Majestic Capital (MAJC)

[Edge83]

If they can pull this one out and keep from going bankrupt or get a buyer should have a big bounce here. Chart is making a nice pincher.



* Bayside cites material deterioration in capital surplus

* Majestic's insurance unit to sell renewal rights to Amtrust

* Amtrust to assume loss reserves and insurance business (Follows alerts)

March 21 (Reuters) - Insurer Majestic Capital Ltd said it expects to file for bankruptcy protection after its sale to a private equity firm fell through, triggering an 85 percent fall in its shares.

In September, Bermuda-based Majestic had agreed to be bought by Bayside Capital Partners for $7.8 million in cash.

However, the private equity firm said a material deterioration in Majestic's capital surplus and failure to secure regulatory approval led to the termination of the deal.

The failure to complete the merger with Bayside is expected to result in a downgrade of Majestic Insurance Co's credit rating and a conservation proceeding by the California Department of Insurance, the company said.

Majestic's insurance unit also entered into a non-binding letter of intent to sell its renewal rights to AmTrust Financial Services Inc , with AmTrust assuming the unit's loss reserves and the insurance business.

Majestic's shares, which had doubled in value since the sale to Bayside was announced, were trading down 71 percent at $1.25 Monday morning on Nasdaq. (Reporting by Tenzin Dekeva in Bangalore; Editing by Saumyadeb Chakrabarty)

http://www.reuters.com/article/2011/03/21/majesticcapital-idUSL3E7EL1YE20110321?feedType=RSS&feedName=bankruptcyNews&rpc=43