NEW YORK, Dec. 11, 2014 (GLOBE NEWSWIRE) -- AmTrust Financial Services, Inc. (Nasdaq:AFSI) (the "Company" or "AmTrust") today announced that it has entered into separate, privately negotiated exchange agreements under which it will retire $131.9 million in aggregate principal of the Company's outstanding 5.50% Convertible Senior Notes due 2021 (the "2021 Notes"). Pursuant to the exchange agreements, the holders of the 2021 Notes participating in the exchange will receive 2.7 million shares of the Company's common stock, par value $0.01 per share, and $158.3 million aggregate principal amount of the Company's new 2.75% Convertible Senior Notes due 2044 (the "2044 Notes"). Following the exchange transactions, $68.1 million principal amount of the 2021 Notes will remain outstanding.
The Company also entered into separate, privately negotiated purchase agreements to issue an additional $76.0 million in aggregate principal amount of the 2044 Notes for cash. The Company expects to use the net proceeds from the issuance of such 2044 Notes for general corporate purposes.
The 2044 Notes will be senior, unsecured obligations of the Company and will bear interest at a rate of 2.75% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2015. Beginning with the six-month period starting December 15, 2021, holders of the 2044 Notes will receive contingent interest for certain periods if the trading price of the 2044 Notes is greater than or equal to a certain threshold. Any contingent interest payable on the 2044 Notes will be in addition to the regular interest payable on the 2044 Notes. The 2044 Notes will mature on December 15, 2044, unless earlier converted, redeemed or repurchased.
Prior to September 15, 2044, the 2044 Notes will be convertible, at the option of the holders, only upon satisfaction of certain conditions, including if the 2044 Notes have been called for redemption. The 2044 Notes will have an initial conversion rate of 13.3333 shares of common stock per $1,000 principal amount of 2044 Notes, which corresponds to an initial conversion price of $75.00 per share (based on the $1,000 principal amount of each note), representing approximately a 30% premium over the $57.77 closing price of the Company's common stock on NASDAQ on December 10, 2014. The conversion rate will be subject to adjustment upon the occurrence of certain events. Upon conversion of the 2044 Notes, the Company will, at its election, pay or deliver, as the case may be, cash, shares of AmTrust common stock, or a combination of cash and shares of AmTrust common stock.
The 2044 Notes provide the Company with the option, at its election, to redeem the 2044 Notes in whole or in part, prior to the December 15, 2018 redemption date, providing the trading price of the Company's common stock equals or exceeds $97.50 (or 130% of the then applicable conversion price) for the required measurement period, at a redemption price equal to 100% of the principal amount of the 2044 Notes to be redeemed, plus any accrued and unpaid interest. Thereafter, the 2044 Notes will be subject to redemption for cash, in whole or in part, at the Company's option at a redemption price equal to 100% of the accreted amount of the 2044 Notes to be redeemed, plus any accrued and unpaid interest.
In addition, holders of the 2044 Notes will have the right to require the Company to purchase their 2044 Notes for cash, in whole or in part, on December 15, 2024 or upon the occurrence of a fundamental change. In each such case, the repurchase price would be 100% of the principal amount of the 2044 Notes being repurchased, plus any accrued and unpaid interest.
The shares of the Company's common stock that will be issued pursuant to the exchange agreements and the shares of the Company's common stock issuable upon conversion of the 2044 Notes have been reserved for issuance by the Company and are expected to be listed on the NASDAQ Global Select Market. The 2044 Notes and the shares of the Company's common stock that may be issuable upon conversion of the 2044 Notes will not be registered under the Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable securities laws of any relevant state or jurisdiction.
No Solicitation
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
About AmTrust Financial Services, Inc.
AmTrust Financial Services, Inc., a multinational insurance holding company headquartered in New York City, offers specialty property and casualty insurance products, including workers' compensation, commercial automobile, general liability and extended service and warranty coverage through its primary insurance subsidiaries rated "A" (Excellent) by A.M. Best. For more information about AmTrust, visit www.amtrustgroup.com, or call AmTrust toll-free at 855.327.2223.
Forward Looking Statements
This news release contains "forward-looking statements" that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, non-receipt of expected payments from insureds or reinsurers, changes in interest rates, a downgrade in the financial strength ratings of our insurance subsidiaries, the effect of the performance of financial markets on our investment portfolio, the amounts, timing and prices of any share repurchases made by us under our share repurchase program, our estimates of the fair value of our life settlement contracts, development of claims and the effect on loss reserves, accuracy in projecting loss reserves, the cost and availability of reinsurance coverage, the effects of emerging claim and coverage issues, changes in the demand for our products, our degree of success in integrating acquired businesses, the effect of general economic conditions, state and federal legislation, regulations and regulatory investigations into industry practices, risks associated with conducting business outside the United States, developments relating to existing agreements, disruptions to our business relationships with Maiden Holdings, Ltd., National General Holding Corp., ACP Re, Ltd., or third party agencies and warranty administrators, breaches in data security or other disruptions involving our technology, heightened competition, changes in pricing environments, and changes in asset valuations. The forward-looking statements contained in this news release are made only as of the date of this release. The Company undertakes no obligation to publicly update any forward-looking statements except as may be required by law. Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those projected, is contained in the Company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K and its quarterly reports on Form 10-Q.
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