Allstate 2013 Annual Report Download - page 261

including the repurchase of the Company’s common stock through open market purchases from time to time or through
an accelerated repurchase program.
The Subordinated Debentures may be redeemed (i) in whole at any time or in part from time to time on or after
January 15, 2023 at their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption;
provided that if the Subordinated Debentures are not redeemed in whole, at least $25 million aggregate principal
amount must remain outstanding, or (ii) in whole, but not in part, prior to January 15, 2023, within 90 days after the
occurrence of certain tax and rating agency events, at their principal amount or, if greater, a make-whole redemption
price, plus accrued and unpaid interest to, but excluding, the date of redemption.
Interest on the Subordinated Debentures is payable quarterly at the stated fixed annual rate to January 14, 2023, or
any earlier redemption date, and then at an annual rate equal to the three-month LIBOR plus 3.165%. The Company may
elect to defer payment of interest on the Subordinated Debentures for one or more consecutive interest periods that do
not exceed five years. During a deferral period, interest will continue to accrue on the Subordinated Debentures at the
then-applicable rate and deferred interest will compound on each interest payment date. If all deferred interest on the
Subordinated Debentures is paid, the Company can again defer interest payments.
On January 11, 2012, the Company issued $500 million of 5.20% Senior Notes due 2042. The proceeds of this
issuance were used for general corporate purposes, including the repayment of $350 million of 6.125% Senior Notes on
February 15, 2012.
The Company has outstanding $500 million of Series A 6.50% and $500 million of Series B 6.125%
Fixed-to-Floating Rate Junior Subordinated Debentures (together the ‘‘Debentures’’). The scheduled maturity dates for
the Debentures are May 15, 2057 and May 15, 2037 for Series A and Series B, respectively, with a final maturity date of
May 15, 2067. The Debentures may be redeemed (i) in whole or in part, at any time on or after May 15, 2037 or May 15,
2017 for Series A and Series B, respectively, at their principal amount plus accrued and unpaid interest to the date of
redemption, or (ii) in certain circumstances, in whole or in part, prior to May 15, 2037 and May 15, 2017 for Series A and
Series B, respectively, at their principal amount plus accrued and unpaid interest to the date of redemption or, if greater,
a make-whole price.
Interest on the Debentures is payable semi-annually at the stated fixed annual rate to May 15, 2037 and May 15,
2017 for Series A and Series B, respectively, and then payable quarterly at an annual rate equal to the three-month
LIBOR plus 2.12% and 1.935% for Series A and Series B, respectively. The Company may elect at one or more times to
defer payment of interest on the Debentures for one or more consecutive interest periods that do not exceed 10 years.
Interest compounds during such deferral periods at the rate in effect for each period. The interest deferral feature
obligates the Company in certain circumstances to issue common stock or certain other types of securities if it cannot
otherwise raise sufficient funds to make the required interest payments. The Company has reserved 75 million shares of
its authorized and unissued common stock to satisfy this obligation.
In connection with the issuance of the Debentures, the Company entered into replacement capital covenants
(‘‘RCCs’’). These covenants were not intended for the benefit of the holders of the Debentures and could not be enforced
by them. Rather, they were for the benefit of holders of one or more other designated series of the Company’s
indebtedness (‘‘covered debt’’), initially the 6.90% Senior Debentures due 2038. At the time of the issuance of the
Subordinated Debentures, the Company terminated the existing RCCs and entered into new RCCs designating the
6.75% Senior Debentures due 2018 as the covered debt. Pursuant to the new RCCs, the Company has agreed that it will
not repay, redeem, or purchase the Debentures on or before May 15, 2067 and May 15, 2047 for Series A and Series B,
respectively, (or such earlier date on which the new RCCs terminate by their terms) unless, subject to certain
limitations, the Company has received net cash proceeds in specified amounts from the sale of common stock or certain
other qualifying securities. The promises and covenants contained in the new RCC will not apply if (i) S&P upgrades the
Company’s issuer credit rating to A or above, (ii) the Company redeems the Debentures due to a tax event, (iii) after
notice of redemption has been given by the Company and a market disruption event occurs preventing the Company
from raising proceeds in accordance with the new RCCs, or (iv) if the Company repurchases or redeems up to 10% of the
outstanding principal of the Debentures in any one-year period, provided that no more than 25% will be so repurchased,
redeemed or purchased in any ten-year period.
The new RCCs terminate in 2067 and 2047 for Series A and Series B, respectively. The new RCCs will terminate
prior to their scheduled termination date if (i) the applicable series of Debentures is no longer outstanding and the
Company has fulfilled its obligations under the new RCCs or they are no longer applicable, (ii) the holders of a majority
of the then-outstanding principal amount of the then-effective series of covered debt consent to agree to the
termination of the new RCCs, (iii) the Company does not have any series of outstanding debt that is eligible to be
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