SP ACQUISITION HOLDINGS, INC. (“SPAH”)
INTENDS TO FILE A REGISTRATION STATEMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION (“SEC”) AND FRONTIER FINANCIAL CORPORATION (“FRONTIER”) INTENDS TO
FILE A PROXY STATEMENT WITH THE SEC, IN EACH CASE, THAT WILL CONTAIN A
PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS, IN CONNECTION WITH THE PROPOSED
MERGER BETWEEN SPAH AND FRONTIER (THE “MERGER”) AND RELATED TRANSACTIONS AS
DESCRIBED IN THIS REPORT. STOCKHOLDERS AND WARRANTHOLDERS OF SPAH AND OTHER
INTERESTED PERSONS ARE ADVISED TO READ, WHEN AVAILABLE, THE JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH SPAH’S SOLICITATION OF PROXIES FOR THE
SPECIAL MEETINGS BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. SUCH PERSONS CAN
ALSO READ SPAH’S FINAL PROSPECTUS, DATED OCTOBER 10, 2007, IN CONNECTION WITH
SPAH’S INITIAL PUBLIC OFFERING FOR A DESCRIPTION OF THE SECURITY HOLDINGS OF
SPAH’S OFFICERS, DIRECTORS AND AFFILIATES AND THEIR RESPECTIVE INTERESTS IN THE
SUCCESSFUL CONSUMMATION OF THE MERGER. THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS WILL BE MAILED TO SPAH’S STOCKHOLDERS AND WARRANTHOLDERS AS
OF A RECORD DATE TO BE ESTABLISHED FOR VOTING ON THE MERGER AND THE AMENDMENTS
TO THE WARRANT AGREEMENT (AS DEFINED BELOW), AS THE CASE MAY BE. STOCKHOLDERS
AND WARRANTHOLDERS WILL ALSO BE ABLE TO OBTAIN A COPY OF THE DEFINITIVE JOINT
PROXY STATEMENT/PROSPECTUS, WITHOUT CHARGE, BY DIRECTING A REQUEST TO: SP
ACQUISITION HOLDINGS, INC., 590 MADISON AVE., 32ND FLOOR, NEW YORK, NY 10022.
FREE COPIES OF THESE DOCUMENTS, ONCE AVAILABLE, CAN ALSO BE OBTAINED, WITHOUT
CHARGE, AT THE SEC’S INTERNET SITE (HTTP://WWW.SEC.GOV).
COMMENCING SHORTLY AFTER THE FILING OF
THIS CURRENT REPORT ON FORM 8-K, SPAH INTENDS TO HOLD PRESENTATIONS FOR CERTAIN
OF ITS STOCKHOLDERS AND WARRANTHOLDERS, AS WELL AS OTHER PERSONS WHO MIGHT BE
INTERESTED IN PURCHASING SPAH’S SECURITIES.
SPAH, FRONTIER AND THEIR RESPECTIVE
DIRECTORS, EXECUTIVE OFFICERS, AFFILIATES AND OTHER PERSONS MAY BE DEEMED TO BE
PARTICIPANTS IN THE SOLICITATION OF PROXIES FOR THE SPECIAL MEETING OF SPAH
STOCKHOLDERS AND SPAH WARRANTHOLDERS TO BE HELD TO APPROVE THE MERGER AND THE
AMENDMENTS TO THE WARRANT AGREEMENT (AS DEFINED BELOW), AS THE CASE MAY BE.
ADDITIONAL INFORMATION REGARDING THE INTERESTS OF POTENTIAL PARTICIPANTS WILL BE
INCLUDED IN THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER MATERIALS TO BE FILED
BY SPAH AND FRONTIER WITH THE SEC.
This
report and the exhibits hereto contain forward-looking statements with respect
to the financial condition, results of operations, plans, objectives, future
performance, and business of SPAH following the consummation of the Merger.
These statements are preceded by, followed by, or include the words “believes,”
“expects,” “anticipates,” or “estimates,” or similar expressions. Many possible
events or factors could affect the future financial results and performance of
SPAH following the Merger. This could cause the results or performance of SPAH
to differ materially from those expressed in the forward-looking statements.
Investors should consider these important factors when voting on the Merger.
Factors that may cause actual results to differ materially from those
contemplated by the forward-looking statements include (1) delays in closing the
Merger whether due to the inability to obtain stockholder or regulatory approval
or otherwise, (2) loss of key personnel or an expenditure by SPAH of a greater
amount of resources attracting, retaining and motivating key personnel than in
the past, (3) a significant increase in competition among depository and other
financial institutions, (4) changes in the interest rate environment that reduce
operating margins, (5) general economic conditions, either nationally or in
Washington and Oregon, may be less favorable than expected resulting in, among
other things, a deterioration in credit quality and an increase in credit
risk-related losses and expenses, (6) loan losses may exceed the level of
allowance for loan losses of the surviving corporation, (7) the rate of
delinquencies and amount of charge-offs may be greater than expected, (8) the
rates of loan growth and deposit growth may not increase as expected, (9)
legislative or regulatory changes may adversely affect the business of SPAH,
(10) SPAH must successfully integrate Frontier’s operations with its existing
operating platforms if the Merger is consummated, (11) costs related to the
Merger may reduce SPAH’s working capital and (12) SPAH may fail to close the
Merger and may be forced to dissolve and liquidate.
