Dallas-based Hallmark Financial Services Inc. announced it filed a registration statement with the Securities and Exchange Commission relating to an anticipated distribution to its shareholders of subscription rights to purchase additional shares of common stock of the company.
When the registration statement takes effect, the company will distribute to its shareholders of record as of the record date, which has not been determined, a fixed amount of non-transferable rights to subscribe for shares of its common stock. The rights offering is expected continue for thirty days after the statement becomes effective.
The proceeds will be used to repay an $8.6 million loan, plus accrued interest on the loan, made to Hallmark in 2002 by Newcastle Partners, L.P., with any additional proceeds used for working capital purposes. The proceeds of the loan from Newcastle Partners, L.P., were used to finance the purchase of a note receivable from a major bank and the acquisition of a commercial lines general agency and two inactive companies from Millers Insurance Company.
A portion of the note receivable purchased from the bank was later exchanged for all of the capital stock of Phoenix Indemnity Insurance Company, an Arizona domiciled non-standard automobile insurance company.
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