The Canadian Press
Kingsway Financial Services Inc. (TSX:KFS) stock gained more than 30% Monday after it announced a proposed sale of its Jevco Insurance subsidiary to Westaim Corp. (TSX:WED) in a deal worth about $263 million.
Kingsway stock lifted 52¢ to $2.04 on the Toronto Stock Exchange shortly after the opening bell, while Calgary-based Westaim was ahead 8.5¢ to 52¢.
Jevco specializes in providing non-standard insurance for autos, recreational vehicles, commercial autos, property and liability. The company also provides surety insurance for the Canadian construction industry.
Westaim’s primary asset is its 75% interest in Nucryst Pharmaceuticals Corp. (TSX:NCS) but the company has a mandate to invest in businesses with the potential for capital appreciation.
“This acquisition will complete the transformation of Westaim into a company with a new focus on the Canadian insurance business,” Westaim president Cameron MacDonald said in a statement.
The sale price is based on 94.5% of Jevco’s book value as of Dec. 31, subject to adjustments. In addition, prior to closing the sale, Kingsway will receive a C$40 million dividend from Jevco.
The deal requires approval from the Minister of Finance and Westaim shareholders.
The company said it has arranged $275 million in financing to complete the acquisitions, including $148 million to be invested in the company by Alberta Investment Management Corporation (AIMCo).
In addition, GMP Securities LP has agreed to underwrite a $50 million “bought-deal” private placement and to offer an additional $59.5 million of subscription receipts on a “best efforts” basis.
Directors and officers of Westaim, Jevco management, funds managed by Goodwood Inc. and certain other investors are expected to provide an additional $17.5 million in funding.
“Jevco and its management team are very pleased to have entered into this strong partnership with Westaim,” said Serge Lavoie, Jevco’s chief executive.
“This transaction is designed to bring financial strength and stability to Jevco, and to bring comfort to our business partners. We are excited with the significant growth opportunities ahead, and look forward to our future with Westaim.”
Based in Mississauga, Ont., Kingsway operates through a number of subsidiaries in the United States and Canada, including Jevco. Kingsway said it has conditional agreements to repurchase about US$47 million of its outstanding debt if the Jevco deal is completed successfully.
Westaim to buy Jevco stake from Kingsway Financial
cquisition will complete the Acquisition will transform Westaim into a company with a new focus on the Canadian insurance business
- By: Canadian Press
- January 25, 2010 January 25, 2010
- 09:40