Atlas Financial Holdings, Inc. (NASDAQ:AFH) Files An 8-K Entry into a Material Definitive Agreement

Atlas Financial Holdings, Inc. (NASDAQ:AFH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

Effective November 2, 2020, American Insurance Acquisition, Inc. (“AIAI”), a subsidiary of Atlas Financial Holdings, Inc. (the “Company”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Buckle Corp. (“Buckle”) and the Director of Insurance of the State of Illinois, Robert Muriel (the “Director”), acting solely in his capacity as the statutory and court-affirmed successor to and liquidator (the “Liquidator”) of American Service Insurance Company, Inc., an indirect subsidiary of the Company, and its wholly-owned subsidiary American Country Insurance Company (collectively, “ASIC/ACIC”), each in liquidation. to the Stock Purchase Agreement and subject to closing conditions, including certain insurance regulatory approvals, Buckle will acquire the stock (and thereby the charter and all rights to the state insurance licenses) of ASIC/ACIC (the “Shares”). The timing of such approvals may be impacted by COVID-19. Written court orders were entered on August 11, 2020 and November 4, 2020 liquidating ASIC/ACIC and approving the sale of the stock in, and channeling of the charter and rights to all licenses of, ASIC/ACIC; the parties await approval from the Illinois Department of Insurance.
The purchase price for the Shares (the “Purchase Price”), which will be paid to the Liquidator on behalf of the ASIC/ACIC liquidation Estates, is comprised of a Closing Payment and a holdback amount, subject to further adjustment six months following the closing date. The “Closing Payment” will be calculated as the sum of the following:
(i) Eighty Thousand Dollars ($80,000) for each insurance license that is not restricted by state insurance regulators as of the closing; plus
(ii) Forty Thousand Dollars ($40,000) for each insurance license that is restricted but not cancelled by state insurance regulators as of the closing.
ASIC/ACIC currently collectively have 43 unrestricted licenses plus 20 restricted licenses. Among other factors, closing is contingent upon at least 40 state licenses being unrestricted in at least 36 states.
A holdback amount will be paid within five (5) business days following the date that is six (6) months following the closing date, which will be calculated based on the status of licenses that may change following closing. The final Purchase Price will be increased or decreased based the same amount per license type used to determine the Closing Payment should licenses that were restricted or unrestricted at closing change status.
Upon closing, affiliates of Buckle and affiliates of AIAI intend to expand their existing general agency agreement relating to the transition of qualifying taxi, livery and limousine insurance business written by Anchor Group Management, Inc., a wholly-owned indirect subsidiary of the Company (“AGMI”), to include ASIC/ACIC, as well as a program framework agreement relating to future administrative support to be provided by AIAI and AGMI in connection with the operation of ASIC/ACIC. The parties also intend to continue discussing a claim handling arrangement with the Liquidator following the closing. Effective June 16, 2020, Buckle acquired the stock, charter, and state licenses of Gateway Insurance Company (“GIC”), which was another indirect subsidiary of the Company in state court liquidation proceedings. By court order entered October 30, 2020, the liquidation estates of GIC, ASIC and ACIC were consolidated.
The description of the Stock Purchase Agreement contained herein is a summary description only and is qualified in its entirety by the terms of the Stock Purchase Agreement. Closing is subject to regulatory approvals and other contingencies. There can be no assurance that these contingencies will be met.
7.01 Regulation FD Disclosure.
On November 5, 2020, the Company issued a press release announcing the Stock Purchase Agreement. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference. The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing under the Securities Act.
Forward-Looking Statements
This Current Report on Form 8-K includes forward-looking statements and information within the meaning of the federal securities laws regarding the Company and its businesses. Such statements are based on the current expectations, estimates, projections, and assumptions made by management. The words “anticipate,” “expect,” “believe,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or similar words are used to identify such forward looking information. The forward-looking events and circumstances discussed in this report may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the Company, including risks regarding the effects and duration of the COVID-19 outbreak, the insurance industry, economic factors, and the equity markets generally and the other risk factors discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and subsequent periodic reports. Many of these uncertainties and risks are difficult to predict and beyond management’s control. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made, and the Company and its subsidiaries undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
9.01 Financial Statements and Exhibits.
(d) Exhibits
Atlas Financial Holdings, Inc. Exhibit
EX-10.1 2 asicacicbucklespaagreeme….
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