Mark J. Morrison
Chief Financial Officer
817-348-1600
http://www.hallmarkgrp.com
FORT WORTH, Texas -- April 11, 2005 -- Hallmark Financial Services,
Inc. (Amex: HAF.EC) today announced the distribution to its shareholders of
subscription rights to purchase an aggregate of 50,000,000 additional shares
of common stock of the Company. Hallmark also announced that it has filed a
registration statement with the Securities and Exchange Commission relating
to the shareholder rights offering.
Upon the effectiveness of the registration statement, the Company will distribute
to its shareholders of record as of April 20, 2005, non-transferable rights
containing a basic subscription privilege and an over-subscription privilege.
The basic subscription privilege entitles a shareholder to purchase 1.37 shares
of Hallmark common stock for each share of the common stock owned as of the
record date. If all shareholders do not fully exercise their basic subscription
rights, the over-subscription privilege entitles shareholders who have fully
exercised their basic subscription right to purchase additional shares on a
pro rata basis. Hallmark anticipates that the rights offering will begin promptly
following the effectiveness of the registration statement filed with the SEC
and will continue for thirty days thereafter.
"The purpose of the rights offering is to strengthen the financial condition
and underwriting capacity of the Company sufficiently to enhance the structure
and broaden the scope of its operations," stated Mark E. Schwarz, Hallmark's
President and Chief Executive Officer. "Hallmark has initiated the regulatory
process necessary to consolidate the underwriting of all of its non-standard
automobile insurance into one insurance subsidiary and to convert its other
personal lines insurance subsidiary to a commercial lines insurance carrier,"
Mr. Schwarz continued.
Hallmark's Chief Financial Officer, Mark J. Morrison, stated, "The $45.0
million in new equity capital expected to be raised in the rights offering,
together with $30.0 million in proceeds from new debt sought to be obtained,
will be used as working capital for the Company's business and general corporate
purposes. The Company believes that the infusion of this additional working
capital and realignment of its insurance operations will allow it to write and
retain additional personal lines business, permit it to directly write commercial
lines business presently being sold as agent for a third party insurer, and
enable both insurance subsidiaries to achieve more favorable financial strength
ratings from our rating agencies."
Neither Hallmark, its board of directors, nor any committee of the board of
directors is making any recommendation to shareholders as to whether to exercise
their subscription rights. Further information regarding the rights offering,
including the process for exercising subscription rights, will be communicated
after the registration statement filed with the SEC becomes effective. When
available, a written prospectus may be obtained by contacting Hallmark Financial
Services, Inc., 777 Main Street, Suite 1000, Fort Worth, Texas 76102, Attention:
Investor Relations.
The registration statement filed with the SEC relating to these securities
has not yet become effective. These securities may not be sold and offers may
not be accepted prior to the time the registration statement becomes effective.
The rights offering will only be made by means of prospectus. This press release
does not constitute an offer to sell or the solicitation of an offer to buy
these securities, and there will not be any sale of these securities in any
state in which such offer, solicitation, or sale would be unlawful prior to
registration or qualification under securities laws of such state.
Hallmark Financial Services, Inc. engages primarily in the sale of property
and casualty insurance products. The Company's business involves marketing and
underwriting of non-standard personal automobile insurance primarily in Texas,
Arizona and New Mexico, marketing commercial insurance primarily in Texas, New
Mexico, Idaho, Oregon and Washington, third party claims administration, and
other insurance related services. The Company is headquartered in Fort Worth,
Texas, and its common stock is listed on the American Stock Exchange under the
symbol "HAF.EC".
Forward-looking statements in this release are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Act of 1995. Investors
are cautioned that actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and uncertainties including,
but not limited to, continued acceptance of the Company's products and services
in the marketplace, competitive factors, interest rate trends, the availability
of financing, underwriting loss experience and other risks detailed from time
to time in the Company's registration statement and periodic reports filed with
the Securities and Exchange Commission.
For further information, please contact:
Mark J. Morrison, Chief Financial Officer at 817-348-1600
http://www.hallmarkgrp.com
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Suite #1000