Brooke Corporation Agrees to Acquire Controlling Interest in First American Capital Corporation
October 06 2006 - 5:56PM
PR Newswire (US)
OVERLAND PARK, Kan., Oct. 6 /PRNewswire-FirstCall/ -- Brooke
Corporation (NASDAQ:BXXX) today announced that it has entered into
a definitive agreement to acquire 55 percent of the common stock of
First American Capital Corporation for $3 million in cash and
future performance-related consideration. The closing of the
transaction is subject to regulatory approvals and standard closing
conditions, and is expected to occur during the fourth quarter of
this year. First American Capital Corporation is a public company
with headquarters in Topeka, Kan., and more than 4,000
shareholders. Its primary subsidiary is First Life America
Corporation, a Kansas domiciled life insurance company that offers
life insurance and annuity products. It also owns First Life
Brokerage, Inc., a broker of life, health, disability and annuity
products underwritten by insurance companies other than First Life
America. Robert D. Orr, chairman and chief executive officer of
Brooke, stated, "We are excited about the opportunities that the
acquisition of this ownership interest in First American Capital
brings to Brooke, to Brooke franchisees, and to First American
Capital. For Brooke and the independent Brooke franchisees, it
represents the continuation of a strategy to leverage our
relationship to provide additional products and services that
complement the standard property and casualty insurance policies
our franchisees currently offer. In this respect, the rationale
supporting this acquisition is the same rationale behind our
proposed acquisition of Generations Bank." Orr added, "We also
believe that our franchise network and our Internet- based
management system offers First Life America and First Life
Brokerage opportunities to significantly expand their distribution
networks for their insurance and annuity products. As a public
company, First American Capital has better access to the capital
required to help support the premium growth anticipated to result
from these expanded networks." Although Brooke and First American
Capital expect the synergies between them to produce long-term
results, First American Capital's operations are expected to have
minimal impact on Brooke Corporation's overall consolidated 2006
and 2007 annual earnings. The definitive agreements provide for
Brooke to initially acquire at closing for a price of $2,552,132
approximately 46.8 percent of First American Capital's then
outstanding common stock and a warrant to purchase additional
common stock that, when exercised, will increase the aggregate
ownership to approximately 55 percent of such common stock on a
fully diluted basis. The warrant is exercisable at a price of
$447,818 after First American Capital's Articles of Incorporation
are amended by its shareholders to increase its authorized shares
of common stock to 25 million shares and its authorized shares of
preferred stock to 1,550,000 shares. The amendment will also reduce
the common stock's par value per share from $0.10 to $0.01. As a
part of the transaction, Brooke's brokerage subsidiary will agree
not to engage in any new managing general agent loan brokerage
business after the closing and to then provide support and
assistance to First Life Brokerage to enable it to thereafter
conduct that business. In addition to cash consideration of $3
million for the shares of common stock, the agreements provide that
Brooke shall pay to First American Capital up to $6 million as
additional consideration for such shares if $6 million of pretax
profits are not generated over a three-year period by the life
insurance brokerage subsidiary in accordance with a specified
schedule. Among other things, the agreements also provide for
obligations regarding the future listing of First American Capital
common stock on a national stock exchange and a related 3-for-1
reverse stock split; a modified "Dutch Auction" style tender offer
by First American Capital for $500,000 of outstanding shares of
First American Capital common stock, subject to certain
adjustments; certain human resources, accounting, compliance and
communications services to be provided by Brooke to First American
in exchange for a fee; Brooke's limited support of First American
Capital's capital budget for three years after closing; certain
limitations on Brooke's ability to transfer its First American
Capital common stock during that three-year period; and the
formation of a committee of independent directors of First American
Capital's Board of Directors for a limited term to approve or
disapprove certain specified types of actions and transactions.
