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buying property abroad
News and Information Article
OVERLAND PARK, Kan., Sept. 15 /-FirstCall/ -- Brooke
Corporation (Nasdaq: BXXX) announced today the sale of 20,000 shares,
representing $20 million stated value, of its newly designated Perpetual
Convertible Preferred Stock Series 2006, coupled with warrants, to an
accredited institutional investor in a negotiated private placement
transaction. Antaeus Capital, Inc. served as the placement agent for the
offering.
The net proceeds will be used to repay a $10 million promissory note
issued during the second quarter of 2006 for the purpose of contributing
capital to Brooke Corporations finance company subsidiary to help it fund
a growing loan portfolio. It is expected that the remaining net offering
proceeds will be used to support the further growth of Brooke Corporations
subsidiaries, including growth through additional product and service
offerings made available to Brooke insurance agency franchisees.
Dividends on the Preferred Stock will be paid in cash at a rate of 13
percent per annum; however, subject to certain exceptions, no dividends
will be accrued or paid on the Preferred Stock for the first two years
after closing. The purchase price of $14.6 million represented a $5.4
million discount from the $20 million stated value.
The Preferred Stock is convertible into Brooke common stock at a fixed
conversion price of $17 per share of common stock, subject to anti-dilution
adjustments. This conversion price represents a 40 percent premium to
yesterdays closing price. Based on a $17 per share conversion price,
approximately 1.2 million shares of Brooke common stock would be issued if
all of the Preferred Stock is converted into common stock.
The purchaser may convert the Preferred Stock into Brooke common stock
pursuant to the terms of the transaction documents. After two years, under
certain circumstances, Brooke Corporation may also require the investor to
convert the Preferred Stock if Brookes common stock price exceeds $29.75
per share for a specified number of days. After two years, subject to
certain conditions, Brooke Corporation may redeem up to 50 percent of the
Preferred Stock for a cash payment equal to 115 percent of the investment
amount being redeemed and, after five years, may redeem the remaining
Preferred Stock upon the same terms.
In conjunction with the Preferred Stock sale, Brooke Corporation also
issued warrants to purchase approximately 235,000 shares of Brooke common
stock at an exercise price of approximately $24 per share, subject to anti-
dilution adjustments, which is approximately 200 percent of the weighted
average price for the five trading days preceding the closing date. These
warrants are exercisable immediately and expire after 48 months.
In connection with this sale, the company signed a registration rights
agreement with the holder of the Preferred Stock. Among other things, this
registration rights agreement requires the company, within 30 days after
closing, to file a registration statement relating to the resale of the
common stock issuable upon conversion of the Preferred Stock and upon
exercise of the warrants. The sale of the Preferred Stock was not
registered under the Securities Act of 1933 and was offered and sold
pursuant to the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. This announcement is made as a matter of record
only and no Preferred Stock or other securities are offered hereby.
About our company ... Brooke Corporation is listed on the Nasdaq Global
market under the symbol "BXXX." Brooke Corporation is a holding company
with three operating subsidiaries. Brooke Franchise Corporation is a
subsidiary that distributes insurance and financial services through a
network of more than 650 franchise locations. Brooke Credit Corporation is
a subsidiary that originated loans to insurance agencies and other
businesses that sell insurance or financial services, including Brooke
franchisees. Brooke Brokerage Corporation is a subsidiary that brokers
hard-to-place insurance and brokers loans for general insurance agencies
specializing in hard-to-place insurance sales. For more information, visit
http://www.brookecorp.com .
E-mail Distribution ... To receive electronic press alerts, visit the
Brooke Corporation Media Room at http://brookecorp.mediaroom.com and
subscribe to our e-mail alerts online.
This press release contains forward-looking statements. All forward-
looking statements involve risks and uncertainties, and several factors
could cause actual results to differ materially from those in the
forward-looking statements. The following factors, among others, could
cause actual results to differ from those indicated in the forward-looking
statements: uncertainties associated with the conversion price for the
Preferred Stock and the number of shares of common stock actually issued as
a result of the conversion of the Preferred Stock and exercise of the
warrants, uncertainties associated with the use of proceeds from the sale
of Preferred Stock and warrants, uncertainties associated with adjustments,
conditions, restrictions and protections included in the terms of the
agreements, the Preferred Stock, the warrants and other documents related
to the sale of the Preferred stock and warrants and related transactions,
the uncertainty that the Company will achieve its short-term and long-term
profitability and growth goals, uncertainties associated with market
acceptance of and demand for the Companys products and services, the
impact of competitive products and pricing, the dependence on third-party
suppliers and their pricing, its ability to meet product demand, the
availability of funding sources, the exposure to market risks,
uncertainties associated with the development of technology, changes in the
law and in economic, political and regulatory environments, changes in
management, the dependence on intellectual property rights, the
effectiveness of internal controls, and risks and factors described from
time to time in reports and registration statements filed by Brooke
Corporation with the Securities and Exchange Commission. A more complete
description of Brookes business is provided in Brooke Corporations most
recent annual, quarterly and current reports, which are available from
Brooke Corporation without charge or at http://www.sec.gov .
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