FORT WORTH, Texas, July 1, 2008 (PRIME NEWSWIRE) -- Hallmark Financial Services, Inc. ("Hallmark") (Nasdaq:HALL) today reaffirmed its proposal to acquire all of the outstanding stock of Specialty Underwriters' Alliance Inc. ("SUAI"). Hallmark remains committed to its proposal to acquire SUAI in a stock-for-stock transaction where each share of SUAI is valued at $6.50 in Hallmark common stock. The offer price of $6.50 in Hallmark stock for each outstanding share of SUAI represents a significant 37% premium to SUAI's trailing 30-day average closing price of $4.74 per share on Friday, June 13, the last trading day prior to Hallmark's initial written proposal.
The following is a copy of the letter Hallmark sent to the Board of Specialty Underwriters' Alliance, Inc.:
July 1, 2008
Mr. Courtney C. Smith, Chairman, President and Chief Executive Officer
Mr. Peter E. Jokiel, Executive Vice President and Chief Financial
Officer, Director
Mr. Robert E. Dean, Director
Mr. Raymond C. Groth, Director
Mr. Paul A. Philip, Director
Mr. Robert H. Whitehead, Director
Mr. Russell E. Zimmermann, Director
Specialty Underwriters' Alliance Inc.
222 South Riverside Plaza
Chicago, IL 60606
To: the Board of Directors of Specialty Underwriters' Alliance Inc.
I am writing to reaffirm the written proposal by Hallmark Financial
Services, Inc. ("Hallmark") to acquire all of the outstanding stock of
Specialty Underwriters' Alliance Inc. ("SUAI") delivered in person to
Courtney Smith at our dinner meeting on June 16.
Hallmark remains committed to our proposal to acquire SUAI in a
stock-for-stock transaction and strongly believes that our proposal
offers significant and compelling benefits to SUAI shareholders. Our
offer price of $6.50 in Hallmark stock for each outstanding share of
SUAI represents a significant 37% premium to SUAI's trailing 30-day
average closing price of $4.74 per share on Friday, June 13, the day
prior to delivery of our proposal.
Hallmark is deeply disappointed by SUAI's June 26 publicly-stated
response to our proposal: "After due deliberation, the SUAI Board
unanimously concluded not to accept this offer".
In our June 16 written proposal, we requested a meeting with SUAI's
Board of Directors and/or management as soon as possible to discuss
our proposal. Beginning on June 17, numerous attempts to speak to you
and your advisors went unanswered.
How is it possible that, on behalf of SUAI shareholders, the Board
fully and fairly considered Hallmark's proposal while at the same time
refusing to engage us in any dialogue? If the Board is truly
endeavoring to act in the best interests of its shareholders, why deny
yourselves the benefit of having all information available before
making an important decision? There is no possible downside, only
upside.
In your June 26 press release you state SUAI's unanimous conclusion to
"remain independent and continue with the execution of its current
business strategy, which the Board believes represents a better
long-term value for the company's shareholders". We again question:
How is it conceivable to arrive at this conclusion without a
willingness to engage in discussions with Hallmark regarding the
merits of its proposal.
Hallmark reiterates its wish to enter into constructive dialogue with
SUAI to achieve a friendly combination that we believe will be a
win-win outcome for SUAI shareholders:
1. SUAI shareholders will receive an immediate significant 37%
premium to SUAI's trailing 30-day average closing price as of
Friday, June 13.
2. SUAI shareholders' upside potential will not be capped. SUAI
shareholders will retain a continuing ownership interest in
Hallmark and will benefit from any future gains in Hallmark
shares.
As the largest SUAI shareholder, with beneficial ownership of
1,429,615 shares representing 9.7% of the common stock outstanding, we
ask that you not summarily dismiss our proposal and deny your
shareholders this truly outstanding opportunity. Hallmark is a bona
fide buyer, without a financing contingency, and requires no unusual
conditions to close. Our proposal is a firm proposal, subject only to
confirmatory due diligence, the negotiation of a mutually satisfactory
definitive agreement and customary shareholder and regulatory
approvals.
As stated previously, Hallmark's senior management stands ready to
meet with you and answer any questions concerning our proposal. We
look forward to hearing from you.
Very truly yours,
Mark E. Schwarz
Executive Chairman
Hallmark Financial Services, Inc.
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