Item 3.02 Unregistered Sales of Equity Securities
On May 25, 2017, AmTrust Financial Services, Inc. (AFSI: the Company), executed a purchase agreement for the issuance and sale in a private
placement of 24,096,384 shares of its common stock at a price of $12.45 per share resulting in proceeds to the Company of $300,000,000. The last reported sale price of the Companys common stock on May 25, 2017 was $12.45 per share. The
transaction is expected to close on May 26, 2017.
The sole purchasers in the private placement were certain members of the families of Barry
Zyskind, Chairman and Chief Executive Officer of the Company, and George Karfunkel, a director of the Company. Neither Mr. Zyskind nor Mr. Karfunkel nor any other director, executive officer or significant shareholder of the Company
acquired shares in the private placement. The Company granted to these investors certain registration rights at a future date once the Company has regained its current filer status for SEC registration purposes. The investors have agreed not to
exercise their right to vote their shares of common stock until after the conclusion of the Companys 2018 annual meeting of shareholders. Additionally, such investors have agreed not to transfer the common stock, subject to certain limited
exceptions for bona fide estate planning purposes for a period of one year from purchase.
The members of the Companys independent Audit Committee,
assisted by its outside legal and financial advisors, reviewed the terms of the private placement on behalf of the Company. No underwriters or placement agents were involved in the private placement.
The Company will contribute the proceeds of the private placement to its insurance subsidiaries to support their financial strength, continued growth and the
writing of business. By raising capital through this private placement and with a higher capital base, the Company remains committed to providing confidence to its stakeholders that it is well capitalized to support its business.
The issuance and sale described above were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in
Rule 506 promulgated under the Securities Act of 1933, as amended (the Securities Act) and in Section 4(a)(2) of the Securities Act, based on the following: (1) the investors confirmed to us that they were either
accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act or had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an
investment in the securities; (2) the investors acknowledged that all securities being purchased were restricted securities for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered
under the Securities Act or exempt from registration under the Securities Act; and (3) a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently
registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.
Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements that are intended to be covered by the safe harbors created by the
Private Securities Litigation Reform Act of 1995. When the Company uses words such as anticipate, intend, plan, believe, estimate, expect, or similar expressions, it does so to
identify forward-looking statements. Examples of forward-looking statements include the plans and objectives of management for future operations, including those relating to future growth of the Companys business activities and availability of
funds, projections of the impact of potential errors or misstatements in the Companys financial statements, and estimates of the impact of material weaknesses in the Companys internal control over financial reporting, and are based on
current expectations that involve assumptions that are difficult or impossible to predict accurately and many of which are beyond the Companys control. Actual results may differ materially from those expressed or implied in these statements as
a result of significant risks and uncertainties, including, but not limited to, non-receipt of expected payments from insureds or reinsurers, changes in interest rates, a downgrade in the financial strength ratings of the Companys insurance
subsidiaries, the effect of the performance of financial markets on the Companys investment portfolio, the amounts, timing and prices of any share repurchases made by us under the Companys share repurchase program, development of claims
and the effect on loss reserves, accuracy in projecting loss reserves, the cost and availability of reinsurance coverage, the effects of emerging claim and
coverage issues, changes in the demand for the Companys products, the Companys degree of success in integrating acquired businesses, the effect of general economic conditions, state
and federal legislation, regulations and regulatory investigations into industry practices, the impact of known or potential errors or misstatements in the Companys financial statements, the Companys ability to timely and effectively
remediate the material weaknesses in the Companys internal control over financial reporting and implement effective internal control over financial reporting and disclosure controls and procedures in the future, risks associated with
conducting business outside the United States, the impact of Brexit, developments relating to existing agreements, disruptions to the Companys business relationships with Maiden Holdings, Ltd. or National General Holdings Corp., breaches in
data security or other disruptions with the Companys technology, heightened competition, changes in pricing environments, and changes in asset valuations. Additional information about these risks and uncertainties, as well as others that may
cause actual results to differ materially from those projected, is contained in the Companys filings with the SEC, including the Companys Annual Report on Form 10-K and the Companys quarterly reports on Form 10-Q. The projections
and statements in this Current Report on Form 8-K speaks only as of the date of this filing and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or
otherwise, except as may be required by law.
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Exhibit No.
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Description
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10.1
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Common Stock Purchase Agreement, dated May 25, 2017, by and among the Company and each of the Purchasers listed on
Exhibit A
thereto.
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10.2
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Form of Registration Rights Agreement.
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