First Security Group, Inc. (FSGI)

[56Chevy]

First Security Group Inc (FSGI): Billionaire Michael Price Just Reported a Massive Stake

Published: April 15, 2013 at 12:14 pm

In the hedge fund world, Michael Price's MFP Investors reported a buy of 6,080,000 shares of First Security Group Inc (NASDAQ:FSGI) in a 13D filing with the SEC's Edgar system. Altogether, the holding in First Security Group is now worth close to $15,321,600. This is a new position, and was likely a piece of the company's strategic recapitalization last week.

Looking at the entire picture, 13Ds reveal the goals of activist hedge fund managers. These talented managers are the most widely covered in the investment space, and look to impose their will to an already standing company.

In layman's terms, it's extremely important for retail investors to pay attention to Michael Price's (MP) new investment into First Security Group Inc (NASDAQ:FSGI).

[....]

http://www.insidermonkey.com/blog/first-security-group-inc-fsgi-billionaire-michael-price-just-reported-a-massive-stake-117712/?singlepage=1

*MP's buy-in price? $1.50...how do we know?

Stock Purchase Agreement

On February 25, 2013, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with certain institutional investors, including affiliates of EJF Capital LLC (“EJF”), GF Financial II, LLC (“GF Financial”), MFP Partners, L.P. (“MFP”) and Ulysses Partners, L.P. (“Ulysses”) (collectively, the “Investors”), whereby EJF, GF Financial, MFP and Ulysses each agreed to purchase approximately $9.0 million of common stock at the Purchase Price. In aggregate, Investors agreed to purchase approximately $91.1 million of common stock at $1.50 per share. The Stock Purchase Agreement provided that the Company could direct each Investor to purchase all or part of such Investor's committed investment from Treasury. Investors purchased shares remaining from their committed investment directly from the Company. Accordingly, on April 12, 2013, the Company sold 50,793,092 shares of common stock to the Investors.

Subscription Agreements

Other accredited investors (the “Local Investors”) executed subscription agreements (“Subscription Agreements”), pursuant to which they committed to purchase shares of common stock for the Purchase Price. The Subscription Agreements provided that the Company could direct each Local Investor to purchase all or a portion of such Local Investor's committed investment from Treasury.

Gross-Up Rights

The Stock Purchase Agreement provides that each Investor acquiring 5.0% or more of the Company's outstanding common stock will hold gross-up rights by which they may purchase sufficient securities as to maintain their ownership percentage of the Company. Any offering of securities by the Company that is not contemplated by the Stock Purchase Agreement will trigger these rights, and any purchase of securities by such Investors will be on the same or similar terms as those offered to other investors. The gross-up rights terminate with respect to each Investor once such Investor no longer owns 5.0% or more of the Company's outstanding common stock.

Changes to the Board of Directors

The Stock Purchase Agreement provides that, prior to closing, MFP and Ulysses would each designate an individual to serve as a director of the Company, each subject to regulatory non-objection. As a result, the Board of 5 Directors will be increase in size by two directors. The Company has agreed to nominate the designated directors so long as the respective institutions retain ownership of at least 50% of their acquired shares.

The Stock Purchase Agreement also provides that each Investor that beneficially owns at least 5.0% of the Company's outstanding common stock may designate an individual to attend meetings of the Board of Directors as a non-voting observer (the “Observer”). The right of each Investor to appoint an Observer terminates once such Investor no longer owns 5.0% or more of the Company's outstanding common stock.

The foregoing summary of the documents relating to the Recapitalization are not complete and are qualified in their entirely by reference to the full text of such documents, copies of which are included as exhibits to the Company’s Current Report on Form 8-K filed on February 26, 2013 and incorporated by reference herein. See “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.”

http://www.faqs.org/sec-filings/130425/FIRST-SECURITY-GROUP-INC-TN_S-1/

*PPS as of 5/1/2013 $3.68. Needs to go lower.