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Affirmative closes $100 million sale; proceeds will be used for debt repayment or capital infusion
By Lisa Kerner
Charlotte, N.C., Sept. 30 - Affirmative Insurance Holdings, Inc. announced it closed the sale of its retail agency distribution business to Confie Seguros for $100 million in cash, with the potential to receive an additional $20 million of cash proceeds.
As previously reported, the initial $100 million of cash proceeds will include $20 million to be placed in an escrow account to be used to either infuse capital into Affirmative or to pay down debt.
Affirmative expects to pay down about $72 million of its current $119 million senior debt obligation with the net proceeds available after the $20 million is placed into escrow and after transaction expenses.
The company may received up to an additional $20 million of proceeds that could be used to pay down debt or for capital, contingent on meeting certain risk-based capital thresholds, beginning June 30, 2014 and achieved quarterly through Dec. 31, 2015.
Additional financing
Affirmative also has replaced its existing senior credit facility with the proceeds from the sale and with proceeds from two new debt arrangements: a $40 million senior secured credit facility from Credit Suisse AG, Cayman Islands Branch with a maturity date of March 30, 2016 and a $10 million subordinated secured credit facility from JCF AFFM Debt Holdings, LP with a maturity date of March 30, 2017.
Affirmative Insurance is an Addison, Texas, producer and provider of personal non-standard automobile insurance policies to individual consumers.
Confie Seguros is a Huntington Beach, Calif.-based national insurance distribution company.
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