Business & Finance
Business and Finance
Business and Finance
Mon, March 21, 2011 Majestic Capital Announces Termination of the Merger Agreement with Bayside Capital Partners; Non-Binding Letter of Intent with
HAMILTON, Bermuda--([ BUSINESS WIRE ])--Majestic Capital, Ltd. (Majestic Capital) (Nasdaq: MAJC) today announced that Bayside Capital Partners LLC (Bayside) has terminated the previously announced merger agreement with Majestic Capital. In its termination notice, Bayside cited a material deterioration in Majestic Capitala™s capital surplus, an inability to secure regulatory approval for the merger, and a failure to satisfy the closing condition with respect to termination of Majestic Capitala™s lease for office space in Poughkeepsie, New York on terms acceptable to Bayside. As a result of Baysidea™s termination of the merger agreement, Majestic Capitala™s previously scheduled Special General Meeting of Shareholders to vote on the merger agreement scheduled for March 28, 2011 has been cancelled.
The failure to complete the merger with Bayside is expected to result in a downgrade of Majestic Insurance Companya™s aB++a financial strength rating and a conservation proceeding by the California Department of Insurance. As a result, Majestic Capital and its subsidiaries expect to seek protection under applicable United States and Bermuda bankruptcy and other similar laws for the protection of creditors.
Majestic Insurance Company, Majestic Capitala™s wholly-owned insurance subsidiary, has entered into a non-binding letter of intent with AmTrust Financial Services, Inc. (AmTrust) (Nasdaq: AFSI) by which Majestic Insurance Company would sell AmTrust its renewal rights and AmTrust would assume Majestic Insurance Companya™s loss reserves and in-force insurance business through a loss portfolio transfer and 100% quota share reinsurance agreement. The transactions contemplated by the letter of intent are subject to negotiation and execution of definitive agreements and approval by the California Department of Insurance. Majestic Insurance Company has granted AmTrust an exclusivity period until the earlier of June 20, 2011 and the commencement of a conservation proceeding. The proposed transactions by Majestic Insurance Company with AmTrust are not expected to yield any amounts that would be available for distribution to shareholders of Majestic Capital.
Pending the closing of the transactions, Majestic Insurance Company will arrange for workersa™ compensation insurance policies to be underwritten by the AmTrust group companies and reinsured by Majestic Insurance Company under the previously announced 90% quota share reinsurance agreement.
About Majestic Capital, Ltd.
Majestic Capital, through its subsidiaries, is a specialty provider of workersa™ compensation insurance products and services. Further information about Majestic Capital and its business can be found on Majestic Capitala™s website at [ http://www.MajesticCapital.com ].
MAJC-E
About AmTrust Financial Services, Inc.
AmTrust Financial Services, Inc., headquartered in New York, NY is a multinational insurance holding company, which, through its insurance carriers, offers specialty property and casualty insurance products, including workers' compensation, commercial automobile and general liability; extended service and warranty coverage. For more information about AmTrust, visit [ www.amtrustgroup.com ], or call AmTrust toll-free at 866.203.3037.