The forward-looking statements are
based on current expectations about future events. Although SPAH believes that
the expectations reflected in the forward-looking statements are reasonable,
SPAH cannot guarantee that these expectations actually will be achieved. SPAH is
under no duty to update any of the forward-looking statements after the date
made to conform those statements to actual results.
Item 1.01
Entry into a
Material Definitive Agreement.
Merger
Agreement
On July 30, 2009, SPAH entered into an
agreement and plan of merger (the “Merger Agreement”) with Frontier that
provides for the merger of Frontier with and into SPAH, with SPAH surviving the
Merger. Frontier Bank, a wholly owned subsidiary of Frontier, will become a
wholly owned subsidiary of SPAH following the Merger. Each share of Frontier
common stock issued and outstanding at the effective time of the Merger will be
converted into the right to receive 0.0530 shares of newly issued SPAH common
stock and the right to receive 0.0530 newly issued warrants to purchase common
stock of SPAH. The Merger Agreement has been unanimously approved by the Board
of Directors of SPAH. SPAH will issue approximately 2.5 million shares and
approximately 2.5 million warrants to holders of Frontier common stock in
consideration of the Merger. Frontier is a Washington corporation
which was incorporated in 1983 and is registered as a bank holding company under
the Bank Holding Company Act of 1956. At June 30, 2009, Frontier had one
principal subsidiary, Frontier Bank, which is engaged in a general banking
business and in businesses related to banking.
The
Merger Agreement contains customary representations, warranties and covenants of
each of SPAH and Frontier. In addition, the Merger Agreement provides that
neither SPAH or Frontier nor any of their respective affiliates and
representatives will solicit any other acquisition proposal.
The consummation of the Merger is
subject to customary closing conditions. In addition, the closing is conditioned
upon, among other things, (i) the approval of the Merger by Frontier and SPAH
stockholders, (ii) no more than 10% of the SPAH public stockholders voting
against the Merger and thereafter exercising their conversion rights (iii) the
approval of amendments to the SPAH amended and restated certificate of
incorporation (“SPAH Certificate of Incorporation”) as described more fully
below by the SPAH stockholders and (iv) the approval of the amendments to the
Warrant Agreement (as hereinafter defined) as more fully described below by the
SPAH warrantholders. The closing is also conditioned upon each of (i) that
certain Cease and Desist Order, dated March 20, 2009, and the related inquiry by
the FDIC and the State of Washington, as such matters are more fully described
in the Quarterly Report of FFC on Form 10-Q for the fiscal quarter ended on
March 31, 2009, and (ii) that certain Written Agreement between FFC and the
Federal Reserve dated July 2, 2009 and (iii) that certain Memorandum of
Understanding between the Board of Directors of FFC and the Regional Director of
the FDIC executed by Frontier on August 20, 2008, being modified in a manner
reasonably acceptable to SPAH, including the elimination of certain provisions
and consequences related thereto. Under certain circumstances, SPAH will be
entitled to receive a $2.5 million termination fee.
A
copy of the Merger Agreement is filed herewith as Exhibit 2.1 and is
incorporated by reference herein. The foregoing description does not purport to
be complete and is qualified in its entirety by reference to the full text of
Exhibit 2.1.
Charter
Amendments
SPAH is proposing to amend the terms of
the SPAH Certificate of Incorporation to revise the definition of an “initial
business combination” to eliminate the requirement that the fair market value of
the target business equal at least 80% of the balance of SPAH’s trust account
(excluding the deferred underwriting discount and commissions plus the proceeds
of the co-investment). SPAH believes that the proposed Merger is an extremely
attractive opportunity in the current market environment and therefore, SPAH
public stockholders should be given the opportunity to consider the business
combination. However, because the SPAH Certificate of Incorporation in its
current form does not allow for SPAH to complete the Merger, each SPAH public
stockholder at the time of the Merger who purchased his or her shares in the
initial public offering and who has not converted his or her shares into cash
may have securities law claims against SPAH for rescission (under which a
successful claimant has the right to receive the total amount paid for his or
her securities pursuant to an allegedly deficient prospectus, plus interest and
less any income earned on the securities, in exchange for surrender of the
securities) or damages (compensation for loss on an investment caused by alleged
material misrepresentations or omissions in the sale of a
security).
