Travelers 2004 Annual Report Download - page 172

THE ST. PAUL TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
10. DEBT, Continued
The following table presents the unamortized fair value adjustment and the related effective interest rate on
the debt instruments acquired in the merger:
(in millions) Issue Rate Maturity Date
Unamortized
Fair Value Purchase
Accounting
Adjustment at
December 31, 2004
Effective
Interest Rate
to Maturity
Senior notes ............................... 7.875% Apr 2005 $ 5 1.645%
7.125% Jun 2005 2 1.881%
5.750% Mar 2007 33 2.625%
5.250% Aug 2007 11 1.389%
8.125% Apr 2010 45 4.257%
Medium-term notes ........................ 6.4%-7.4% Through 2010 34 3.310%
Subordinated debentures ................... 7.625% Dec 2027 22 6.147%
8.470% Jan 2027 7 7.660%
8.500% Dec 2045 16 6.362%
8.312% Jul 2046 20 6.362%
7.600% Oct 2050 42 7.057%
Nuveen Investments’ debt ................... 4.220% Sep 2008 6 3.674%
Zero Coupon convertible notes ............... 4.500% Mar 2009 2 4.175%
Unamortized fair value adjustment ............. $245
Description of Debt
Commercial Paper—The Company maintains an $800 million commercial paper program with $1 billion of
back-up liquidity, consisting entirely of bank credit agreements. Interest rates on commercial paper issued in
2004 ranged from 1.1% to 2.8%.
Medium-Term Notes—The medium-term notes outstanding at December 31, 2004 bear interest rates ranging
from 6.4% to 7.4%, with a weighted average rate of 6.8%. Maturities range from 5 to 15 years after the issuance
dates. During 2004, medium-term notes having a par value of $59 million matured or were repurchased.
5.25% Senior Notes—In July 2002, concurrent with the issuance of 17.8 million of SPC common shares in a
public offering, SPC issued 8.9 million equity units, each having a stated amount of $50, for gross consideration
of $443 million. Each equity unit initially consists of a forward purchase contract for the Company’s common
stock (maturing in July 2005), and an unsecured $50 senior note of the company (maturing in 2007). Total annual
distributions on the equity units are at the rate of 9.00%, consisting of interest on the note at a rate of 5.25% and
fee payments under the forward contract of 3.75%. The forward contract requires the investor to purchase, for
$50, a variable number of shares of the Company’s common stock on the settlement date of August 16, 2005.
The number of shares to be purchased will be determined based on a formula that considers the average trading
price of the Company’s stock immediately prior to the time of settlement in relation to the $24.20 per share price
of common stock at the time of the offering. Had the settlement date been December 31, 2004, the Company
would have issued approximately 15 million common shares based on the average trading price of the
Company’s common stock immediately prior to that date.
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