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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  June 30, 2020

 

Hilltop Holdings Inc.

(Exact name of registrant as specified in its charter)

 

Maryland   1-31987   84-1477939

(State or other jurisdiction of

incorporation)

 

(Commission

File Number)

 

(IRS Employer Identification

No.)

 

6565 Hillcrest Avenue    
Dallas, Texas   75205
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code:  (214) 855-2177

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to section 12(b) of the Act:

 

Title of each class ​ Trading symbol ​

Name of each exchange on which

registered

Common Stock, par value $0.01 per share ​ HTH ​ New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

  

 

 

 

 

Section 1 – Registrant’s Business and Operations

 

  Item 1.01 Entry into a Material Definitive Agreement.

 

On June 30, 2020, Hilltop Holdings Inc. (“Hilltop Holdings”) entered into an amendment (the “Amendment”) to the previously disclosed stock purchase agreement (as amended, the “Purchase Agreement”), dated January 30, 2020, by and among Hilltop Holdings, ARC Insurance Holdings, Inc., a Delaware corporation and a direct wholly owned subsidiary of Hilltop Holdings (“ARC” and, together with Hilltop Holdings, “Hilltop”), Align NL Holdings, LLC, a Delaware limited liability company (“Buyer”), and, for limited purposes set forth therein, Align Financial Holdings, LLC, a Delaware limited liability company and the parent entity of Buyer (together with Buyer, “Align”) and MGI Holdings, Inc., a Delaware corporation (“MGI”). Pursuant to the Amendment, the purchase price payable by Align to Hilltop in connection with the Sale (as defined below) was reduced from $150,000,000 to $143,600,000, subject to adjustment as set forth in the Purchase Agreement.

 

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by the full text of the Amendment attached hereto as Exhibit 2.2, which is incorporated herein by reference.

 

Section 2 – Financial Information

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

On June 30, 2020, Hilltop completed the previously announced sale of 100% of the outstanding capital stock of National Lloyds Corporation, a Delaware corporation and a direct wholly owned subsidiary of ARC (“NLC”) in an all-cash transaction (the “Sale”), pursuant to the Purchase Agreement. Concurrent with the closing of the Sale, Buyer sold two subsidiaries of NLC, National Lloyds Insurance Company and American Summit Insurance Company, to ReAlign Insurance Holdings, LLC, a Delaware limited liability company (“ReAlign”), in an all-cash transaction pursuant to a separate definitive stock purchase agreement. ReAlign is a holding company formed by ReAlign Capital Strategies, LLC and MGI.

 

The information set forth in Item 1.01 above is incorporated into this Item 2.01 by reference.

 

The foregoing description of the Sale does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which was filed as Exhibit 2.1 to Hilltop Holdings’ Current Report on Form 8-K filed with the Securities and Exchange Commission on February 3, 2020, and the full text of which is incorporated herein by reference.

 

Section 8 – Other Events

 

  Item 8.01 Other Events.

 

On July 1, 2020, Hilltop Holdings issued a press release announcing the completion of the Sale. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Section 9 – Financial Statements and Exhibits

 

  Item 9.01 Financial Statements and Exhibits.

 

  (a) Financial statements of businesses acquired. Not applicable.

 

  (b) Pro forma financial information. Not applicable.

 

  (c) Shell company transactions. Not applicable.

 

  (d) Exhibits.  

 

The following exhibit(s) are filed or furnished, depending on the relative item requiring such exhibit, in accordance with the provisions of Item 601 of Regulation S-K and Instruction B.2 to this form.

 

 

 

Exhibit
Number 		  Description of Exhibit
 2.2   First Amendment, dated June 30, 2020, to Stock Purchase Agreement by and among Hilltop Holdings Inc., ARC Insurance Holdings, Inc., Align NL Holdings, LLC and, for limited purposes set forth therein, Align Financial Holdings, LLC and MGI Holdings, Inc., dated January 30, 2020 (filed pursuant to Item 1.01)
     
99.1   Press Release dated July 1, 2020 (filed pursuant to Item 8.01)
     
104   Cover Page Interactive File (formatted as Inline XBRL).

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Hilltop Holdings Inc.,
  a Maryland corporation
     
     
Date:        July 1, 2020 By: /s/ COREY PRESTIDGE
  Name: Corey G. Prestidge
  Title: Executive Vice President,
    General Counsel & Secretary

 

 

Exhibit 2.2

 

EXECUTION VERSION

 

FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

 

This First Amendment to Stock Purchase Agreement (this “Amendment”) is entered into as of June 30, 2020, by and among Hilltop Holdings Inc., a Maryland corporation (“Hilltop”), ARC Insurance Holdings, Inc., a Delaware corporation and a direct wholly owned subsidiary of Hilltop (“ARC Insurance Holdings,” and collectively with Hilltop, “Seller”) and Align NL Holdings, LLC, a Delaware limited liability company (“Buyer”).

