PRAGUE, June 14, 2018 /PRNewswire/ -- Arca Capital, one of the largest shareholders of AmTrust Financial Services, Inc., is urging fellow shareholders to disregard the recently-revised ISS report and continue to vote NO on the upcoming privatization vote at the amended $14.75 offer price scheduled for June 21, 2018.
Arca Capital has emphasized its own analysis as well as the analysis of Short Hills Capital illustrating a clear long-term price target of between $25 to $31 per share. As recently as February 24, 2017, sixteen months ago, AmTrust's stock stood at $27.66 per share. The $14.75 amended buyout price represents approximately 50 percent of that value. From a technical perspective, Arca Capital emphasizes that $14.75 per share represents a Book Value per Share (BVPS) of 1.0x as opposed to relevant peers trading at an average of 1.64x. Moreover, Arca's analysis illustrates that the $14.75 offer represents a Tangible Book Value per Share (TVPS) of 1.5x which again compares to its relevant peers trading at an average of 1.86x. This analysis, in Arca Capital's view, is a clear technical metric that shows that AmTrust is worth significantly more than $14.75 per share.
"Our analysis of the technicals and fundamentals of AmTrust clearly illustrates that the $14.75 per share offered is designed to appeal to shareholders' fears of uncertainty rather than a truly fair price for the company. Barry Zyskind, as CEO, may have purposefully created much of this uncertainty to devalue the stock for the purpose of allowing a cheap buyout. We urge shareholders to vote NO on this buyout and NO to taking a 50% loss on an investment during a period of nearly unprecedented stock market growth," said Pavol Krúpa, Chairman of Arca Capital
Arca Capital has previously said that the increased offer of $14.75 per share is nothing more than a cosmetic increase over the previous $13.50 per share offer. Furthermore, Arca has said that the increased buyout price does not mitigate the substantial concerns discussed by ISS in its May 25th report where it recommended shareholders vote NO on privatization. Specifically, ISS mirrored Arca's concerns that AmTrust's ruling Zyskind/Karfunkel family knew something that investors didn't regarding the fundamental strength of the firm.
"The buyer group eventually included the company's CEO, who would appear to know the company as well as anyone; if he is willing to buy at this price, does that not imply that the company's challenges are not so severe?" says the May 25th ISS report.
To that end, Arca Capital continues to express its concern that the controlling family's interest in privatizing the firm is indicative of the firm's fundamental strength.
"More than the technical and fundamental analysis, the best illustration of the true value of AmTrust is its own controlling family's actions. Less than two weeks after adamantly insisting they would not move on the price, the Zyskind/Karfunkel family increased their bid. Why? Because they know precisely that AmTrust's problems, like ISS has said, are not as severe as imagined. The Zyskind/Karfunkel family knows that the value of AmTrust is between $25 to $31 per share. If investors keep rejecting their lowball offers, the family will increase their offer price to reflect this price target," added Krúpa.
Arca Capital also questions claims made by the Zyskind/Karfunkel family in a press release on June 4, 2018, where the family claimed they were reaching out to major shareholders in the aftermath of the failed privatization vote at $13.50 per share.
"Despite being one of the largest shareholders of AmTrust and despite being prepared to negotiate in good faith, we were never approached by the Zyskind/Karfunkel family. This purported 'outreach' to shareholders never materialized. Yet again, these claims are symptomatic of the dubious way that the Zyskind/Karfunkel family does business," Krúpa added.
Arca Capital has announced its intention to seek appraisal of its AmTrust shares through the Delaware Court of Chancery to determine the fair value of the company should the transaction be approved on June 21st.
"We will seek all available legal remedies, including appraisal. Make no mistake, Arca Capital will settle for no less than fair value and will continue to hold the Zyskind/Karfunkel family accountable until the end of time or until this matter is resolved," added Krúpa.
About Arca Capital
Arca Capital is a private investment group with a strong Central European exposure. It focuses on the development of its private equity activities oriented on energy, real estate, retail and service activities, as well as regulated activities focused on building and managing fund structures focusing on energy, real estate and financial services. Arca Capital also carries out projects with a so-called activist approach, with the goal of remedying and eliminating management actions that have a negative impact on companies, and with the goal of achieving significant positive change in strategy, financial structure or management.
Assets under management over $1.7 billion USD.
Mob: +420 776 575 096
Tel: +420 224 231 813
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SOURCE Arca Capital