The discussion set forth below under “Item 2.01 – Completion of Acquisition or Disposition of Assets” is incorporated in this “Item 1.01 – Entry into a Material Definitive Agreement.”
Item 2.01 Completion of Acquisition or Disposition of Assets
On February 7, 2008, Quanta Capital Holdings Ltd. (the “Company”) entered into a Stock Purchase Agreement with Quanta 4000 Holding Company Ltd., a wholly-owned subsidiary of the Company, and Chaucer Holdings PLC (“Chaucer”), pursuant to which the Company agreed to sell all of its interests at Lloyd’s to Chaucer. Previously, the Company participated in the Lloyd’s of London insurance market through its investment in Syndicate 4000, which is managed by Pembroke Managing Agency Limited (“Pembroke”). Pembroke is a joint venture among the Company, Chaucer and the Syndicate 4000 underwriting team. For the 2007 underwriting year the Company provided 90% of the capital of Syndicate 4000, and an affiliate of Chaucer provided the remaining 10%. The Company’s interests at Lloyd’s that are subject to the Stock Purchase Agreement include its 100% interest in Quanta 4000 Ltd. (which is a corporate member of Syndicate 4000), its 15% interest in Pembroke JV Ltd. (which owns Pembroke) and its deposit of approximately $116.0 million with the Society at Lloyd’s, known as “Funds at Lloyd’s.” The Stock Purchase Agreement provides that, in consideration of the equity interests in Quanta 4000 and Pembroke, the Company will receive the return of its Funds at Lloyd’s. On February 13, 2008, the Company completed the disposition by transferring to Chaucer its interests in Quanta 4000 Ltd. and Pembroke JV Ltd., and the Company received the return of its Funds at Lloyd’s from the Society at Lloyd’s.
Item 7.01 Regulation FD Disclosure
On February 7, 2008, the Company issued a press release announcing the Stock Purchase Agreement referred to in Item 2.01 above. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, the information contained in this Item 7.01 to this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information
QUANTA CAPITAL HOLDINGS LTD.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2007
(Expressed in thousands of U.S. dollars)
UNAUDITED
|
|
|
Quanta |
|
Quanta |
|
|
|
Pro Forma Adjustments |
|
Pro Forma |
| ||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading investments |
|
$ |
643,316 |
|
$ |
(25,073 |
) |
|
|
$ |
— |
|
$ |
618,243 |
|
|
|
|
|
643,316 |
|
|
(25,073 |
) |
|
|
|
— |
|
|
618,243 |
|
|
Cash and cash equivalents (including restricted) |
|
|
174,581 |
|
|
(92,464 |
) |
|
|
— |
|
|
82,117 |
| |
|
Accrued investment income |
|
|
3,946 |
|
|
|
|
|
|
|
— |
|
|
3,969 |
|
|
Premiums receivable |
|
|
41,401 |
|
|
(29,074 |
) |
|
|
|
— |
|
|
12,327 |
|
|
Funds withheld by cedants |
|
|
6,548 |
|
|
— |
|
|
|
|
— |
|
|
6,548 |
|
|
Losses and loss adjustment expenses recoverable |
|
|
149,258 |
|
|
|
) |
|
|
|
— |
|
|
133,871 |
|
|
Other accounts receivable |
|
|
2,337 |
|
|
(279 |
) |
(c) |
|
|
1,354 |
|
|
3,412 |
|
|
Net receivable for investments sold |
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
Deferred acquisition costs, net |
|
|
11,428 |
|
|
(7,058 |
) |
|
|
|
— |
|
|
4,370 |
|
|
Deferred reinsurance premiums |
|
|
19,465 |
|
|
(8,994 |
) |
|
|
|
— |
|
|
10,471 |
|
|
Software, property and equipment, net of accumulated depreciation |
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
Other intangible assets |
|
|
7,175 |
|
|
— |
|
|
|
|
— |
|
|
7,175 |
|
|
Other assets |
|
|
26,078 |
|
|
(1,274 |
) |
(c) |
|
|
(2,676 |
) |
|
22,128 |
|
|
Total assets |
|
$ |
1,086,368 |
|
$ |
(179,580 |
) |
|
|
$ |
(1,322 |
) |
$ |
905,466 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for losses and loss expenses |
|
$ |
563,067 |
|
$ |
(139,388 |
) |
|
|
$ |
— |
|
$ |
423,679 |
|
|
Unearned premiums |
|
|
87,587 |
|
|
(45,684 |
) |
|
|
|
— |
|
|
41,903 |
|
|
Environmental liabilities assumed |
|
|
1,774 |
|
|
— |
|
|
|
|
— |
|
|
1,774 |
|
|
Reinsurance balances payable |
|
|
30,056 |
|
|
(3,888 |
) |
|
|
|
— |
|
|
26,168 |
|
|
Accounts payable and accrued expenses |
|
|
20,736 |
|
|
(571 |
) |
(c,d,e) |
|
|
|
|
|
21,109 |
|
|
Deposit liabilities |
|
|
36,586 |
|
|
— |
|
|
|
|
— |
|
|
36,586 |
|
|
Deferred income and other liabilities |
|
|
1,796 |
|
|
— |
|
|
|
|
— |
|
|
1,796 |
|
|
Total liabilities |
|
|
741,602 |
|
|
(189,531 |
) |
|
|
|
|
|
|
553,015 |
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
Additional paid-in capital |
|
|
582,819 |
|
|
(77 |
) |
|
|
|
— |
|
|
582,742 |
|
|
Accumulated deficit |
|
|
(236,829 |
) |
|
8,046 |
|
(c,d,e) |
|
|
(2,266 |
) |
|
(231,049 |
) |
|
Accumulated other comprehensive (loss) income |
|
|
(1,925 |
) |
|
1,982 |
|
|
|
|
— |
|
|
|
|
|
Total shareholders’ equity |
|
|
344,766 |
|
|
|
|
|
|
|
(2,266 |
) |
|
352,451 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
1,086,368 |
|
$ |
(179,580 |
) |
|
|
$ |
(1,322 |
) |
$ |
905,466 |
|
The accompanying notes form an integral part of these unaudited pro forma condensed financial statements.
QUANTA CAPITAL HOLDINGS LTD.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(Expre