Integon Corporation Modifies Subordinated Note in Connection with Proposed Acquisition of Integon Life

Strategic Insights -

Winston-Salem, N.C.-based Integon Corporation, a leading provider of specialty automobile insurance products, announced on January 9, 1995, that its Board of Directors has approved modifications to the $10 million 10% Subordinated Note due 2002 issued by Integon Life Corporation. The modifications aim to facilitate the proposed acquisition of Integon Life by PennCorp Financial Group, Inc. The agreement reached between Integon Life and PennCorp follows the termination of a previously announced deal with The Liberty Corporation. Integon Corporation will waive prepayment requirements, extend the principal payment schedule, and permit interest accrued through December 31, 1995, to be paid on January 31, 1996. The modifications are contingent upon the completion of the acquisition and the guarantee of the Subordinated Note by PennCorp.

Key Takeaways:

  • The Board of Directors approved modifications to the $10 million 10% Subordinated Note due 2002, allowing PennCorp Financial Group, Inc. to assume obligations under the note in connection with its proposed acquisition of Integon Life Corporation.
  • The modifications include waiving mandatory prepayment on the Subordinated Note, extending the annual principal payment schedule by two years, and permitting interest accrued and accruing on the note through December 31, 1995, to be paid on January 31, 1996.
  • The Subordinated Note was issued to Integon Corporation in February 1992, with a current principal amount of $10 million and a monthly interest payment rate of 10% per annum.
  • The proposed modifications are conditioned upon the acquisition of Integon Life by PennCorp and the guarantee of the Subordinated Note by PennCorp.
  • Integon Corporation will forbear from taking action on a default in the early interest payment due under the Subordinated Note, with the next interest payment due on January 15, 1995.
  • The Subordinated Note is subordinated to approximately $27.6 million in senior notes issued by Integon Life Corporation, which are claimed to be in default by the agent for the holders.

Statistics:

  • $10 million: Principal amount of the 10% Subordinated Note due 2002
  • 10%: Interest payment rate per annum on the Subordinated Note
  • $27.6 million: Outstanding principal amount of senior notes issued by Integon Life Corporation
  • 1992: Year the Subordinated Note was issued to Integon Corporation
  • 2002: Date the Subordinated Note is due
  • $333,333: Amount of interest payments on the Subordinated Note demanded by the agent for the holders of senior notes
  • $3 million: Purchase price for Integon Services Company, an affiliate of Integon Life Corporation, acquired by Integon Corporation on December 22, 1994
  • $1.0 billion: Integon Corporation's total assets as of September 30, 1994
  • $368 million: Integon Corporation's total revenues for the nine-month period ended September 30, 1994
  • 10,000: Number of independent agencies through which Integon Corporation markets its products
  • 20: Number of states in which Integon Corporation markets its products

Sources:

  • Integon Corporation press release, January 9, 1995
  • PR Newswire, January 9, 1995
  • SEC filings, Integon Corporation, Winston-Salem, North Carolina