lazard also worked for Prudential.(Additional reporting by Douwe Miedema, Myles Neligan, Raji Menon and Paul Hoskins; Editing by Erica Billingham)($1 = 0.6859 pound)News posted by www.newsinfoline.com
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