Unum 2007 Annual Report Download - page 81

Unum 2007 Annual Report 79
Debt
At December 31, 2007, we had long-term debt, including senior secured notes and junior subordinated debt securities, totaling $2,515.2 million
and short-term debt of $175.0 million due in May 2008. Our leverage ratio, when calculated excluding the non-recourse debt and associated
capital of Tailwind Holdings and Northwind Holdings and also allowing 50 percent equity credit for the adjustable conversion-rate equity
security units that were still outstanding at the beginning of the year, was 21.4 percent at the end of 2007, compared to 26.2 percent at
the beginning of 2007, subsequent to our cumulative effect adjustment to equity for the adoption of the new accounting policies related
to deferred acquisition costs and income taxes. Our leverage ratio, when calculated using consolidated debt to total consolidated capital,
was 26.4 percent at the end of 2007, compared to 28.8 percent at the beginning of 2007.
On October 31, 2007, Northwind Holdings issued $800.0 million floating rate, insured, senior, secured notes in a private offering.
Recourse for the payment of principal, interest, and other amounts due on the notes will be limited to the assets of Northwind Holdings,
consisting primarily of the stock of its sole subsidiary Northwind Re, a Vermont special purpose financial captive insurance company.
Northwind Holdings’ ability to meet its payment obligations under the notes will be dependent principally upon its receipt of dividends
from Northwind Re. The ability of Northwind Re to pay dividends to Northwind Holdings will depend on its satisfaction of applicable
regulatory requirements and on the performance of the reinsured claims of Provident, Paul Revere and Unum America (the ceding insurers)
reinsured by Northwind Re. None of Unum Group, the ceding insurers, Northwind Re or any other affiliate of Northwind Holdings is an
obligor or guarantor on the notes.
On November 1, 2006, Tailwind Holdings issued $130.0 million floating rate, insured, senior, secured notes in a private offering.
Recourse for the payment of principal, interest, and other amounts due on the notes will be limited to the assets of Tailwind Holdings,
consisting primarily of the stock of its sole subsidiary Tailwind Re, a South Carolina special purpose financial captive insurance company.
Tailwind Holdings’ ability to meet its payment obligations under the notes will be dependent principally upon its receipt of dividends from
Tailwind Re. The ability of Tailwind Re to pay dividends to Tailwind Holdings will depend on its satisfaction of applicable regulatory
requirements and on the performance of the reinsured claims of Unum America reinsured by Tailwind Re. None of Unum Group, Unum
America, Tailwind Re or any other affiliate of Tailwind Holdings is an obligor or guarantor on the notes. The balance outstanding on these
notes was $112.5 million at December 31, 2007.
In the fourth quarter of 2007, we purchased and retired $17.5 million of our outstanding 6.75% notes scheduled to mature in 2028.
Pursuant to a cash tender offer, we purchased and retired $23.5 million aggregate liquidation amount of the 7.405% junior subordinated
debt securities due 2038; $99.9 million aggregate principal amount of the 7.625% notes due 2011; $210.5 million aggregate principal
amount of the 7.375% notes due 2032; and $66.1 million aggregate principal amount of the 6.75% notes due 2028. We also called and
retired all $150.0 million principal amount of our outstanding 7.25% notes scheduled to mature in 2032.
Also in 2007, in open market transactions, we purchased $34.5 million of our outstanding 6.85% notes due 2015 and $17.5 million of
our outstanding senior secured notes issued by Tailwind Holdings. In February 2007, the scheduled remarketing of the senior note element
of the 2004 units occurred, as stipulated by the terms of the original offering, and we reset the interest rate of $300.0 million of senior
notes due May 15, 2009 to 5.859%. We purchased $150.0 million of the senior notes in the remarketing which were subsequently retired.
In May 2007, we settled the purchase contract element of the units by issuing 17.7 million shares of common stock. We received proceeds
of approximately $300.0 million from the transaction.
In the fourth quarter of 2007, we entered into a $400.0 million unsecured revolving credit facility. At December 31, 2007, we had no
borrowings outstanding on this facility. The facility has a 364 day tenor and a one year term out option. Within this facility is a $100.0 million
dollar letter of credit sub-limit.