 

WHEREAS, Seller, Buyer and the other parties thereto are party to that certain Stock Purchase Agreement dated as of January 30, 2020 (as amended, the “Purchase Agreement”);

 

WHEREAS, pursuant to Section 11(i) of the Purchase Agreement, no amendment of any provision of the Purchase Agreement shall be valid unless the same shall be in writing and signed by the Parties, which is defined in the Purchase Agreement as Seller and Buyer; and

 

WHEREAS, Seller and Buyer have agreed, upon the following terms and conditions, to amend the Purchase Agreement, subject to the terms and conditions hereof.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.         Terms and References. Unless otherwise stated in this Amendment (a) terms defined in the Purchase Agreement have the same meanings when used in this Amendment, and (b) references to “Sections” are to sections of the Purchase Agreement (as modified hereby).

 

Section 2.         Amendments to Purchase Agreement.

 

(a)      The definition of “Initial Purchase Price” contained in Section 1 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

“Initial Purchase Price” means One Hundred Forty Three Million Six Hundred Thousand Dollars ($143,600,000).

 

(b)      Section 2(c)(i) of Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

 

 

“Pre-Closing Financial Statements and Pre-Closing Adjustment Notice. As promptly as practicable, but no later than 10 days prior to the Closing Date, Seller shall prepare and deliver, or shall cause to be prepared and delivered, to Buyer (A) a balance sheet of NLC, prepared in accordance with GAAP, applied on a basis consistent with the accounting principles, practices, procedures, methodologies and policies that were employed in preparing the NLC Financial Statements (with consistent classifications, judgments, inclusions, exclusions and valuation and estimation methodologies) (the “NLC Pre-Closing Balance Sheet”) as of the Closing Date, and (B) a statement (the “Pre-Closing Adjustment Notice”) setting forth (1) the Tangible Book Value of NLC on the NLC Pre-Closing Balance Sheet, as calculated as set forth on Section 2(c) of the Seller Disclosure Letter (the “NLC Pre-Closing Tangible Book Value”), and the amount calculated as follows: (I) the NLC Pre-Closing Tangible Book Value, less (II) the Target NLC Closing Tangible Book Value (such amount, whether positive or negative, the “TBV Change”) and (2) an amount equal to twenty-three percent (23%) of the difference between (I) $78,800,000 plus or minus the TBV Change to the extent attributable to the Carrier Entities (the contribution of the Guidewire system from NLC to NGC shall be expressly excluded from the determination of the TBV Change attributable to the Carrier Entities) and (II) the adjusted tax basis of the assets of NGC, Excalibur Financial Corporation, a Delaware corporation, and the Insurance Companies (the “Section 338(h)(10) Subsidiaries ”) less any liabilities of the Section 338(h)(10) Subsidiaries taken into account for income Tax purposes (the amount calculated pursuant to this clause (2), the “Tax Amount”), provided, however, that if RIH and Buyer do not make or cause to be made an election pursuant to Section 338(h)(10) of the Code with respect to the actual or deemed sale of the stock of the Section 338(h)(10) Subsidiaries in the Carrier Entities Transaction, Buyer shall pay over the Tax Amount to Seller no later than five (5) business days after the due date for filing IRS Form 8023.”

 

Section 3.           Remaining Terms. Except as modified hereby, all of the terms and conditions set forth in the Purchase Agreement shall remain unchanged and in full force and effect, and by executing this Amendment each party agrees to be bound by the same. The provisions of Section 11 of the Purchase Agreement shall apply to this Amendment, mutatis mutandis, and are incorporated herein by this reference as if fully set forth herein.

 

Section 4.           Amendments to Other Transaction Documents. All references in the Transaction Documents to the Purchase Agreement shall henceforth be deemed to be references to the Purchase Agreement, as modified and amended hereby, and as may, from time to time, be further amended or modified in accordance with its terms.

 

(Signature page to follow.)

 

2

 

 

IN WITNESS WHEREOF, each of the parties has executed this Amendment as of the date first written above.

 

BUYER:  
   
   
ALIGN NL HOLDINGS, LLC  
   
By: /s/ Kieran A. Sweeney  
Name: Kieran A. Sweeney  
Title: Chief Executive Officer  

 

SELLER:  
   
   
ARC INSURANCE HOLDINGS, INC.  
   
By: /s/ Corey G. Prestidge  
Name: Corey G. Prestidge  
Title: Vice President and Secretary  
   
   
HILLTOP HOLDINGS INC.  
   
