Syncora sells SGI for $392.5m

16-08-2019

Syncora Holdings has announced the signing of an agreement to sell Syncora Guarantee (SGI), its wholly owned, New York financial guarantee insurance subsidiary, to Star Insurance Holdings, an entity organised by GoldenTree Asset Management on behalf of GoldenTree’s managed funds and accounts, for $392.5 million in cash, subject to adjustment. 

The company said that the cash purchase price for SGI represents a premium to the closing share price of Syncora’s common stock on March 1, 2019, the trading day prior to the announcement of the process.  In addition to the cash purchase price, after the closing of the sale, Syncora will have cash in the amount of $32 million and specified non-core assets currently held at SGI, including certain non-cash assets of Pike Pointe Holdings, and an 80 percent interest in Swap Financial Group. 

The closing of the transaction remains subject to customary conditions, including approval by the New York Department of Financial Services, and clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to take place by the end of the fourth quarter of 2019 or during the first quarter of 2020.  The transaction does not require the approval of Syncora’s shareholders.

On March 4, 2019, Syncora, working with its financial advisor, Moelis & Company, and its US legal advisor, Debevoise & Plimpton, commenced a formal review process to explore and evaluate strategic alternatives which included the sale of Syncora or SGI.

According to Syncora the process included solicitations of interest from dozens of potential acquirers, executed non-disclosure agreements with 20 potential acquirers and bids from five interested parties.  After several rounds of bidding, the board of directors of Syncora selected GoldenTree’s bid as the most attractive to the company.

Frederick Hnat, CEO and president of Syncora, remarked that “this agreement is the culmination of years of hard work and focus on our core strategies of risk reduction, asset monetisation and enhancing value for our shareholders.  We are very pleased with the terms of the agreement with Star Insurance, an entity organised by GoldenTree, one of the largest independent asset managers focused on credit, and believe that it helps accomplish our long stated goal of optimising shareholder value and returning capital to shareholders.”

Syncora, SGI, sale, financial guarantee, Star Insurance

Bermuda Re