Travelers 2005 Annual Report Download - page 189

THE ST. PAUL TRAVELERS COMPANIES, INC.AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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10. DEBT (Continued)
These senior notes were sold to qualified institutional buyers as defined under Rule 144A under the
Securities Act of 1933 (theSecurities 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, the Company 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, the Company
initiated the Exchange Offer pursuant to aForm 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 andregistration rights relating to the restricted notes do not apply to the Exchange
Notes. As of May 13, 2003 (the Expiration Date of the Exchange Offer), 99.8%, 99.4% and 100% of the
company’s 5,10, and 30-year restricted notes, respectively, were exchanged for Exchange Notes.
4.50% Convertible Junior Subordinated Notes—In March 2002, the Company issued $893 million
aggregate principal amount of 4.5% convertible juniorsubordinated notes, which will mature on April 15,
2032, unless earlier redeemed, repurchased or converted. Interest is payable quarterly in arrears. The
Company has the option to defer interest payments on the notes for a period not exceeding 20 consecutive
interest periods nor beyond the maturity of the notes. During a deferral period, the amount of interest due
to holders of the notes will continue to accumulate, and such deferred interest payments will themselves
accrue interest. Deferral of any interest can create certain restrictions for the Company. Unless previously
redeemed or repurchased, the notes are convertible into shares of common stock at the option of the
holders at any time after March 27, 2003 and prior to April 15, 2032 if at any time (1) the average of the
daily closing prices of common stock for the 20 consecutive trading days immediately prior to the
conversion date is at least 20% above the then applicable conversion price on the conversion date, (2) the
notes have been called for redemption, (3) specified corporate transactions have occurred, or (4) specified
credit rating events with respect to the notes have occurred. The notes will be convertible into shares of
common stock at a conversion rate of 0.4684 shares of common stock for each $25.00 principal amount of
notes (equivalent to an initial conversion price of $53.37 per share of common stock), subject to
adjustment in certain events. On or after April 18, 2007, the notes may be redeemed at the Company’s
option. The Company is not required to make mandatory redemption or sinking fund payments with
respect to the notes. The notes are general unsecured obligations and are subordinated in right of payment
to all existingand future Senior Indebtedness. The notes are also effectively subordinated to all existing
and future indebtedness and other liabilities of any of the Company’s current or future subsidiaries.
Maturities—Theamount of debt obligations, other than commercial paper, that become due in each of
the next five years is as follows: 2006, $210 million; 2007, $1.02 billion; 2008, $552 million;2009, $143
million; and 2010, $273 million.
Lineof Credit Agreements
The Company maintains an $800 million commercial paper program with back-up liquidity consisting
of a bank credit agreement. In June 2005, the Company entered into a $1.0billion, five-year revolving
credit agreement with a syndicate of financial institutions. The new credit agreement replaced and
consolidated the Company’s three prior bank credit agreements that had collectively provided the
Company access to $1.0 billion of bank credit lines. Pursuant to covenants in the new credit agreement, the
Company must maintain anexcess of consolidated net worth over goodwill and other intangible assets of