Transaction and Partnership
Highlights
GWG Holdings, Inc. (Nasdaq:GWGH), the parent company of GWG Life
and Life Epigenetics, a financial services company committed to
transforming the life insurance industry through disruptive and
innovative products and services, today announced a strategic
relationship with The Beneficient Company Group, L.P. (BEN) that
will be effected through a transformative transaction that is
expected to significantly increase GWGH’s common shareholder
equity, diversify its balance sheet, income statement and cash flow
sources while creating opportunities to leverage existing
infrastructure and capabilities.
BEN is the first financial services platform designed to provide
a comprehensive suite of innovative lending and liquidity products
offered to meet the rapidly growing liquidity demand from the
nearly one million underserved mid-to-high net worth (MHNW)
individual investors and small-to-medium institutional owners of
alternative assets. BEN has also developed a complementary
line of alternative asset fund administration and insurance
services coupled with proprietary disruptive and scalable financial
technologies.
As part of the strategic relationship, GWGH will acquire 82% of
the outstanding BEN MLP units from existing unitholders of BEN. BEN
will have in excess of $800 million of tangible financial assets
pro forma for the transaction. GWGH will also enter into a
$400 million, four-year commercial loan with BEN to enable BEN to
continue building out its suite of liquidity products.
“We are pleased to announce a strategic relationship with one of
the most innovative companies in the alternative asset industry,”
said Jon Sabes, GWGH Chief Executive Officer. “BEN is partnering
with GWGH because they’ve identified the life insurance asset class
as a key enhancement to their diversified endowment portfolio of
high-quality alternative assets for which they provide loans and
liquidity. And while GWGH will continue to execute our announced
strategies to our utmost capacity, we also look forward to rolling
out BEN’s innovative alternative asset liquidity products to
independent broker-dealers and RIAs once BEN obtains its pending
regulatory approvals.”
“This transaction stands to potentially double our assets to
over $1.6 billion and quadruple our total equity to over $500
million,” said William Acheson, GWGH Chief Financial Officer. “This
is a transformational vote of confidence in GWGH, giving us both a
scaled balance sheet and an additional source of current earnings
which complements our large and growing life insurance portfolio.
Additionally, we believe we will achieve greater access to the
capital markets, creating opportunities to further optimize our
capital structure and lower our cost of capital which is an
important driver of shareholder value.”
“GWG Holdings is the perfect partner for us as we execute on our
business plan and expand our product offerings,” said Brad K.
Heppner, Chief Executive Officer and Founder of BEN. “We have been
committed to adding the life insurance asset class to our business
plan and our mix of alternative asset classes that we administer
and lend against. GWGH’s expertise in the life insurance secondary
market, as well as management’s commitment to growth and
innovation, blend perfectly into the emerging opportunity to
provide liquidity and administrative services to the alternative
asset investors we serve.”
GWGH provides BEN and institutional investors exposure to the
life insurance asset class in which GWGH is an acknowledged leader.
With over a decade of experience, GWGH has experienced 28 percent
growth, year-over-year, in its portfolio of life insurance
policies, becoming one of the largest buyers of life insurance
policies in the secondary market in 2017. In addition, GWGH
launched Life Epigenetics, a wholly owned subsidiary that is
commercializing innovative epigenetic technology designed to
revolutionize the underwriting, pricing and sale of life insurance
for the global insurance industry.
Credit Suisse Securities (USA) LLC is acting as lead financial
advisor and placement agent to BEN.
Transaction Financing
Assuming the maximum size of $800 million, the transaction will
be financed from (1) the issuance of $400 million of GWGH common
stock at $10.00 per share, (2) the issuance of $400 million in
five-year GWGH L-Bonds, and (3) $150 million in cash from an
affiliated unitholder of BEN which will purchase a portion of the
total common stock and L Bonds issued in conjunction with the
transaction, at the election of GWGH.
Transaction Closing
The GWGH-BEN transaction, which is expected to close on or
before April 30, 2018, is subject to a number of closing
conditions, including regulatory and GWGH shareholder approvals,
that are described in a Form 8-K filed with the Securities and
Exchange Commission (SEC) today.
About GWG Holdings, Inc.
GWG Holdings, Inc. (Nasdaq:GWGH), the parent
company of GWG Life and Life Epigenetics, is a financial services
company committed to transforming the life insurance industry
through disruptive and innovative products and services. The
Company has developed a new suite of options for the life insurance
secondary market called LifeCare Xchange (LCX). This new capability
provides seniors with the exchange value of their life insurance
policies they can apply to long-term care and other post-retirement
needs. Life Epigenetics seeks to transform the industry by applying
proprietary M-Panel epigenetic technology to improve on traditional
life insurance underwriting practices. Since 2006, GWG Life has
provided seniors over $457 million in exchange value for their
illiquid life insurance and, as of September 30, 2017, owned a
portfolio of over $1.62 billion in face value of policy
benefits.
