Aon Makes Move On Debt Promise

Aon Makes Move On Debt Promise

By Mark E. Ruquet

NU Online News Service, Oct. 5, 2:52 p.m. EST?Chicago-based insurance broker Aon Corp. has made good on its announced effort to reduce debt through bond and stock offerings.

The broker announced that it agreed to privately place $250 million worth of 3.5 percent bonds due 2012. The unsecured bonds are convertible to Aon common stock at a ratio of more than 46.5 shares per $1,000 of bond principal. The firm said this would equal a conversion price of approximately $21.475 per share.

The firm also granted the initial purchasers of the bonds 13 day options to purchase an additional $50 million in bonds. The bond placement is expected to close Thursday.

The broker also announced an offering of 32 million shares of common stock priced at $17.18 per share to raise $550 million. An over-allotment option of 4.8 million shares was granted to the underwriters.

Morgan Stanley, New York City, is handling the offering. Proceeds are intended to be used to repay short-term debt, Aon said.

In its third-quarter report last week, Patrick G. Ryan, Aon's chairman and chief executive officer, announced the broker had abandoned plans to either sell or spin-off its insurance entity, Combined Specialty. It would instead concentrate on raising $1 billion in capital to pay down short- and long-term debt the firm had accumulated.