Group Nine Acquisition (NASDAQ:GNAC)
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GAINSCO Reports Completion of Restructuring
DALLAS, Jan. 21 /PRNewswire-FirstCall/ -- GAINSCO, INC. (OTC:GNAC) (BULLETIN
BOARD: GNAC) today reported that it had closed the previously announced
restructuring of the Company that was approved by its shareholders on January
18, 2005 and is more fully described in the Company's proxy statement dated
December 22, 2004.
"This is a major milestone for GAINSCO. As a result of the capital from this
restructuring, the Company can now pursue a long-term strategic growth plan.
We are now focused on our goal of profitably growing and diversifying our
nonstandard personal automobile insurance business in the five states of
Florida, Texas, Arizona, Nevada and California," said Glenn W. Anderson,
President and Chief Executive Officer.
As previously disclosed, on August 27, 2004 the Company entered into agreements
with the holders of its Preferred Stock and another investor providing for a
recapitalization of the Company, subject to shareholder approval. The
agreements were with Goff Moore Strategic Partners, L.P. ("GMSP"), then holder
of the Company's Series A and Series C Preferred Stock and approximately 5% of
the outstanding Common Stock; Robert W. Stallings, the Chairman of the Board
and then holder of the Company's Series B Preferred Stock; and First Western
Capital, LLC, a limited liability company owned by James R. Reis ("First
Western").
The recapitalization substantially reduced the Company's existing Preferred
Stock redemption obligations and resulted in cash proceeds to the Company of
approximately $8.7 million (before an estimated $2 million in transaction costs
and approximately $3.4 million used to redeem the Series C Preferred Stock).
As part of the Company's recapitalization closed on January 21, 2005:
* 13,500 shares (redemption price of $13.5 million) of the 31,620 shares
of Series A Preferred Stock held by GMSP (called for redemption on
January 1, 2006 at a redemption price of approximately $31.6 million)
were exchanged for 19,125,612 shares of Common Stock. The remaining
18,120 shares of Series A Preferred Stock (called for redemption in
2006 with a redemption price of approximately $18.1 million) become
redeemable at the option of the holders commencing January 1, 2011,
and are now entitled to receive cash dividends at the rate of 6% per
annum until January 1, 2006 and 10% per annum thereafter until
redemption. Those 18,120 shares of Series A Preferred Stock remain
outstanding and convertible into 3,552,941 shares of Common Stock at
$5.10 per share, continue to be entitled to vote on an as-converted
basis, and remain redeemable at the option of the Company commencing
June 30, 2005 at a price equal to stated value plus accrued dividends;
* The Company exercised its option to purchase all of the outstanding
shares of Series C Preferred Stock for approximately $3.4 million from
the proceeds of the sale of Common Stock in the recapitalization;
* The expiration date of GMSP's Series B Warrant to purchase
1,550,000 shares of Common Stock for $2.5875 per share was extended to
January 1, 2011; and
* The investment management agreements of the Company and its insurance
company subsidiaries with GMSP were terminated.
Also as part of the recapitalization, (i) Mr. Stallings acquired 13,459,741
shares of Common Stock in exchange for $4,629,042.44 cash, his 3,000 shares of
outstanding Series B Preferred Stock and his warrant expiring March 23, 2006 to
purchase 1,050,000 shares of Common Stock for $2.25 per share, and (ii) First
Western acquired 6,729,871 shares of Common Stock in exchange for $4,037,922.60
in cash. The purchase price of these shares was $0.60 per share.
In the restructuring, Mr. Stallings became executive Chairman of the Board of
the Company and Mr. Reis became Executive Vice President of the Company with
responsibility for risk management. The arrangements for the compensation of
Messrs. Stallings, Reis and Anderson described in the proxy statement dated
December 22, 2004 became effective.
The number of shares of Common Stock outstanding has increased from 21,169,736
to 61,084,960 as a result of the restructuring, including the 600,000 shares
issued to Mr. Anderson (400,000 of which are subject to certain forfeiture
conditions). GMSP now owns 33% of the outstanding Common Stock of the Company,
Mr. Stallings owns 22% and First Western owns 11%.
GAINSCO, INC. is a Dallas, Texas-based holding company. The Company's
nonstandard personal automobile insurance products are distributed through
retail agents in Florida, Texas, Arizona, Nevada and California. Its insurance
company subsidiaries are General Agents Insurance Company of America, Inc. and
MGA Insurance Company, Inc., both of which are currently rated "B-" (Fair),
with a stable outlook, by A.M. Best.
Some statements made in this release may be considered forward-looking
statements. Investors are cautioned that important factors, representing
certain risks and uncertainties, could cause actual results to differ
materially from those contained in the forward-looking statements. A forward-
looking statement is relevant only as of the date the statement is made and the
Company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances arising after the date on which the statement
was made. Please refer to the Company's recent SEC filings for further
information regarding factors that could affect the Company's results.
DATASOURCE: GAINSCO, INC.
CONTACT: Scott A. Marek, Asst. Vice President-Investor Relations,
+1-214-647-0427, or Richard M. Buxton, Senior Vice President, +1-214-647-0428,
both of GAINSCO, INC.,
Web site: http://www.gainsco.com/