FBD, the troubled insurance group, said yesterday it had struck an agreement for an injection of €70m by Fairfax Holdings through a convertible bond.
The injection will help FBD to shore up its capital reserves.
The insurance company has been stricken by a record level of claims and last month announced urgent cost-cutting plans after unveiling losses of €96.4m for the first six months of the year.
Shares in the group have more than halved in the past year.
Yesterday, however, the shares rallied by almost 9% to €6.75 after it said the agreement with Fairfax allows for an injection of €70m through a 10-year convertible bond, with an annual coupon of 7%.
The conversion price has been set at €8.50.
The agreement will require the approval of shareholders and, on an interim basis, Fairfax will provide a 12% per annum €70m debt instrument to FBD.
Fiona Muldoon, interim chief executive at FBD, said the injection was “a significant vote of confidence.”
“I am confident that the completion of this transaction helps our business plan with our core farming and small business customers and with our consumer customers also.
“It underpins the board’s strong commitment to maintain healthy capital buffers,” she said.
Ms Muldoon took over the top job on an interim basis earlier this year.
She was previously the high-profile director of credit institutions and insurance supervision at the Central Bank between August 2011 and May 2014.
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