By Stephanie N. Rotondo
Portland, Ore., Aug. 18 - FMG Acquisition Corp. announced Monday that it will issue $18.28 million of private placement 11% notes in conjunction with its merger with United Insurance Holdings LC.
According to a press release, the three-year term notes will be issued at 93% of face value. The bonds are callable at 105% of face value for 30 days following the first and second anniversary of issuance.
Proceeds from the placement, valued at around $10 million, will be used to fund a tender offer for FMG's stock at $8.05 per share. If necessary, up to $5.5 million of United's cash on hand will also be used to fund the transaction.
Two investors have already been lined up to purchase the notes: Bulldog Investors and HBK Master Fund LP, which collectively own 869,565 shares, or $18.4% of FMG's IPO shares. The two parties will receive $7.5 million of the new notes in exchange for their shares. Other unnamed investors will purchase up to $10.8 million of the bonds.
FMG and United entered into the merger agreement on April 2, 2008. FMG said it will hold a special meeting of its shareholders to vote on the pending merger and related matters. Neither the press release nor the related filing with the Securities and Exchange Commission indicated when that meeting will be held.
If the company does not receive majority consent, the private placement will fall through and the tender offer will be cancelled. If approved, the tender is scheduled to begin Monday and will continue for 20 business days thereafter. The placement will close "as soon as practicable" after the meeting.
"United and its chairman and management have shown great flexibility as we move forward to complete this merger. Our two largest stockholders have put their support behind the merger by providing long term financing and voting in favor of the transaction," said Gordon Pratt, chairman and chief executive of FMG, in a news release.
"We are pleased to be in a position to support the management team at FMG - they found a good merger partner in United, and we are voting in favor of the transaction," said Phillip Goldstein of Bulldog Investors, FMG's largest stockholder.
The acquisition is expected to be completed in late September of early October.
FMG Acquisition is a Delaware-based blank check company, formed to acquire a business operating in or providing services to the insurance industry through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination.
| Issuer: | FMG Acquisition Corp.
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| Security description: | Promissory notes
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| Amount: | $18.28 million
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| Maturity: | 2011
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| Price: | 93
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| Coupon: | 11%
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| Call: | 105 at first and second anniversaries of issuance
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| Distribution: | Private placement
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| Investors: | Bulldog Investors and HBK Master Fund LP ($7.5 million); other unnamed investors ($10.8 million)
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