Gerova Completes Acquisition of $1.2 Billion Life Insurance Portfolio and Arranges $50 Million Credit Facility
HAMILTON, Bermuda, Jan. 4, 2011 /PRNewswire via COMTEX/ --
Gerova Financial Group, Ltd. ("Gerova") (NYSE: GFC), a diversified financial services company, announced today that it has completed the acquisition of a portfolio of life insurance policies and loans on life insurance policies representing approximately $1.2 billion of in-force life insurance. The portfolio consists of 180 policies issued by highly rated insurance carriers with 96% of the carriers in the Portfolio rated A, A+, or A++.
The portfolio was acquired from HM Ruby Fund L.P., a Los Angeles-based hedge fund, for $105 million, consisting of $11 million in cash and $94 million in Gerova ordinary shares. The share consideration of $28.69 per share was based on the average closing price of Gerova on the New York Stock Exchange for the ten trading days ending December 30, 2010. The 3,276,403 shares to be issued in the transaction represent 10.2% of the issued and outstanding shares after giving effect to the issuance.
Concurrently, Gerova arranged a five-year $50 million line of credit. The proceeds will be used to service the portfolio, and to service future share-based portfolio acquisitions in the life settlements sector.
"This transaction reaffirms a key aspect of our business model, using our publicly listed shares to acquire private equity portfolios on favorable terms," said Keith Harris, incoming Gerova Chairman.
On December 7, 2010 Gerova announced two other all-share transactions, agreeing to acquire institutional investment banks Seymour Pierce Holdings Ltd. and Ticonderoga Securities LLC.
"Today, Gerova acquired over a billion dollars of high quality financial instruments issued by investment grade rated institutions in exchange for Gerova equity, which substantially enhances our company's balance sheet and our earnings potential as we plan for the integration of Seymour Pierce and Ticonderoga," continued Harris.
Wholly-owned subsidiary Gerova Advisors LLC arranged the transaction.
