The Western Investment Company of Canada, part-owner of Fortress Insurance Company, has announced an increase in the maximum size of its proposed private placement offering, expanding the potential proceeds to $30 million.
The adjustment follows heightened interest after Western’s prior announcement on Aug. 30. The private placement, initially set at $10 million, has been increased to $25 million, with an option for an additional $5 million over-allotment.
“We have received substantially more interest than we expected and that we are able to allocate,” said Scott Tannas, Western president and chief executive. “As a result, we have decided to upsize the private placement… to bring as many long-term shareholders into this opportunity as possible.”
The private equity company plans to offer up to 62.5 million units at $0.40 each, targeting accredited investors. Each unit will consist of one common share and one warrant, allowing investors to purchase an additional common share at $0.47, exercisable over five years from the closing date. The offering includes an over-allotment option for up to an additional 12.5 million units.
Proceeds from the offering will be allocated to fund working capital and pursue acquisitions. A portion of the capital raised may also be used to support the cash component of Western’s planned purchase of additional shares in Fortress.
As previously announced, Western plans to become the sole owner of Fortress. It currently owns 28.5% of the insurance business.
“Securing agreements for the purchase of 100% of Fortress Insurance, instead of the 51% outlined as a condition of the original transaction, would have required a complex and costly process in order to close the Fortress Insurance acquisition,” Tannas said in August.
“In addition to being costly, this would have significantly delayed and altered the original transaction. Given the strategic importance to Western of acquiring 100% of Fortress Insurance in the near term, we searched for a simpler and more efficient financing path.
“This revised transaction provides Western with a much clearer and quicker path to achieving its insurance and investments growth strategy and maintains a simple capital structure.”
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