By Isheeta Sanghi
BANGALORE, Jan 25 (Reuters) - Canadian property and casualty insurer Kingsway Financial Services Inc said it would sell its stake in Jevco Insurance Co to Westaim Corp and use the proceeds to repay debt.
Shares of both Kingsway and Westaim rallied on the deal, with Westaim shares soaring 31 percent to a 52-week high of 57 Canadian cents. Kingsway Financial rose 36 percent to C$2.07 on the Toronto Stock Exchange.
Westaim expects to pay C$263 million for Kingsway's stake in Jevco, after giving effect to a proposed dividend from Jevco to Kingsway to be paid before completion of the acquisition.
'There's not an awful lot left of Kingsway Financial once you sell that unit off. Most of the other units are fairly small and not terribly profitable,' RBC Capital Markets analyst Mark Dwelle said by phone. 'The Jevco unit was clearly their best asset.'
Jevco specializes in insurance products covering non-standard auto, recreational vehicles, commercial auto, property and liability.
Dwelle said the price Kingsway received was probably a lot higher than he would have forecast, adding the deal 'certainly creates more liquidity' for Kingsway.
Kingsway, which expects to receive a C$40 million dividend from Jevco before closing, said it plans to immediately purchase debt to ensure it continues to satisfy financial covenants in bond agreements.
In November, Kingsway said it intended to dispose its majority interest in Jevco.
Westaim arranged financing of C$275 million to complete the acquisition. It plans to issue 550 million subscription receipts for 50 Canadian cents per receipt.
(Reporting by Isheeta Sanghi in Bangalore; Editing by Ratul Ray Chaudhuri) Keywords: KINGSWAYFINANCIAL/ (isheeta.sanghi@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: isheeta.sanghi.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BANGALORE, Jan 25 (Reuters) - Canadian property and casualty insurer Kingsway Financial Services Inc said it would sell its stake in Jevco Insurance Co to Westaim Corp and use the proceeds to repay debt.
Shares of both Kingsway and Westaim rallied on the deal, with Westaim shares soaring 31 percent to a 52-week high of 57 Canadian cents. Kingsway Financial rose 36 percent to C$2.07 on the Toronto Stock Exchange.
Westaim expects to pay C$263 million for Kingsway's stake in Jevco, after giving effect to a proposed dividend from Jevco to Kingsway to be paid before completion of the acquisition.
'There's not an awful lot left of Kingsway Financial once you sell that unit off. Most of the other units are fairly small and not terribly profitable,' RBC Capital Markets analyst Mark Dwelle said by phone. 'The Jevco unit was clearly their best asset.'
Jevco specializes in insurance products covering non-standard auto, recreational vehicles, commercial auto, property and liability.
Dwelle said the price Kingsway received was probably a lot higher than he would have forecast, adding the deal 'certainly creates more liquidity' for Kingsway.
Kingsway, which expects to receive a C$40 million dividend from Jevco before closing, said it plans to immediately purchase debt to ensure it continues to satisfy financial covenants in bond agreements.
In November, Kingsway said it intended to dispose its majority interest in Jevco.
Westaim arranged financing of C$275 million to complete the acquisition. It plans to issue 550 million subscription receipts for 50 Canadian cents per receipt.
(Reporting by Isheeta Sanghi in Bangalore; Editing by Ratul Ray Chaudhuri) Keywords: KINGSWAYFINANCIAL/ (isheeta.sanghi@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: isheeta.sanghi.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