About our company... Brooke Corporation is listed on the Nasdaq
National Market under the symbol "BXXX." Brooke Corporation is a
holding company with three operating subsidiaries. Brooke Franchise
Corporation is a subsidiary that distributes insurance and
financial services through a network of over 650 franchise
locations. Brooke Credit Corporation is a subsidiary that
originates loans to insurance agencies and other businesses that
sell insurance or financial services, including Brooke franchisees.
Brooke Brokerage Corporation is a subsidiary that brokers
hard-to-place insurance and offers other services that complement
the standard property and casualty insurance polices Brooke
franchisees typically sell. For more information, go to
http://www.brookecorp.com/ . E-mail Distribution... To receive
electronic press alerts, visit the Brooke Corporation Media Room at
http://brookecorp.mediaroom.com/ and subscribe to our e-mail alerts
online through the Get the News link. This press release contains
forward-looking statements. All forward- looking statements involve
risks and uncertainties, and several factors could cause actual
results to differ materially from those in the forward-looking
statements. The following factors, among others, could cause actual
results to differ from those indicated in the forward-looking
statements: the uncertainties that all regulatory approvals will be
obtained, that all closing conditions will be met, that the closing
of the transaction will occur, and that any closing will occur when
expected; the uncertainty that plans relating to the Company's
relationship with First American Capital Corporation and the
acquisition will be successfully implemented; the uncertainty that
the parties to the transaction will be successful in listing First
American Capital Corporation's common stock on a national stock
exchange; the uncertainty as to the effect of the potential
acquisition on the Company's earnings; the uncertainty that the
Company or First American Capital Corporation will achieve
short-term and long-term profitability and growth goals,
uncertainties associated with market acceptance of and demand for
the products and services of the Company or First American Capital
Corporation, the impact of competitive products and pricing, the
dependence on third-party suppliers and their pricing, the ability
of the parties to the transaction to meet product demand, the
availability of capital and funding sources, the exposure to market
risks, uncertainties associated with the development of technology,
changes in the law and in economic, political and regulatory
environments, changes in management, the dependence on intellectual
property rights, the effectiveness of internal controls, and risks
and factors described from time to time in reports and registration
statements filed by Brooke Corporation with the Securities and
Exchange Commission. A more complete description of Brooke's
business is provided in Brooke Corporation's most recent annual,
quarterly and current reports, which are available from Brooke
Corporation without charge or at http://www.sec.gov/ . WITH RESPECT
TO THE PROPOSED ISSUER TENDER OFFER FOR FIRST AMERICAN CAPITAL
CORPORATION (FACC) COMMON STOCK DESCRIBED ABOVE, THIS PRESS RELEASE
IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR
THE SOLICITATION OF AN OFFER TO SELL ANY SECURITIES OF FACC. THE
SOLICITATION AND THE OFFER TO BUY SHARES OF FACC COMMON STOCK WILL
BE MADE ONLY PURSUANT TO AN OFFER TO PURCHASE AND RELATED MATERIALS
THAT FACC INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION. FACC STOCKHOLDERS AND OTHER INVESTORS SHOULD READ THESE
MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION,
INCLUDING THE TERMS AND CONDITIONS OF THE OFFER. ONCE FILED, FACC
STOCKHOLDERS AND OTHER INVESTORS WILL BE ABLE TO OBTAIN COPIES OF
THE TENDER OFFER STATEMENT ON SCHEDULE "TO," THE OFFER TO PURCHASE
AND RELATED DOCUMENTS WITHOUT CHARGE FROM THE SECURITIES AND
EXCHANGE COMMISSION THROUGH THE COMMISSION'S WEBSITE AT
http://www.sec.gov/ . FACC STOCKHOLDERS AND OTHER INVESTORS ARE
URGED TO READ CAREFULLY THOSE MATERIALS PRIOR TO MAKING ANY
DECISIONS WITH RESPECT TO THE PROPOSED OFFER. DATASOURCE: Brooke
Corporation CONTACT: Anita Larson of Brooke Corporation,
+1-913-661-0123, or Web site: http://www.brookecorp.com/
http://brookecorp.mediaroom.com/
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