Prudential still haggling with FSA

10th May 2010 11:40

Embattled life insurer Prudential is contemplating re-jigging the terms of the funding of its $35.5bn acquisition of AIG's Asian arm in a last-ditched attempt to get approval from the Financial Services Authority.Prudential stunned the market last week when it postponed publication of its prospectus detailing the terms of a $21bn (£14bn) rights issue to fund the AIG Asian (AIA) deal because the FSA still had concerns over the capital position of the enlarged group.Reports over the weekend suggested the Pru has offered to re-classify the $5bn senior debt part of the purchase consideration as more expensive junior debt, while equity investors will be asked for an additional $1bn in the rights issue.While that could be enough for the FSA, doubts still remain over the attitude of investors to the deal with the Pru's management coming under heavy fire for a string of blunders since the deal was unveiled. One significant shareholder is trying to table a resolution to force the Pru's chief executive Tidjane Thiam to stand down, while a number of others have suggested the rights issue will be a flop.