Brooke Corporation to Transfer Ownership of Two Private Company Subsidiaries to Public Company Subsidiary
August 31 2007 - 3:31PM
PR Newswire (US)
OVERLAND PARK, Kan., Aug. 31 /PRNewswire-FirstCall/ -- Brooke
Corporation (NASDAQ:BXXX) has agreed to merge its wholly owned
insurance agency subsidiary, Brooke Franchise Corporation, into
Brooke Capital Corporation (AMEX:BCP). After consummation of the
merger, Brooke Capital Corporation has agreed to acquire all of the
outstanding capital stock of Delta Plus Holdings, Inc., a wholly
owned non-standard auto insurance subsidiary of Brooke Corporation.
Upon consummation of the merger and the acquisition, Brooke
Corporation will receive 5.5 million shares of Brooke Capital
Corporation common stock at closing. If Brooke Franchise
Corporation and Delta Plus Holdings achieve certain performance
benchmarks in 2007 and 2008, then Brooke Corporation could receive
up to 2.5 million additional shares of Brooke Capital Corporation's
common stock. As a result of the two proposed transactions and
based on current levels of ownership, Brooke Corporation would own
a minimum of 85 percent, and a maximum of 88.4 percent, of Brooke
Capital Corporation's common stock. Brooke Corporation has agreed
it will not transfer the Brooke Capital Corporation common stock it
receives in these transactions for 180 days after the closing date,
unless Brooke Capital Corporation otherwise agrees. As a result of
the proposed transactions, Brooke Capital Corporation would acquire
a non-standard auto insurance company (Traders Insurance Company
subsidiary of Delta Plus Holdings) to complement its existing life
insurance company (First Life America Corporation). The proposed
transactions would also result in Brooke Capital Corporation
acquiring an insurance agency franchisor, Brooke Franchise
Corporation, for the distribution of insurance policies, including
non-standard auto and life insurance policies issued by Traders
Insurance Company and First Life America Corporation. Brooke
Franchise Corporation has more than 800 franchise locations, 1,700
licensed insurance agents and 450 employees. Brooke Capital
Corporation plans to increase profit margins from Brooke Franchise
Corporation's valuable agent distribution network by selling
non-standard auto insurance policies issued by Traders Insurance
Company and thereby generating underwriting profits, in addition to
sales commissions, from the sale of non-standard insurance
policies. Nearly 40 percent of Brooke Franchise Corporation's sales
commissions are received from non-standard auto insurance
companies, which suggest a promising market for expansion of
Traders Insurance Company. As the result of its recent listing on
the American Stock Exchange, Brooke Capital Corporation is better
positioned to access the capital markets for the equity capital
required to support expansion of Traders Insurance Company. The
proposed transactions consolidate all of Brooke Corporation's
insurance operations into Brooke Capital Corporation, the result of
which will be that Brooke Corporation increases its investment in
Brooke Capital Corporation and Brooke Capital Corporation will
operate an insurance organization for the benefit of Brooke
Corporation and Brooke Capital Corporation's other shareholders.
The proposed transactions are not expected to have a material
impact on the earnings of Brooke Corporation because its share of
earnings from Brooke Franchise Corporation and Delta Plus Holdings
are not expected to be significantly diluted as a result of the
transaction. Based on past performance of Brooke Franchise
Corporation and Delta Plus Holdings, the proposed transactions are
expected to have a material impact on the earnings of Brooke
Capital Corporation. Pursuant to the terms of the merger agreement
and to provide for greater separation of the respective companies,
Kyle Garst and Dane Devlin will become members of Brooke Capital
Corporation's board of directors and Robert D. Orr will resign from
its board. Correspondingly, Kyle Garst will resign from Brooke
Corporation's board of directors. The transactions have been
approved by the boards of directors of Brooke Corporation, Brooke
Capital Corporation and Brooke Franchise Corporation, but are
subject to customary conditions of closing. The merger is subject
to regulatory approval and approval of the shareholders of Brooke
Capital Corporation. The acquisition of Delta Plus Holdings is
subject to regulatory and other approvals. The parties intend for
the transactions to close within 60 days. About Brooke Corporation
... Brooke Corporation is a holding company listed on the Nasdaq
Global Market under the symbol "BXXX". Brooke Corporation owns 62
percent of Brooke Credit Corporation (OTC:BRCR) (BULLETIN BOARD:
BRCR) , a finance company specializing in insurance related
lending. Subject to closing a merger with Brooke Franchise
Corporation and the acquisition of Delta Plus Holdings, Brooke
Corporation will own a minimum of 85 percent of Brooke Capital
Corporation (AMEX:BCP), an insurance organization, which would then
include a life insurance company, a non-standard auto insurance
company and an insurance agency franchisor. Brooke Corporation also
owns 100 percent of Brooke Brokerage Corporation, a banking
organization with a federally chartered thrift institution that
operates an "agent bank". About Brooke Capital Corporation ...
Brooke Capital Corporation is an insurance organization listed on
the American Stock Exchange under the symbol "BCP". Brooke Capital
is the parent company of First Life America Corporation, a life
insurance company, and Brooke Capital Advisors, Inc., a loan broker
and consultant for general insurance agencies specializing in the
sale of hard-to-place and niche insurance policies. Subject to
closing, Brooke Capital expects to merge with Brooke Franchise
Corporation, an insurance agency franchisor and to become the
parent company of Delta Plus Holdings, Inc., a non standard auto
insurer. 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
transactions will occur, and that any closing will occur when
expected, the uncertainty that plans relating to Brooke Capital
Corporation's merger with Brooke Franchise Corporation and the
acquisition of Delta Plus Holdings, Inc. will be successfully
implemented, the uncertainty as to the effect of the potential
transaction on the earnings and operations of Brooke Capital
Corporation, Brooke Franchise Corporation, Delta Plus Holdings,
Inc. or Brooke Corporation; the uncertainty that Brooke Capital
Corporation, Brooke Franchise Corporation, Delta Plus Holdings,
Inc. or Brooke 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
Brooke Capital Corporation, Brooke Franchise Corporation, Delta
Plus Holdings, Inc. or other subsidiaries of Brooke 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 and Brooke Capital
Corporation, respectively, with the Securities and Exchange
Commission. A more complete description of the businesses of Brooke
Corporation and Brooke Capital Corporation is provided in their
most recent annual, quarterly and current reports, which are
available from them without charge at the U.S. Securities and
Exchange Commission's Internet site (http://www.sec.gov/).
ADDITIONAL INFORMATION: Shareholders of Brooke Capital Corporation
are urged to read the Information Statement on Schedule 14C when it
becomes available as it will contain important information
regarding Brooke Franchise Corporation and Delta Plus Holdings,
Inc. and the transactions. Copies of the Information Statement will
be available when filed and without charge at the U.S. Securities
and Exchange Commission's Internet site (http://www.sec.gov/).
DATASOURCE: Brooke Corporation CONTACT: Anita Larson of Brooke
Corporation, +1-913-661-0123, Web site: http://www.brookecorp.com/
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