Genworth deal delayed yet again, as some approvals still needed

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The closing of the Genworth Financial-China Oceanwide transaction, while closer than ever to actually occurring, remains on hold as the parties announced they will not meet today's deadline.

A Chinese regulator, the National Development and Reform Commission, has reapproved the transaction, which will allow China Oceanwide to move forward on the remaining regulatory steps. That includes seeking clearance for currency conversion and transfer of the balance of the transaction funds from China's State Administration of Foreign Exchange.

The parties also need to get a confirmation from Delaware's Department of Insurance that the acquisition of a Genworth subsidiary domiciled in that state can proceed under the existing approval.

As a result, Genworth and China Oceanwide are negotiating another extension of the transaction deadline, this time until Dec. 31. They are also working on a 90-day extension of each of the three $500 million tranches that are part of the post-closing capital plan for Genworth.

"We are encouraged that Oceanwide continues to make progress on the remaining steps needed to complete the transaction," Tom McInerney, Genworth president and CEO, said in a press release. "Although I am disappointed we could not close by Nov. 30, we are hopeful that we can close in the first half of December, but have agreed to an end date of Dec. 31 to allow more time for the remaining regulatory approvals to be achieved."

Fannie Mae and Freddie Mac have reapproved the transaction. Genworth and China Oceanwide will seek their non-objection to the adjusted capital contributions schedule.

Investors also were apparently relieved by the announcement. Worries over the transaction closing drove Genworth's stock price down to a close of $4.15 on Nov. 27. But after the latest delay was announced, Genworth's stock opened at $4.55 per share, the level it had been trading at in recent weeks.

The latest delay in the now-four-year-old agreement between the parties happened one month after China Oceanwide cleared a major hurdle by providing documentation showing that its financing provider, Hony Capital, would be able to obtain the $1.8 billion in offshore funding needed to close the deal as scheduled. The Nov. 2 announcement noted that the prior NDRC approval had expired and a new extension had been filed.

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