   
By: /s/ Corey G. Prestidge  
Name: Corey G. Prestidge  
Title: Executive Vice President and General Counsel  

 

SIGNATURE PAGE TO FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

 

 

Exhibit 99.1

 

   
     
Hilltop Media Contact:   Align Media Contact:
Ben Brooks | 214.252.4047   Kieran Sweeney | 619.333.2501
ben.brooks@hilltop-holdings.com   ksweeney@aligngeneral.com

 

Hilltop Investor Relations Contact:

Erik Yohe | 214.525.4634

eyohe@hilltop-holdings.com

 

Hilltop Holdings Inc. Completes Sale of National Lloyds

Corporation to Align Financial Holdings, LLC

 

DALLAS (July 1, 2020) – Hilltop Holdings Inc. (NYSE: HTH) (“Hilltop”) and Align Financial Holdings, LLC (“Align”) today announced the completion of the sale of Hilltop’s wholly owned subsidiary, National Lloyds Corporation (“National Lloyds”), to Align on June 30. The transaction, which was first announced in January 2020, closed following the receipt of required regulatory approvals and the satisfaction of other customary closing conditions. Gross proceeds (before transaction expenses) at closing to Hilltop from the transaction were approximately $154.1 million, subject to post-closing adjustments.

 

Dallas-based National Lloyds is a specialty property insurer primarily serving owners of lower value homes and mobile homes. The company writes premiums through two subsidiaries, National Lloyds Insurance Company and American Summit Insurance Company (the “Carriers”), and also has wholly owned agency and services businesses, including Nalico General Agency (the “Agencies”).

 

As part of its purchase of National Lloyds, Align concurrently sold the Carriers to ReAlign Insurance Holdings, LLC (“ReAlign”) in an all-cash transaction. ReAlign is an insurance holding company formed by ReAlign Capital Strategies, LLC and other private investors. As part of the transaction, the Agencies retained by Align, or their affiliates, have entered into various agreements with the Carriers to provide services, including acting as a program underwriting manager and claims administrator for the Carriers.

 

“We are so proud of what National Lloyds has accomplished during the past 13 years as a part of the Hilltop family,” said Hilltop Holdings President and CEO Jeremy B. Ford. “We will certainly miss working with the exceptional team that has helped National Lloyds continue to deliver strong financial results as it has throughout the company’s impressive 70-year history, but we are excited for them to embark on this new journey with Align. I believe that Align’s established platform and keen focus on the insurance industry will help take National Lloyds to the next level.”

 

“This strategic transaction will serve to further diversify and scale Align’s business; putting us on track to write close to $500 million of specialty premiums this year,” said Kieran Sweeney, CEO of Align. “National Lloyds is a leading underwriter of specialty personal property insurance and we are delighted to welcome their high-quality team to Align. We look forward to working together to deliver new and enhanced product solutions to their valued customers.”

 

 

 

 

Piper Sandler & Co. acted as exclusive financial advisor to Hilltop Holdings and Wachtell, Lipton, Rosen & Katz served as legal counsel to Hilltop Holdings in connection with the transaction. Durham Jones & Pinegar, P.C. served as legal counsel to Align Financial Holdings in connection with the transaction.

 

About Align Financial Holdings, LLC

 

Headquartered in San Diego, California, Align Financial Holdings, LLC is an insurance holding company that was founded in 2003 and owns and operates leading specialist program underwriting managers. The company’s subsidiaries include: Align General Insurance Agency, LLC, a specialty casualty general insurance agency; Catalytic Risk Managers & Insurance Agency, LLC, a leading independent program underwriting manager of property catastrophe insurance products in the U.S.; and Deposit Choice, a national provider of surety bonds and insurance products to the multifamily housing industry.

 

About ReAlign Insurance Holdings, LLC

 

ReAlign Insurance Holdings, LLC is a new insurance holding company formed by ReAlign Capital Strategies, LLC and private investors to acquire and own broadly licensed admitted and non-admitted insurance companies focused exclusively on the specialty program marketplace in the U.S.

 

About Hilltop Holdings Inc.

 

Hilltop Holdings is a Dallas-based financial holding company. Its primary line of business is to provide business and consumer banking services from offices located throughout Texas through PlainsCapital Bank. PlainsCapital Bank’s wholly owned subsidiary, PrimeLending, provides residential mortgage lending throughout the United States. Hilltop Holdings’ broker-dealer subsidiaries, Hilltop Securities Inc. and Hilltop Securities Independent Network Inc., provide a full complement of securities brokerage, institutional and investment banking services in addition to clearing services and retail financial advisory. At March 31, 2020, Hilltop employed approximately 4,850 people and operated approximately 420 locations in 48 states. Hilltop Holdings’ common stock is listed on the New York Stock Exchange under the symbol "HTH." Find more information at Hilltop-Holdings.com, PlainsCapital.com, PrimeLending.com, and Hilltopsecurities.com.

 

FORWARD-LOOKING STATEMENTS

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we do not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning such things as our plans, objectives, strategies, expectations and intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “might,” “plan,” “probable,” “projects,” “seeks,” “should,” “target,” “view” or “would” or the negative of these words and phrases or similar words or phrases. For a discussion of factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.

 

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