Becomes Largest Shareholder of FedNat Post Highly Synergistic Transaction
New Growth Strategy Targeting Asymmetric Risk/Reward Opportunities
Strategic Plan Focused on Reinsurance and Investment Management
1347 PIH will now operate as a diversified holding company of reinsurance and investment management businesses focused on building a permanent and growing base of asymmetric risk/reward opportunities for its shareholders. The Board of Directors continues to evaluate the alternatives for the use of proceeds received from the sale of Maison, which are expected to include using a portion of the cash consideration to conduct the business of its reinsurance subsidiary,
Terms of the Transaction / Financial Details
$51.0 millionpurchase price was comprised of a 50/50 mix of cash and stock, including 1,773,102 shares of FedNatcommon stock, which represents approximately 12% of pro forma shares outstanding. The number of shares issued to 1347 PIH was based on the volume-weighted average closing price of FedNatcommon stock for the 20 trading days prior to closing. The resale of the shares issued will be enabled through a subsequent registration statement and will be subject to a five-year Standstill Agreement.
- Post close, 1347 PIH’s cash is approximately
$31.1 millionand investments are $29.5 million, which includes the previously mentioned FedNatcommon stock and private limited partnerships.
- The preferred shareholder equity is
$17.5 millionand the common shareholder equity is approximately $40.4 million.
- The estimated book value per share of 1347 PIH following the closing of the transaction is approximately
$6.67per share based on $40.4 millionof common shareholder equity post-closing and approximately 6.1 million shares outstanding.
- In addition to the purchase price, 1347 PIH received five-year rights of first refusal to provide reinsurance on up to 7.5% of any layer in FedNat’s catastrophe reinsurance program.
- 1347 PIH entered into a five-year agreement to provide investment advisory services to
- 1347 PIH agreed to a non-compete for five years with respect to
Alabama, Florida, Georgia, Louisiana, South Carolinaand Texas. The non-compete will not prohibit 1347 PIH from entering into reinsurance contracts in the states subject to non-competition.
- 1347 PIH retained CFO
John Hilland Controller Brian Bottjerfollowing the closing of the transaction.
- Additional details on the transaction can be found in 1347 PIH’s current report on Form 8-K, to be filed by the Company with the
U.S. Securities and Exchange Commissionat www.sec.gov.
Sandler O’Neill + Partners, L.P. served as exclusive financial advisor to 1347 PIH while
Additional information about 1347
Certain statements made in this press release are not based on historical facts, but are forward-looking statements. These statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “can,” “could,” “estimate,” “expect,” “evaluate,” “forecast,” “guidance,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “probable,” “project,” “seek,” “should,” “view,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These statements reflect the Company’s reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those in the forward-looking statements. Such risks and uncertainties include volatility or decline of Purchaser’s common stock received by the Company as consideration in the Asset Sale, limitations on the Company’s ability to sell or otherwise dispose of Purchaser’s common stock, risks of being a minority stockholder of Purchaser, disruptions in the Company’s operations from the Asset Sale that prevent the Company from realizing intended benefits of the Asset Sale, risks associated with the Company’s inability to identify and realize business opportunities, and undertaking of any such new opportunities, following the Asset Sale, risks associated with the Company’s reduced revenue, limited assets with which to generate revenue, and potentially limited business prospects following the Asset Sale, risks associated with the lack of an operating history or established reputation in the reinsurance industry, which may make it difficult for the Company to attract or retain business, risks associated with the Company’s investment and investment management strategy, risks of becoming an investment company, risks of the Company’s inability to satisfy the continued listing standards of the
Any forward-looking statement speaks only as of the date of this press release and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
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