Travelers 2003 Annual Report Download - page 68

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66
In August 2002, CIRI issued $49.7 million aggregate principal amount of 6.0% convertible notes which will mature on
December 31, 2032 unless earlier redeemed or repurchased. See note 8 of notes to Travelers consolidated financial
statements for a further discussion.
In December 2002, TPC entered into a loan agreement with an unaffiliated lender and borrowed $550.0 million under
a promissory note due in January 2004. The Promissory Note carried a variable interest rate of LIBOR plus 25 basis
points per annum. On February 5, 2003, TPC issued $550.0 million of Floating Rate Notes due in February 2004. The
proceeds from these notes were used to repay the $550.0 million due on the Promissory Note. The Floating Rate Notes
also carried a variable interest rate of LIBOR plus 25 basis points per annum. On March 14, 2003 and June 17, 2003,
Travelers repurchased $75.0 million and $24.0 million, respectively, of the Floating Rate Notes at par plus accrued
interest. The remaining $451.0 million were repaid on September 5, 2003.
On March 11, 2003, TPC issued $1.400 billion of senior notes comprising $400.0 million of 3.75% senior notes due
March 15, 2008, $500.0 million of 5.00% senior notes due March 15, 2013 and $500.0 million of 6.375% senior notes
due March 15, 2033. The notes pay interest semi-annually on March 15 and September 15 of each year, beginning
September 15, 2003, are senior unsecured obligations and rank equally with all of TPC’s other senior unsecured
indebtedness. TPC may redeem some or all of the notes prior to maturity by paying a “make-whole” premium based
on U.S. Treasury rates. The net proceeds from the sale of these notes were contributed to its primary subsidiary,
TIGHI, so that TIGHI could prepay and refinance $500.0 million of 3.60% indebtedness to Citigroup and to redeem
$900.0 million aggregate principal amount of TIGHI’s 8.00% to 8.08% junior subordinated debt securities held by
subsidiary trusts. These trusts, in turn, used these funds to redeem $900.0 million of preferred capital securities on
April 9, 2003.
These senior notes were sold to qualified institutional buyers as defined under Rule 144A under the Securities Act of
1933 (the Securities Act) and outside the United States in reliance on Regulation S under the Securities Act.
Accordingly, the notes (the restricted notes) were not registered under the Securities Act or any state securities laws
and could not be transferred or resold except pursuant to certain exemptions. As part of this offering, TPC agreed to
file a registration statement under the Securities Act to permit the exchange of the notes for registered notes (the
Exchange Notes) having terms identical to those of the senior notes described above (Exchange Offer). On April 14,
2003, TPC initiated the Exchange Offer pursuant to a Form S-4 that was filed with the Securities and Exchange
Commission. Accordingly, each series of Exchange Notes has been registered under the Securities Act, and the
transfer restrictions and registration rights relating to the restricted notes do not apply to the Exchange Notes.