Great-West Lifeco Inc. said Monday that it is making an offer to buy backup to 170,000 of the outstanding Great-West Life Trust Securities – Series A (GREATs) of Great-West Life Capital Trust and up to 180,000 of the outstanding Canada Life Capital Securities – Series A (CLiCS) of Canada Life Capital Trust.

If more than 170,000 GREATs or 180,000 CLiCS are tendered to the offer, the tenders will be subject to pro ration, Great-West Lifeco said.

The insurance holding company also announced that it has entered into an agreement with a syndicate of agents co-led by RBC Capital Markets and BMO Capital Markets for the sale of $200 million aggregate principal amount of debentures on an agency basis.

The debentures will be dated November 16, 2009. They will be issued at par and will mature on Nov. 16, 2039. Interest on the debentures at the rate of 5.998% per annum will be payable semi-annually in arrears on May 16 and November 16 in each year, commencing May 16, 2010, until Nov. 16, 2039.

The net proceeds will be used by the company for general corporate purposes and to augment the company’s current liquidity position.

The syndicate of agents will include RBC Capital Markets, BMO Capital Markets, CIBC World Markets Inc., Scotia Capital Inc., TD Securities Inc., Merrill Lynch Canada Inc., National Bank Financial Inc., Casgrain & Company Limited, and Desjardins Securities Inc.

Holders of GREATs and CLiCS will have the opportunity to tender all or a portion of their securities for either cash, or a mix of debentures and cash.

Great-West Lifeco will announce the purchase prices for the GREATs and the CLiCS on December 15.

The purchase price for the GREATs will provide a yield equal to the yield of the 2% Government of Canada bond due Sept., 1, 2012, plus a spread of 1.20%. The purchase price for the CLiCS will provide a yield on each CLiCS to June 30, 2012 equal to the yield of the 3.75% Government of Canada bond due June 1, 2012, plus a spread of 1.05%.

In addition, the debentures to be issued under the offer will provide a yield to maturity equal to the yield to maturity of a 5% Government of Canada due June 1, 2037 plus an equivalent credit spread to the debentures to be determined and included in the offer.

The take up of GREATs and CLiCS tendered to the offer for cash will be financed from the Great-West Lifeco’s existing cash reserves. If the offer is fully taken up the company will acquire approximately 48.6% of the outstanding GREATs and 60% of the outstanding CLiCS. GREATs and CLiCS acquired pursuant to the offer will not be cancelled and will remain outstanding.

The offer will expire on or about December 16.

IE