Asia Special Situation Acquisition Corp. (stock symbol: [t]CIO[/t]), which previously terminated its proposed merger with White Energy, has announced that it is going to ask its shareholders to "to vote upon the acquisition of up to three insurance companies and approximately $650.0 million of assets of two unaffiliated families of hedge funds."
Asia Special Situation Acquisition Corp. Announces Proposed Acquisitions to Form a Reinsurance Group with Post Transaction Assets of Approximately $1.5 Billion
Extraordinary General Meeting of Shareholders to Be Held January 19, 2010, to Vote upon the Proposed Transactions
Press Release Source: Asia Special Situation Acquisition Corp. On Thursday January 7, 2010, 11:16 am EST
NEW YORK--(BUSINESS WIRE)--Asia Special Situation Acquisition Corp. (“ASSAC”) (Amex: CIO - News) today announced that an Extraordinary General Meeting of Shareholders will be held on January 19, 2010, to vote upon the acquisition of up to three insurance companies and approximately $650.0 million of assets of two unaffiliated families of hedge funds. Shareholders also will vote to change the company’s name to Gerova Capital Corp.
The Extraordinary General Meeting of Shareholders will be held 10:00 a.m. EST, January 19, 2010 at the offices of Hodgson Russ LLP, New York, New York. The full meeting agenda is detailed in the definitive Proxy Statement, a draft of which will be filed by January 7, 2010, with the Securities and Exchange Commission as an exhibit to our Form 6-K interim report. The definitive Proxy Statement will be mailed on January 8, 2010, to all shareholders of record, as of the close of business on January 4, 2010.
Acquisition Targets and Transaction Highlights
- Acquisition of two profitable specialty reinsurance companies engaged in the reinsurance of life insurance and property and casualty insurance and the business of investment management with total post transaction assets of approximately $1.5 billion;
-- A simultaneous all-stock acquisition of approximately $650.0 million of assets from two hedge funds principally consisting of performing, non-real estate senior secured commercial loans;
-- Transactions result in a strong balance sheet with low leverage and net equity of $832.6 million, representing an equity-to-assets ratio of 0.55 times;
-- Strong cash flow generation resulting from an investment portfolio concentrated in higher yielding fixed income investments, consisting of senior secured commercial loans to the energy, insurance and legal industries;
-- Enhanced balance sheet will permit the expansion of credit portfolio by taking advantage of the dislocation in the credit markets and the associated undersupply of traditional sources of credit;
-- The fixed income asset backed lending funds managed by Stillwater Capital Partners, were ranked as the #1 Risk Adjusted funds in their asset class for 2006, 2007 and 2008; and
-- Addition of a proven senior management team, including incoming Chairman and Chief Executive Officer, Marshall Manley.
Manley has had a long and distinguished career in business, including serving as President and CEO of City Investing Co., a Fortune 200, NYSE-listed company. Included among the major and better known subsidiaries of City Investing was Home Insurance Company, then the 16th largest property and casualty insurance company in the United States. Manley was President and CEO of Home Group (which later changed its name to AmBase Corp.), an NYSE-listed diversified financial services company that provided property and casualty insurance and reinsurance, capital market, wealth management, real estate development, banking, insurance premium financing, venture capital investing and mortgage services. Manley also served as Chairman of Home Insurance Co., subsidiary of Home Group. Usi Re, another subsidiary of Home Group, was the 13th largest reinsurance company in the United States. Prior to his corporate career, Manley was a prominent practicing attorney and served as a named partner at two major Los Angeles law firms.
Marshall Manley said, “We believe there is a significant opportunity to acquire insurance books of business and performing financial assets at appropriate discounts. This opportunity comes about due to the fact that certain financial institutions are required to sell such assets to comply with regulatory capital requirement. In appropriate situations such assets can be redeployed to enable our insurance subsidiaries to significantly enhance their profit potential.”
Upon approval of our shareholders, the Company will acquire an 81.5% interest in Allied Provident Insurance Co., Ltd., a Barbados property and casualty insurer. In addition to acquiring Allied Provident, the Company has entered into a non-binding letter of intent to acquire, for $7.0 million, Northstar Group Inc., a Bermuda corporation that owns two insurance companies, Northstar Reinsurance Ltd. – Bermuda and Northstar Reinsurance Ltd. – Ireland. Subject to a number of conditions, including execution of definitive agreements, and certain regulatory and senior lender approvals, the Company anticipates that it will acquire the Northstar Companies in February or March 2010, or as soon thereafter as is practicable.
Subject to obtaining approval of our shareholders, the Company will also acquire approximately $540.0 million of net assets of the Stillwater Funds, the majority of which consists of performing senior secured commercial loans to the insurance, legal and energy industries. The Stillwater Asset Backed Fund was ranked by HedgeFund.net as the #1 Risk Adjusted fund in its asset class for 2006, 2007 and 2008. In addition to the Stillwater Funds, and upon approval of ASSAC’s shareholders, ASSAC will acquire about $114.0 million of assets and investments held by Wimbledon Financing Master Fund Ltd. and Wimbledon Real Estate Financing Fund Ltd., Cayman Islands companies, managed by Weston Capital Asset Management of West Palm Beach, FL.
Transaction Terms
Other than Northstar, each of the transactions is an all-stock acquisition where the sellers have agreed to accept ASSAC shares as payment for the acquired assets. As consideration for the purchase of the Allied Provident, the Stillwater Funds and the Wimbledon Funds, ASSAC will issue approximately $735 million of its 5% Series A convertible preferred shares. The preferred shares automatically start to convert at $7.50 per share into ordinary shares, beginning July 31, 2010, at the rate of 16-2/3% of such ordinary shares per month for the remaining six months, converting all the 5% preferred shares will be converted into ordinary shares by December 31, 2010. However, the number of ASSAC ordinary shares to be issued upon conversion of the preferred shares is expected to be reduced as a result of post-closing adjustments based upon the appraisals of the net asset values as of December 31, 2009, of a majority of the invested assets of the funds. A detailed description of the terms of the Company’s preferred shares will be set forth in our Proxy Statement.
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