Summary
Arthur J. Gallagher & Co. (AJG) announced on March 28, 2005, through a Form 8-K filing, that its wholly-owned subsidiary, AJG Financial Services, Inc. (AJGFS), entered into a Purchase and Sale Agreement on March 22, 2005, to sell its partnership interests in the Florida Community Development. This divestiture is expected to generate a pre-tax gain for the company. The transaction involves the sale of AJGFS's stake in a limited partnership that owns the Development. The company anticipates receiving approximately $25.8 million in cash, with a net cash consideration of $22.1 million. This sale is projected to result in a pre-tax gain of $11.0 million to $12.0 million. The closing is slated for April 2005, contingent upon standard closing conditions. Importantly, Gallagher will continue to support the Development by posting a $12.6 million letter of credit to guarantee existing bonds, for which it will be fully indemnified and compensated.
Key Highlights
- 1AJG's subsidiary, AJG Financial Services, Inc. (AJGFS), entered into a definitive agreement to sell its partnership interests in the Florida Community Development.
- 2The sale is expected to be completed in April 2005, subject to customary closing conditions.
- 3AJGFS will receive approximately $25.8 million in cash, including $22.1 million in net cash consideration.
- 4The transaction is anticipated to generate a pre-tax gain for AJG ranging from $11.0 million to $12.0 million.
- 5AJG will continue to provide a $12.6 million letter of credit to guarantee $12.4 million of bonds issued by the Development.
- 6AJG will be fully indemnified by the purchaser's affiliate for this guarantee and will receive cash compensation for costs plus 1% of certain future cash flow residuals.