The acquisition of Genworth Financial Inc (NYSE:GNW) by Chinese-based Oceanwide will be delayed further as regulatory hurdles mount. Genworth which focuses on selling long-term motor vehicle insurance and mortgage insurance was seeking to be acquired by Oceanwide Holdings at a price of $2.7 billion. However the approval from government regulators has not been forthcoming.

Due to the expected delay the two firms are now contemplating the mitigation steps that they can take in order for the merger to be approved. According to a senior executive at Genworth, options are also being considered in the event that the deal fails to get approval.

Shareholder approval                 

Oceanwide’s intended acquisition was disclosed close to a year ago and it was approved by shareholders of the company earlier in the year. The planned completion of the deal has however been postponed severally over the issue of regulatory reviews. Twice, the two firms have withdrawn and then refiled their CFIUS’ (Committee on Foreign Investment in the United States – a regulatory agency which scrutinizes acquisition deals of companies in the United States by foreign entities) joint voluntary notice. This is what happened again earlier this week. The refiling process will cause a delay of 30 days.

“We continue to work diligently to secure all required regulatory approvals necessary to complete the transaction. At the same time, we are evaluating options to address our upcoming debt maturities and preserve the value of our businesses in the event the transaction with Oceanwide cannot be completed,” said the president and chief executive officer of Genworth, Tom McInerney.

Debt maturity

At the moment Genworth’s debt is approximately $600 million and it matures next year in May. Besides the acquisition price of $2.7 billion Oceanwide had planned to infuse $1.1 billion in cash to Genworth upon completion of the deal. Some of the options that Genworth might employ include asset sales and refinancing.

Despite the regulatory setbacks Oceanwide’s chairman, Lu Zhiqiang, has reiterated that its interest in Genworth remain strong and is looking forward to introducing some of Genworth’s insurance products in China.

On Monday shares of Genworth Financial Inc fell by 12.47% to close the day at $3.37.