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John Hancock agrees to buy up Eagle Material's unsecured loans

09/09/11

A recently announced shelf agreement between Eagle Materials Inc. and John Hancock Life Insurance Company will allow John Hancock to purchase up to $75 million worth of Eagle's unsecured loans, though the agreement includes no language necessitating any transactions between the companies, according to Citybizlist Dallas. Any transactions must total no less than $5 million, and certain closing agreements must be met.

The source notes that additional terms of the agreement include limitations on sales that might endanger Eagle's financial stability and a restriction on the amount of prioritized debt available for transfer, which cannot exceed 20 percent of Eagle's consolidated net worth at the end of any quarter, the source notes.

The shelf agreement also includes language that ensures John Hancock's ability to pay the principal, interest and other performance obligations.

According to the Federal Trade Commission, unsecured debts are credit debts not backed by assets. The carefully constructed agreement between the parties, in this case, is designed to alleviate the pressure of Eagle's unsecured debts while John Hancock is in a stable enough financial position to take on the loans, eventually profiting from the interest.

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