Sunset Financial Resources and Alesco Financial Trust to Merge
28 Aprile 2006 - 6:48AM
PR Newswire (US)
Sunset Enters into Interim Management Agreement with Cohen Brothers
JACKSONVILLE, Fla., and PHILADELPHIA, April 27
/PRNewswire-FirstCall/ -- Sunset Financial Resources, Inc.
(NYSE:SFO) and Alesco Financial Trust announced today a definitive
agreement to merge. Under the terms of the agreement, Sunset will
issue 1.26 Sunset shares for each Alesco share. The combined
company will continue to trade on the NYSE and will operate under
the Alesco Financial name. The merged company will pursue Alesco's
investment strategy focused on trust preferred securities issued by
banks and insurance companies, middle market loans and residential
mortgage backed securities. Alesco Financial Trust, a specialty
finance REIT, completed a $111 million Rule 144A equity offering in
January 2006 and currently has approximately $2.2 billion in
assets. Alesco is externally managed by Cohen Brothers Management
LLC, a leading asset management firm based in Philadelphia, PA.
Cohen Brothers currently has approximately $17.0 billion in assets
under management, including over $7.0 billion in trust preferred
securities issued by banks and insurance companies. Cohen Brothers
is a market leader in trust preferred securities to these sectors
with an estimated 35% market share. Trust preferred financing is
attractive to banks and insurance companies as it qualifies for
favorable regulatory and rating agency capital treatment. Sunset
has entered into an interim management agreement with Cohen
Brothers, effective immediately, which will allow Sunset to
transition its existing assets into assets consistent with the
investment strategy of the combined company. Sunset expects the
interim management agreement will allow the company to more
efficiently execute the merger integration and allow the company to
more quickly realize the benefits of the transaction. Upon the
closing of the merger, Cohen Brothers will continue as the combined
company's external manager. "After doing an extensive analysis of
our strategic alternatives, including studying our existing
business model, the Special Committee of the Board of Directors of
Sunset determined that the best course of action to optimize
shareholder value was to alter our existing investment strategy.
Cohen Brothers has an outstanding track record of creating value
for shareholders with its structured finance products. As a result,
our Board of Directors decided to pursue a merger with Alesco and
enter into an external management agreement with Cohen Brothers,"
said George Deehan, CEO of Sunset. "Sunset expects the transaction
to be accretive to earnings within the next year as the Alesco
business plan is fully phased in," said Rodney Bennett, Sunset's
Chairman of the Board of Directors, "And by entering into the
interim management agreement, we believe we will achieve improved
results during the pre-merger period." Daniel Cohen, Chairman of
the Board of Alesco said, "Sunset has done a commendable job of
preserving value in a difficult interest rate environment and has
skillfully managed its residential mortgage backed securities
portfolio. We are excited about this transaction as it provides
Alesco with an NYSE listing and public market liquidity for our
shareholders. In addition, it represents a meaningful addition of
capital with which we can further execute our business strategy and
create value for shareholders." Key Transaction Benefits - Expected
to be accretive to per share earnings of both Sunset and Alesco
shareholders within the first year of operations - Accretive to
Alesco's book value per share - Improved access to capital for both
Sunset and Alesco - Provides public stock market liquidity to
Alesco shareholders and increases Sunset's stock market float and
liquidity - Sunset shareholders benefit from a new investment
strategy in higher yielding assets - Approximately doubles Alesco's
capital base in a cost effective manner - Sunset shareholders gain
access to the management expertise and experience of Cohen Brothers
Upon the completion of the merger, the board of directors will
consist of nine directors: three independent directors from Sunset,
four independent directors from Alesco, and Daniel G. Cohen,
Alesco's Chairman, and James J. McEntee, Alesco's President &
CEO. Mr. Cohen will serve as Chairman and Mr. McEntee will serve as
President & CEO of the merged company. As part of the
transaction, Sunset will conduct a tender in which it will offer to
purchase for cash up to $25 million of Sunset common shares from
existing Sunset shareholders at a price of $8.74 per share. The
tender is expected to close immediately prior to the closing of the
merger. Current Sunset shareholders will own 42% of the combined
company (35% if the full self-tender amount is fully subscribed).
The transaction is structured as tax free to Alesco shareholders.
The 1.26 Sunset shares per Alesco share represents an implied value
of approximately $11.15 per Alesco share based on Sunset's closing
price of $8.85 on April 27, 2006. Additionally, the combined
company will have a total equity market capitalization of $220 mm
based on this price. The exchange ratio and tender offer values are
subject to adjustments based on the repayment of certain Sunset
commercial loans. The merger agreement is also subject to
shareholder approval from both companies and other customary
conditions. The transaction is expected to close in the third or
fourth quarter of 2006. Banc of America Securities LLC acted as
financial advisor to Sunset and Locke Liddell & Sapp LLP acted
as its legal counsel. JP Morgan acted as a co-advisor to Sunset.
