Phoenix Group has generated a total of £486 million of cash from the Group's operating companies in 2016.
Of this total cash generation, £117 million has been generated from the integration of the AXA Wealth pensions and protection businesses ("AXA Businesses") that were acquired on 1 November 2016.
The Group has therefore achieved its 2016 target for cash generation of between £350 million to £450 million, which was announced at the time of its 2015 year end results on 23 March 2016.
"Furthermore, Phoenix reiterates its expectation that it will generate a total of at least £250 million of cash from the integration of the AXA Businesses within 6 months of completion of the acquisition," it said. "During December 2016, the Group repaid the entirety of the £182 million of bank debt used to finance the acquisition of the AXA Businesses.
"In addition, the £250 million short-term bank facility relating to the Abbey Life acquisition has been converted into a tranche of the Group's existing bank Revolving Credit Facility ("RCF"), increasing the size of the RCF from £650 million to £900 million."
During December 2016, £50 million of the RCF was repaid, leaving £850 million of the RCF outstanding as at 31 December 2016. On 21 December 2016, PGH Capital PLC established a £3,000,000,000 Euro Medium Term Note Programme guaranteed on a senior or subordinated basis by Phoenix. PGH Capital PLC has mandated Citigroup Global Markets Limited, J.P. Morgan Securities plc, Lloyds Bank plc, Merrill Lynch International and The Royal Bank of Scotland plc (trading as NatWest Markets) to arrange a series of credit investor meetings in London commencing 12 January 2017.
A benchmark Sterling denominated 5.5 year Tier 3 transaction to be guaranteed on a subordinated basis will follow, subject to market conditions.
The net proceeds from the proposed debt issuance are expected to be used to further reduce the outstanding amount of the Group's bank debt.