For more information about GWG Holdings, Inc.
email info@gwglife.com or visit www.gwgh.com.
About The Beneficient Company
Based in Dallas, TX, BEN intends to market an array of lending
and liquidity products along with retirement fund products to
mid-to-high net worth individuals (MHNW) having a net worth of
between $5 million and $30 million and to institutional
investors. In addition to these product offerings, BEN plans
to offer a variety of services to MHNW individuals including fund
administration, retirement funds and insurance services for
covering risks attendant to owning or managing alternative
assets. BEN will offer these services to MHNW individuals and
institutions through BEN’s U.S.-based subsidiaries, including
companies that BEN intends to apply to charter in Texas, and
through its Bermuda-regulated insurance companies, including PEN
Indemnity Insurance Company, LTD. Alongside its products
segment and its services segment, BEN is developing a third
business segment designed to offer clients online financial
technologies and online platforms for direct access to BEN’s
liquidity products and services as well as specialized reporting
tools for private investors.
BEN’s leadership includes Brad K. Heppner, Richard W. Fisher,
Thomas O. Hicks, Bruce W. Schnitzer and Sheldon I. Stein, industry
veterans with broad fiduciary experience in both the credit and
alternative asset markets. Mr. Heppner, Chief Executive Office of
BEN, built one of the first, large-scale private equity investment
platforms, The Crossroads Group, and its affiliate, Capital
Analytics, a full-service investment fund administrative services
provider. While under Mr. Heppner’s leadership, The Crossroads
Group grew to be the eighth largest alternative asset fund of funds
firm in the United States. Mr. Heppner sold The Crossroads Group to
Lehman Brothers, which became a part of Neuberger Berman. Capital
Analytics is now owned by Mitsubishi Union Financial Group.
For more information about The Beneficient Company, visit
www.trustben.com.
Additional Information and Where to Find It
GWGH plans to file with the SEC a proxy statement in connection
with the proposed transactions described above. The
information in any preliminary Proxy Statement is not complete and
may be changed.
The definitive Proxy Statement will be mailed to stockholders of
GWGH. GWGH urges investors and security holders to read the
definitive proxy statement and other documents filed with the SEC
carefully and in their entirety when they become available because
they will contain important information about the proposed
transaction. Investors and security holders will be able to obtain
free copies of the definitive Proxy Statement (when available) and
other documents filed with the SEC by GWGH through the website
maintained by the SEC at www.sec.gov. Free copies of the
definitive Proxy Statement (when available) and other documents
filed with the SEC can also be obtained on GWGH’s website
(www.gwgh.com).
Participants in Solicitation
GWGH and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from the
stockholders of GWGH in connection with the transactions described
herein. Information about the directors and executive
officers of GWGH is set forth in GWGH’s Form 10-K for the year
ended December 31, 2016 and filed with the SEC on
March 15, 2017, and the proxy statement filed with the SEC on
March 30, 2017. Additional information regarding the
interests of these participants and other persons who may be deemed
participants in the transactions may be obtained by reading the
Proxy Statement regarding the proposed transactions when it becomes
available.
Forward-Looking Statements
Certain information contained in this press release contains
forward-looking information, including future-oriented financial
information under applicable securities laws (collectively referred
to herein as forward-looking statements). Except for
statements of fact, information contained herein constitutes
forward-looking statements and includes, but is not limited to, the
(i) projected financial performance of Beneficient and/or GWG
Holdings; (ii) completion of the transaction described herein;
(iii) the expected development of the business of Beneficient
and/or GWG Holdings; and (iv) the execution of the business plans
and strategies of Beneficient and/or GWG Holdings.
Forward-looking statements are provided to allow potential
investors the opportunity to understand management’s beliefs and
opinions in respect of the future so that they may use such beliefs
and opinions as one factor in evaluating this information as a
whole.
These statements are not guarantees of future performance and
undue reliance should not be placed on them. Any
forward-looking statements necessarily involve known and unknown
risks and uncertainties, any of which may cause actual performance
and financial results in future periods to differ materially from
any projections of future performance or result expressed or
implied by forward-looking statements. Examples of the kinds
of risks facing GWG Holdings can be found in GWG Holdings’ Annual
Report on Form 10-K (risk factors) for the year ended December 31,
2016, Quarterly Reports on Form 10-Q for the periods ended March
31, June 30 and September 30, 2017.
Although forward-looking statements contained in this press
release are based upon what management believes are reasonable
assumptions, there can be no assurance that forward-looking
statements will prove to be accurate. GWG Holdings undertakes
no obligation to update forward-looking statements if circumstances
or management’s estimates or opinions should change.
Accordingly, readers are cautioned not to place undue reliance on
the forward-looking statements contained in this press release.
Contacts:
For GWG Holdings, Inc.Dan Callahan Director of
Communication612.746.1935
For the Beneficent CompanyMark Semer or Daniel
YungerKekst212.521.4800
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