GAINSCO announces special cash dividend, amended credit agreement and racing sponsorship
DALLAS, Texas, December 9, 2011 – GAINSCO, INC. (the “Company”) (Pink Sheets: GANS) today announced that its board of directors approved a special cash dividend of $2 per share. The special dividend will be payable on December 29, 2011 to shareholders of record on December 20, 2011.
The Company believes that, at its current size, it has more than adequate capital to support its insurance operations, and that it is appropriate to return some capital to shareholders through a special cash dividend.
Additionally, the Company announced that its board of directors has approved an amendment to its credit agreement that will allow borrowings up to $10 million on a revolving loan basis until maturity on December 12, 2013. The Company expects to draw up to $4.5 million against this agreement prior to payment of the special dividend. There is currently a zero balance outstanding under the credit agreement.
Finally, the board of directors of the Company authorized the Company to enter into a Sponsorship Agreement with Stallings Capital Group Consultants, Ltd. dba Bob Stallings Racing (“Stallings Racing”), to continue the Company’s role as the primary sponsor of a Daytona Prototype Series racing team through December 31, 2012. The Sponsorship Agreement provides that, in consideration of the payment by the Company of a sponsorship fee of $1,000,000, the Company will receive various benefits customary for sponsors of Daytona Prototype Series racing teams, including rights relating to signage on team equipment and access for customers and agents to race facilities at which the racing team participates. The fee is payable in an initial installment of $325,000 due on February 1, 2012 and nine equal monthly installments of $75,000 beginning March 1, 2012.
The Company uses this sponsorship to build brand awareness and advance the Company’s distribution strategies. The new Sponsorship Agreement is effective January 1, 2012 and replaces a similar agreement that is effective through December 31, 2011.
Stallings Racing is owned and controlled by Robert W. Stallings, the Executive Chairman of the Company. Mr. Stallings did not participate in the Board’s decision regarding the Sponsorship Agreement.
GAINSCO, INC. is a Dallas, Texas-based holding company established in 1978. The Company, through its insurance brand, GAINSCO Auto Insurance®, specializes in minimum-limits personal auto coverage and actively distributes its nonstandard personal auto products through independent retail agents in Florida, Georgia and South Carolina (Southeast Region) and in Arizona, New Mexico, Oklahoma and Texas (Southwest Region). Its insurance company subsidiary is MGA Insurance Company, Inc.
Release Date: Friday, December 9, 2011 – FOR IMMEDIATE RELEASE
Scott A. Marek, Asst. Vice President-IR, 972.629.4493
Richard M. Buxton, Senior Vice President, 972.629.4408
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