8-KMaterial AgreementsExhibits & Filings

Arthur J. Gallagher & Co. 8-K Report, Material Agreement (Jan 31, 2007)

Filed January 31, 2007For Securities:AJG

Summary

Arthur J. Gallagher & Co. (AJG) filed an 8-K on January 31, 2007, reporting on a definitive agreement. Specifically, on January 25, 2007, a 90% owned subsidiary, AJG Capital, Inc., completed the sale of its 100% ownership in Aviacargo Leasing Limited (Aviacargo) to Aviacargo 27125/27347, LLC and Erste Finance Malta Limited Partnership. Aviacargo is an airplane leasing company that operates two cargo airplanes leased to the French Postal Service. The sale of Aviacargo resulted in a purchase price of $0.7 million. This transaction led to an after-tax loss for Gallagher of approximately $5.0 million, which was recognized in the fourth quarter of 2006 within the Financial Services Segment. As part of the divestiture, $27.5 million in net fixed assets and $27.9 million in debt were transferred to the buyers.

Key Highlights

  • 1Sale of 100% ownership in Aviacargo Leasing Limited completed on January 25, 2007.
  • 2The transaction involved AJG Capital, Inc. (a 90% owned subsidiary of AJG) as the seller.
  • 3Buyers are Aviacargo 27125/27347, LLC and Erste Finance Malta Limited Partnership.
  • 4Aviacargo Leasing Limited owns two cargo airplanes leased to the French Postal Service.
  • 5Total purchase price for Aviacargo was $0.7 million.
  • 6The divestiture resulted in an approximate $5.0 million after-tax loss for AJG, recognized in Q4 2006.
  • 7$27.5 million in net fixed assets and $27.9 million in debt were transferred to the buyers.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report on the entry into and completion of a material definitive agreement, specifically the sale of Arthur J. Gallagher & Co.'s subsidiary, Aviacargo Leasing Limited.

The sale of Aviacargo resulted in an after-tax loss of approximately $5.0 million for Gallagher, which was recognized in the fourth quarter of 2006 within the Financial Services Segment.

The total purchase price paid by the buyers for Aviacargo was $0.7 million. Additionally, $27.5 million of net fixed assets and $27.9 million of debt were transferred from the seller to the buyers as part of the transaction.

The filing indicates Aviacargo was a 90% owned subsidiary and its sale resulted in a recognized loss, suggesting it was a distinct business unit. The transfer of significant assets and debt implies it was a notable operation, but its divestiture suggests it may no longer be considered core to Gallagher's strategic direction.