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9 December 2019

Response to media coverage

Pursuant to the Rules of the Ljubljana Stock Exchange d.d., Ljubljana, and the Market in Financial Instruments Act, Sava Re d.d., Dunajska 56, Ljubljana, hereby announces the following:

Regarding the newspaper article published in the Delo daily newspaper under the title “Why do state-owned companies pay more for loans” and the article published in the Delo online edition “Brothers in business and other accusations for Petrol”, both articles published on 9 December 2019, Sava Re d.d. responds that certain pieces of information published in the above articles relating to its subordinate bond issue are inaccurate and misleading.

1. In October 2019, Sava Re d.d. issued Tier II eligible subordinated bonds worth EUR 75 million, which count towards the Company’s additional capital. The interest rate of the subordinated bonds is not 4.6%, as stated in both articles, but a fixed annual interest rate of 3.75% for the first 10 years. The bond issue matures in 20 years; however, Sava Re may opt to redeem the bonds early, in November 2029. If Sava Re opts against the first call after ten years, the annual interest rate thereafter will be a three-month Euribor plus 4.683%. 

2. We must also publicly deny that the price (interest rate) is of secondary importance to the issuer. From the day the book of payments into the subordinated bonds was opened, Sava Re managed to lower the price to the final rate of 3.75% because of the large demand from international and Slovenian investors. We would underline that Sava Re decided for a listing on the Luxembourg Stock Exchange because it assessed that the Slovenian market was too small for larger subordinated bond issues. For this reason, the Sava Re bonds were predominately purchased by international investors.

3. It is important to emphasise that, by their very nature, subordinated bonds have a higher required yield because they are subordinated to the ordinary liabilities of the Company in case of bankruptcy or liquidation and count towards its additional capital (Tier II capital under Solvency II). Therefore, it is inconsistent that the article compares the yield of subordinated bonds to the average interest rate on corporate loans above EUR 1 million as published by the Bank of Slovenia (1.8% for Slovenia and 1.1% for the EMU), as the latter includes both secured and unsecured loans.

4. Sava Re has publicly announced its intention to use the proceeds for general corporate purposes of the Sava Insurance Group and for the optimisation of its capital structure – the subordinated bond issue of Sava Re is by no way intended for its "...owners or any other “related” parties, let alone any future – target owners...”.

To ensure that the public is informed in an objective manner regarding the issues raised by the Delo daily newspaper, Sava Re will request that Delo publish this response.