GWG Holdings, a Minneapolis firm in the life insurance policy-settlement business, has struck a deal with a Texas financier to raise debt-and-equity capital in a bid to expand GWG's business.
GWG plans to raise up to $800 million from the issuance of $400 million in its stock and $400 million in bonds through the Beneficient Co. of Dallas, and investors in Beneficient.
"This transaction stands to potentially double our assets to over $1.6 billion and quadruple our total equity to over $500 million," William Acheson, GWG's chief financial officer, said in a statement. "This is a transformational vote of confidence in GWG … giving us both a scaled balance sheet and an additional source of current earnings, which complements our large and growing life insurance portfolio."
Beneficient markets financial products and retirement funds to affluent individuals and institutions.
GWG and Beneficient will work together on complementary products and distribution.
GWG Chief Executive Jon Sabes said Beneficient's financing will allow GWG to also roll out "Beneficient's innovative alternative-asset liquidity products to independent broker-dealers and registered investment advisers once Beneficient obtains pending regulatory approvals."
Bob MacDonald, a former CEO of Allianz Life of North America who served as a short-term consultant to GWG, said the challenge for GWG will be covering incremental debt payments and dividends, as well as policy premiums on the new policies it buys.
GWG buys discounted policies from those who are insured who want to cash out early. It becomes the beneficiary of policies it buys from insureds. It gets paid when the insureds die and payment is made by a life insurer.
GWG has provided seniors $457 million-plus in value for life policies and boasts a portfolio of policies with a face value of $1.62 billion.
GWG's stock surged 26 percent Friday morning on news of the deal with the Texas company. The thinly traded stock backed off in the afternoon to an $8.60 per share close, up about 6 percent, on 10 times normal volume.
CEO Sabes, 51, is the single-largest individual shareholder of GWG at about 2.3 million shares, according to GWG's most recent proxy statement. Sabes and his brother Steven, also a GWG executive, beneficially own more than 75 percent of the stock.
GWG stock has traded between $7.64 and $11.25 per share over the last 52 weeks.
Neal St. Anthony • 612-673-7144