Friedman, Billings, Ramsey & Co., Inc. acted as the financial
adviser to Alesco and Clifford Chance US LLP acted as its legal
counsel. Investor Conference Call An investor conference call is
scheduled for Friday, April 28, 2006 at 11:00 AM Eastern. A live
webcast of the conference call and presentation will be available
online at http://www.sunsetfinancial.net/. Web participants are
encouraged to go to the Web site at least 15 minutes prior to the
start of the call to register, download, and install any necessary
audio/visual software. Those without web access should access the
call telephonically at least ten minutes prior to the conference
call. The dial-in number is (877) 502-9274 (domestic) and (913)
981-5584 (international). An archive of the webcast will be
available online at http://www.sunsetfinancial.net/ on Tuesday, May
2, 2006. In addition, a dial-in replay of the call will be
available from Tuesday, May 2, 2006 through 11:59 p.m. ET on
Tuesday, May 9, 2006. The replay dial-in number is (719) 457-0820
(domestic) and (888) 203-1112. The passcode is 4734555.
Presentation materials to accompany the conference call can be
found at both http://www.sunsetfinancial.net/ and at
http://www.alescofinancialtrust.com/. About Sunset Sunset is a
specialty finance REIT headquartered in Jacksonville, Florida. The
company invests in high quality residential mortgage backed
securities and commercial bridge loans. As of March 31, 2006, it
had approximately $1.1 billion of assets. Sunset trades on the New
York Stock Exchange under the symbol "SFO". About Alesco Alesco is
a specialty finance REIT headquartered in Philadelphia,
Pennsylvania. The company is externally managed by an affiliate of
Cohen Brothers. Alesco invests in trust preferred stock issued by
banks and insurance companies, middle market loans, and residential
mortgage backed securities. As of March 31, 2006, Alesco had
approximately $2.2 billion in assets. About Cohen Brothers Cohen
Brothers is a leading asset management firm with approximately
$17.0 billion in assets under management, including over $7.0
billion in trust preferred securities. Based in Philadelphia, PA,
the company has over 70 professionals in offices in Philadelphia,
New York City, and Paris. Cohen Brothers is a market leader in
trust preferred securities origination for bank and insurance
companies with a 35% market share in 2005. The company has managed
15 CDO and CLO transactions since 2002 and was ranked as the second
largest manager of aggregate CDO assets under management for
2002-2005, according to Asset-Backed Alert, an industry
publication. Contacts Sunset Financial Resources, Inc. Stacy Riffe,
Chief Financial Officer (904) 425-4365 Alesco Financial Trust John
Longino, Chief Financial Officer (215) 701-9687 Additional
Information About This Transaction This material is not a
substitute for the proxy statement/prospectus Sunset will file with
the Securities and Exchange Commission. Investors are urged to read
the proxy statement/prospectus which will contain important
information, including detailed risk factors, when it becomes
available. The proxy statement/prospectus and other documents which
will be filed by Sunset with the Securities and Exchange Commission
will be available free of charge at the SEC's website,
http://www.sec.gov/, or by directing a request when such a filing
is made to . Sunset, its directors, and its executive officers may
be considered participants in the solicitation of proxies in
connection with the proposed transactions. Information about the
directors and executive officers of Sunset and their ownership of
Sunset stock is set forth in the 2005 Annual Report on Form 10K.
Investors may obtain additional information regarding the interests
of such participants by reading the proxy statement/prospectus for
the proposed merger when it becomes available. Forward-Looking
Statements Information set forth in this release contains
forward-looking statements, which involve a number of risks and
uncertainties. Sunset and Alesco caution readers that any
forward-looking information is not a guarantee of future
performance and that actual results could differ materially from
those contained or implied in the forward-looking information. Such
forward-looking statements include, but are not limited to,
statements about the benefits of the business combination
transaction involving Sunset and Alesco, including future financial
and operating results, the new company's plans, objectives,
expectations and intentions and other statements that are not
historical facts. The following factors, among others, could cause
actual results to differ from those set forth in the
forward-looking statements: factors that affect the timing or
ability to complete the transactions contemplated herein; the risk
that the business will not be integrated successfully; the risk
that cost savings and any other synergies from the transaction may
not be fully realized or may take longer to realize than expected;
disruption from the transaction making it more difficult to
maintain relationships with lenders, other counterparties, or
employees; competition and its effects on pricing, spending,
third-party relationships and revenues; the failure of the
companies to successfully execute their business plans, gain access
to additional financing, the availability of additional loan
portfolios for future acquisition, continued qualification as a
REIT and the cost of capital. Additional factors that may affect
future results are contained in Sunset's filings with the SEC,
which are available at the SEC's web site http://www.sec.gov/.
Sunset and Alesco disclaim any obligation to update and revise
statements contained in these materials based on new information or
otherwise. DATASOURCE: Sunset Financial Resources, Inc. CONTACT:
Stacy Riffe, Chief Financial Officer of Sunset Financial Resources,
Inc., +1-904-425-4365; or John Longino, Chief Financial Officer of
Alesco Financial Trust, +1-215-701-9687 Web site:
http://www.sunsetfinancial.net/
http://www.alescofinancialtrust.com/
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