MetLife 2008 Annual Report Download - page 189

On August 6, 2008, the Series A Trust was dissolved and $32 million of the Series A junior subordinated debentures were returned to
the Holding Company concurrently with the cancellation of the $32 million of trust common securities of the Series A Trust held by MetLife,
Inc. Upon dissolution of the Series A Trust, the remaining $1,035 million of Series A junior subordinated debentures were distributed to the
holders of the trust preferred securities and such trust preferred securities were cancelled. In connection with the remarketing transaction
on August 15, 2008, the remaining $1,035 million MetLife, Inc. Series A junior subordinated debentures were modified, as permitted by
their terms, to be 6.817% senior debt securities Series A, due August 15, 2018. The Company did not receive any proceeds from the
remarketing. See also Notes 10 and 13.
On February 5, 2009, the Series B Trust was dissolved and $32 million of the Series B junior subordinated debentures were returned to
the Holding Company concurrently with the cancellation of the $32 million of trust common securities of the Series B Trust held by MetLife,
Inc. Upon dissolution of the Series B Trust, the remaining $1,035 million of Series B junior subordinated debentures were distributed to the
holders of the trust preferred securities and such trust preferred securities were cancelled. In connection with the remarketing transaction
on February 17, 2009, the remaining $1,035 million MetLife, Inc. Series B junior subordinated debentures were modified, as permitted by
their terms, to be 7.717% senior debt securities Series B, due February 15, 2019. The Company did not receive any proceeds from the
remarketing. See also Notes 10, 13 and 25.
Interest expense on the junior subordinated debentures underlying the common equity units was $84 million, $104 million and
$104 million for the years ended December 31, 2008, 2007 and 2006, respectively.
Other Junior Subordinated Debentures Issued by the Holding Company
In April 2008, MetLife Capital Trust X, a VIE consolidated by the Company, issued exchangeable surplus trust securities (the “2008
Trust Securities”) with a face amount of $750 million. The 2008 Trust Securities will be exchanged into a like amount of the Holding
Company’s junior subordinated debentures on April 8, 2038, the scheduled redemption date, mandatorily under certain circumstances,
and at any time upon the Holding Company exercising its option to redeem the securities. The 2008 Trust Securities will be exchanged for
junior subordinated debentures prior to repayment. The final maturity of the debentures is April 8, 2068. The Holding Company may cause
the redemption of the 2008 Trust Securities or debentures (i) in whole or in part, at any time on or after April 8, 2033 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 April 8, 2033
at their principal amount plus accrued and unpaid interest to the date of redemption or, if greater, a make-whole price. Interest on the 2008
Trust Securities or debentures is payable semi-annually at a fixed rate of 9.25% up to, but not including, April 8, 2038, the scheduled
redemption date. In the event the 2008 Trust Securities or debentures are not redeemed on or before the scheduled redemption date,
interest will accrue at an annual rate of 3-month LIBOR plus a margin equal to 5.540%, payable quarterly in arrears. The Holding Company
has the right to, and in certain circumstances the requirement to, defer interest payments on the 2008 Trust Securities or debentures for a
period up to ten years. Interest compounds during such periods of deferral. If interest is deferred for more than five consecutive years, the
Holding Company may be required to use proceeds from the sale of its common stock or warrants on common stock to satisfy its
obligation. In connection with the issuance of the 2008 Trust Securities, the Holding Company entered into a replacement capital covenant
(“RCC”). As a part of the RCC, the Holding Company agreed that it will not repay, redeem, or purchase the debentures on or before April 8,
2058, unless, subject to certain limitations, it has received proceeds from the sale of specified capital securities. The RCC will terminate
upon the occurrence of certain events, including an acceleration of the debentures due to the occurrence of an event of default. The RCC
is not intended for the benefit of holders of the debentures and may not be enforced by them. The RCC is for the benefit of holders of one
or more other designated series of its indebtedness (which will initially be its 5.70% senior notes due June 15, 2035). The Holding
Company also entered into a replacement capital obligation which will commence in 2038 and under which the Holding Company must use
reasonable commercial efforts to raise replacement capital through the issuance of certain qualifying capital securities. Issuance costs
associated with the offering of the 2008 Trust Securities of $8 million have been capitalized, are included in other assets, and are amortized
using the effective interest method over the period from the issuance date of the 2008 Trust Securities until their scheduled redemption.
Interest expense on the 2008 Trust Securities was $51 million for the year ended December 31, 2008.
In December 2007, MetLife Capital Trust IV, a VIE consolidated by the Company, issued exchangeable surplus trust securities (the
“2007 Trust Securities”) with a face amount of $700 million and a discount of $6 million ($694 million). The 2007 Trust Securities will be
exchanged into a like amount of Holding Company junior subordinated debentures on December 15, 2037, the scheduled redemption
date; mandatorily under certain circumstances; and at any time upon the Holding Company exercising its option to redeem the securities.
The 2007 Trust Securities will be exchanged for junior subordinated debentures prior to repayment. The final maturity of the debentures is
December 15, 2067. The Holding Company may cause the redemption of the 2007 Trust Securities or debentures (i) in whole or in part, at
any time on or after December 15, 2032 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 December 15, 2032 at their principal amount plus accrued and unpaid interest to the
date of redemption or, if greater, a make-whole price. Interest on the 2007 Trust Securities or debentures is payable semi-annually at a fixed
rate of 7.875% up to, but not including, December 15, 2037, the scheduled redemption date. In the event the 2007 Trust Securities or
debentures are not redeemed on or before the scheduled redemption date, interest will accrue at an annual rate of 3-month LIBOR plus a
margin equal to 3.96%, payable quarterly in arrears. The Holding Company has the right to, and in certain circumstances the requirement
to, defer interest payments on the 2007 Trust Securities or debentures for a period up to ten years. Interest compounds during such
periods of deferral. If interest is deferred for more than five consecutive years, the Holding Company may be required to use proceeds from
the sale of its common stock or warrants on common stock to satisfy its obligation. In connection with the issuance of the 2007 Trust
Securities, the Holding Company entered into a RCC. As a part of the RCC, the Holding Company agreed that it will not repay, redeem, or
purchase the debentures on or before December 15, 2057, unless, subject to certain limitations, it has received proceeds from the sale of
specified capital securities. The RCC will terminate upon the occurrence of certain events, including an acceleration of the debentures due
to the occurrence of an event of default. The RCC is not intended for the benefit of holders of the debentures and may not be enforced by
them. The RCC is for the benefit of holders of one or more other designated series of its indebtedness (which will initially be its
F-66 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)