Kingstone Reduces Debt By 25% and Extends Maturity to June 2026

Rhea-AI Summary

Kingstone Companies, Inc. (NASDAQ:KINS) has announced a significant debt restructuring initiative. The company has entered into a new Note Exchange Agreement with existing noteholders to refinance $19.95 million of outstanding 12% Senior Notes due December 30, 2024. Under the new agreement, Kingstone will issue $14.95 million in new 13.75% Senior Notes due June 30, 2026, along with $5 million in cash. This move effectively reduces the company's debt by 25% and extends the maturity date by 18 months. Additionally, the expiration date for warrants issued in 2022 will be extended to June 30, 2026. The exchange is set to close on September 12, 2024. CEO Meryl Golden emphasized that this refinancing will enhance financial flexibility and allow for focus on profitable growth opportunities.

Positive

• Debt reduced by 25% from $19.95 million to $14.95 million
• Debt maturity extended by 18 months to June 30, 2026
• New debt structure allows for principal repayment without premium or penalty
• Improved financial flexibility for focusing on profitable growth opportunities

Negative

• Interest rate on new notes increased from 12% to 13.75%
• $5 million cash payment required as part of the debt restructuring

Insights

Financial Analyst

This debt refinancing deal marks a significant improvement in Kingstone's financial position. The 25% reduction in debt principal from $19.95 million to $14.95 million is a positive step towards deleveraging. However, the increased interest rate from 12% to 13.75% could partially offset these savings. The extended maturity to June 2026 provides Kingstone with more breathing room, enhancing financial flexibility. The self-amortizing structure allows for gradual debt reduction, which could improve the company's credit profile over time. While the $5 million cash payment might impact short-term liquidity, the overall deal seems beneficial for Kingstone's long-term financial health. Investors should monitor how effectively management utilizes this improved financial position to drive growth and profitability.

Insurance Industry Expert

This refinancing deal reflects positively on Kingstone's strategic financial management in a challenging insurance market. As a regional property and casualty insurer, Kingstone faces unique challenges, including potential catastrophic events in the Northeast. The debt reduction and extended maturity could provide a important buffer against unforeseen circumstances. The ability to repay principal without penalties is particularly advantageous in the cyclical insurance industry, allowing Kingstone to adjust its debt levels in response to market conditions. However, the higher interest rate might pressure underwriting margins, requiring careful balance between growth and profitability. The management's focus on "profitable growth opportunities" suggests a prudent approach, which is essential in the current competitive insurance landscape.

Market Research Analyst

Kingstone's debt restructuring could be viewed favorably by the market, potentially improving investor sentiment. The 25% debt reduction and extended maturity demonstrate proactive financial management, which is important for smaller, regional insurers. The warrant extension to 2026 aligns investor interests with long-term company performance. However, the increased interest rate might raise concerns about higher financing costs. Investors should closely monitor Kingstone's ability to translate this financial flexibility into tangible growth and improved operational efficiency. The stock's performance post-announcement will be a key indicator of market reception. Given the challenges in the property and casualty insurance sector, Kingstone's ability to capitalize on this financial restructuring will be critical for its competitive positioning and market valuation.

KINGSTON, NY / ACCESSWIRE / September 3, 2024 / Kingstone Companies, Inc. (NASDAQ:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, announced today that it has entered into a new Note Exchange Agreement (the "Exchange Agreement") with its existing noteholders to refinance its outstanding 12% Senior Notes in the aggregate principal amount of $19.95 million due on December 30, 2024 (the "Existing Notes").

Pursuant to the Exchange Agreement, Kingstone will issue to the noteholders, in exchange for their Existing Notes, new 13.75% Senior Notes due June 30, 2026, in the aggregate principal amount of $14.95 million along with cash totaling $5 million. In addition, the expiration date for the warrants issued in 2022 at the time of the issuance of the Existing Notes will be extended to June 30, 2026. The exchange is scheduled to close on Thursday, September 12, 2024.

"We are pleased to have entered into this debt refinancing agreement," said Meryl Golden, Kingstone's Chief Executive Officer. "The new debt structure is self-amortizing and allows us to repay the principal without a premium or penalty. Our intent is to reduce the amount of the debt and the corresponding interest expense, as quickly as our operating results will allow, to drive enhanced value for our stockholders. This refinancing will enable us to heighten our focus on successfully executing the profitable growth opportunities currently underway. We look forward to utilizing Kingstone's enhanced financial flexibility to the benefit of all stakeholders."

About Kingstone Companies, Inc.

Kingstone is a northeast regional property and casualty insurance holding company whose principal operating subsidiary is Kingstone Insurance Company ("KICO"). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2023 was the 15^th largest writer of homeowners insurance in New York. KICO is also licensed in New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine.

Forward-Looking Statements

Statements in this press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those included in forward-looking statements due to a variety of factors. For more details on factors that could affect expectations, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

Kingstone undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Investor Relations Contact:

Karin Daly
Vice President
The Equity Group Inc.
kdaly@equityny.com

SOURCE: Kingstone Companies, Inc.

View the original press release on accesswire.com

FAQ

What is the new debt amount for Kingstone Companies (KINS) after the refinancing?

After the refinancing, Kingstone Companies (KINS) will have a new debt amount of $14.95 million in 13.75% Senior Notes.

When is the new maturity date for Kingstone's (KINS) refinanced debt?

The new maturity date for Kingstone's (KINS) refinanced debt is June 30, 2026.

How much did Kingstone Companies (KINS) reduce its debt in the September 2024 refinancing?

Kingstone Companies (KINS) reduced its debt by 25%, from $19.95 million to $14.95 million, in the September 2024 refinancing.

What is the new interest rate on Kingstone's (KINS) refinanced notes?

The new interest rate on Kingstone's (KINS) refinanced notes is 13.75%.