Upon approval of the Merger Agreement,
SPAH stockholders will be asked to approve subsequent amendments to the SPAH
Certificate of Incorporation to (i) change SPAH’s corporate name, (ii) provide
for the continued existence of the company and (iii) create a new class of
non-voting common stock that may be issued to warrantholders at their election
upon exercise of their warrants.
Warrant Agreement
Amendment
SPAH is proposing to amend certain
terms of the Amended and Restated Warrant Agreement by and between SPAH and
Continental Stock Transfer & Trust Company (the “Warrant Agreement”) to (i)
increase the exercise price from $7.50 per share to $11.50 per share of SPAH
common stock; (ii) amend the warrant exercise period to (A) eliminate the
requirement that the initial founder’s warrants and additional founder’s
warrants owned by the SPAH insiders become exercisable only after the
consummation of an initial business combination if and when the last sales price
of SPAH common stock exceeds $14.25 per share for any 20 trading days within a
30 trading day period beginning 90 days after such business combination and (B)
extend the expiration date of the warrants to the earlier of (x) seven years
from the consummation of the Merger or (y) the date fixed for redemption of the
warrants set forth in the Warrant Agreement; (iii) provide for the mandatory
downward adjustment of the exercise price for each warrant to reflect any cash
dividends paid with respect to the outstanding common stock of SPAH; (iv)
provide that, in the event an effective registration statement is not in place
on the date the warrants are set to expire, the warrants will remain outstanding
until 90 days after an effective registration statement is filed, provided, that
if SPAH has not filed an effective registration statement within 90 days after
the expiration date, the warrants shall become exercisable for cash
consideration under certain circumstances; (v) provide that no adjustment in the
number of shares issuable upon exercise of each warrant will be made upon
consummation of the Merger Agreement and (vi) provide that each warrant will
entitle the holder thereof to purchase, in its sole discretion, either one share
of voting common stock or one share of non-voting common stock.
Stockholders who purchased shares in
SPAH’s initial public offering and have not exercised their conversion rights,
may have securities law claims against SPAH for rescission (under which a
successful claimant has the right to receive the total amount paid for his or
her securities pursuant to an allegedly deficient prospectus, plus interest and
less any income earned on the securities, in exchange for surrender of the
securities) or damages (compensation for loss on an investment caused by alleged
material misrepresentations or omissions in the sale of a security) as SPAH’s
initial public offering prospectus did not disclose that SPAH may seek to amend
the Warrant Agreement upon consummation of the Merger as discussed in detail
above.
Frontier Lock-up and Support
Agreements
Certain of Frontier’s and Frontier
Bank’s executive officers, directors and stockholders beneficially owning 5% or
more of Frontier’s outstanding common stock (other than Barclay’s Global
Investors, State Street Bank and Trust Company and other institutional
investors) and each other person who Frontier reasonably believes may be deemed
an “affiliate” of Frontier for purposes of Rule 145 under the Securities Act of
1933 have entered into lock-up agreements not to sell, pledge, transfer or
otherwise dispose of the shares of SPAH common stock for a one year period
ending on the first anniversary of the consummation of the Merger. In addition,
the directors and executive officers of Frontier and Frontier Bank, and each
shareholder beneficially owning 5% or more of Frontier’s outstanding equity
securities (other than Barclay’s Global Investors, State Street Bank and Trust
Company and other institutional investors) has executed a support agreement (the
“
Support
Agreements
”
)
in connection with the execution of the Merger Agreement whereby each individual
has agreed to vote the shares that he or she owns in favor of the Merger and
against any competing transactions that may arise. In addition, each
individual has agreed to not transfer such shares as provided in the Support
Agreement.
The receipt of Lock-Up and Support
Agreements by all of Frontier’s executive officers, directors, stockholders and
affiliates and Frontier Bank’s executive officers and directors referred to
above is a condition to the closing of the merger.
A copy of the Form of Support Agreement
is filed herewith as Exhibit 10.1 and is incorporated by reference herein. The
foregoing description does not purport to be complete and is qualified in its
entirety by reference to the full text of Exhibit 10.1.
Item
9.01.
Financial Statements
and Exhibits.
(d)
Exhibits
Exhibit
No
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Description
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2.1
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Agreement
and Plan of Merger, dated as of July 30, 2009, by and between SP
Acquisition Holdings, Inc. and Frontier Financial
Corporation
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10.1
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Form
of Support Agreement
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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Date:
July 31, 2009
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SP
ACQUISITION HOLDINGS, INC.
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By:
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Jack
L. Howard
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Chief
Operating Officer and Secretary
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EXHIBIT
INDEX
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Exhibit No.
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Description
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2.1
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Agreement
and Plan of Merger, dated as of July 30, 2009, by and between SP
Acquisition Holdings, Inc. and Frontier Financial
Corporation
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10.1
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Form
of Support Agreement
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