SP Acquisition Holdings, Inc. (stock symbol: [t]DSP[/t]), which raised $432.9 million when it went public in October 2007, to merge with Frontier Financial Corporation, a Washington-based bank holding company with approximately $4.0 billion in assets. The current warrant holders will be asked to amend the terms of their warrants and the insiders will forfeit a significant portion of their shares.
SP Acquisition Holdings Announces Signing of Agreement to Merge With and Recapitalize Frontier Financial Corporation
Press Release
Source: Frontier Financial Corporation
On Friday July 31, 2009, 8:30 am EDT
EVERETT, WA and NEW YORK, NY--(Marketwire - 07/31/09) - Frontier Financial Corporation (NASDAQ:FTBK - News) ("Frontier") and SP Acquisition Holdings, Inc. (AMEX:DSP - News) ("SPAH") today jointly announced that they have entered into an Agreement and Plan of Merger, pursuant to which Frontier will merge with, and into, SPAH. The merger is expected to close in the fourth quarter of 2009.
Frontier is a Washington-based bank holding company, with approximately $4.0 billion in assets. Frontier Bank offers a wide range of banking and financial services to businesses and individuals in its market area. SPAH is a special purpose acquisition company with nearly $429 million in assets held in a trust account for the benefit of its shareholders, and which may be used in connection with a business combination.
Under the terms of the merger agreement, each share of Frontier's common stock outstanding will be exchanged for the right to receive 0.0530 shares of SPAH common stock and 0.0530 SPAH warrants upon completion of the merger. Frontier currently has 47,131,853 shares of common stock issued and outstanding, which will be exchanged for approximately 2.5 million shares of common stock of SPAH and approximately 2.5 million warrants of SPAH, in the aggregate. Such warrants will have an exercise price of $11.50 per share and exercisable for seven years. The closing price SPAH common stock on the NYSE AMEX on July 30, 2009 was $9.75 per share. The stock and warrants received will be listed on a national stock exchange.
As part of the merger, SP Acq LLC and certain directors of SPAH will forfeit 9,453,412 shares of common stock of SPAH. In addition, SPAH will seek approval of its warrantholders to approve an amendment to its existing warrants to increase the exercise price of such warrants to $11.50 per share and extend the expiration date to seven years from the date of the business combination.
Following the completion of the merger, the recapitalized Frontier is expected to be well-positioned to offer new loans and expanded banking services to its customers and to be able to make significant progress on its previously announced business banking plan with a focus on relationship banking and cultivating core deposits within its existing market. In addition, the transaction will result in a strong capital position that should allow Frontier to take advantage of attractive growth opportunities available in today's dislocated market.
For Frontier's customers, employees and the communities that it serves, there will be little evidence of a change after the merger. SPAH will do business as Frontier Financial Corporation. Frontier's executive team will remain in place, the company's headquarters will remain in Everett, Washington, and the Frontier Bank brand will not be changed. The boards of the new holding company and bank will consist of both new members representing SPAH shareholders and current Frontier directors to provide for ongoing community engagement and business continuity. Frontier will continue to be an active member of the communities in which it operates.
Warren Lichtenstein, Chairman and CEO of SPAH, commented, "It is exciting to bring this attractive transaction to our shareholders. With the capital resources of SPAH and the strength of Frontier's existing core franchise we believe the opportunities will be significant for our shareholders going forward. In addition to creating a strong growth platform, the invested capital will provide Frontier Bank with valuable flexibility as it relates to managing its existing non-performing loan portfolio and realizing maximum value for each credit. This opportunity is attractive when considered amidst the backdrop of today's historically low bank stock valuations and the opportunity for improved valuation in the future."
Pat Fahey, Chairman and CEO of Frontier, remarked, "Our team has worked tremendously hard in the last year despite unrelenting headwinds. It is a testament to our dedicated employees, the trust of our valued customers and the support of our communities that we are able to announce a transaction today. Frontier shareholders will have the opportunity to benefit in the combined organization and our customers, employees and communities should continue to experience all that was successful about Frontier Bank. I am personally excited to help lead our business banking efforts and believe this market is ripe with opportunities. The additional capital will put us in a very strong competitive position to win attractive customers going forward."
The transaction is subject to the approval of Frontier shareholders, SPAH shareholders and warrantholders and several regulatory agencies, and other customary closing conditions. Frontier and SPAH expect to file a first draft joint proxy statement/prospectus with the SEC in the coming week with further details about the transaction including risk factors, background and pro forma financial statements.
Conference Call Information
Frontier and SPAH will host a conference call for investors, analysts and other interested parties on Monday, August 3, at 11:00 a.m. PDT (2:00 p.m. EDT). The conference call will be hosted by Warren Lichtenstein, Chairman and CEO of SPAH and Pat Fahey, Chairman and CEO of Frontier Financial Corporation. Investors, analysts and other interested parties may access the teleconference at (888) 359-3613 using access code 9067524. Shortly after the call concludes, the replay will also be available at (888) 203-1112 using access code 9067524, where it will be archived until August 17, 2009. A webcast of the call can be accessed at www.frontierbank.com.
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