Sanders Morris Harris Group to Sell $7.5M of Shares to Fletcher International, Ltd. for $7.00 Per Share
HOUSTON, Nov. 9 -- Sanders Morris Harris Group Inc. (NASDAQ:SMHG) today reported third quarter income from continuing operations of $1.2 million, or $0.04 per share. In the prior year, the quarter's results were a loss of $870,000, or $0.03 per share, from continuing operations excluding the sale of the Company's interests in Salient Partners and its Endowment Fund subsidiaries.
The Company also announced that it has agreed to sell $7.5 million of its common stock to Fletcher International, Ltd., an affiliate of private investment firm Fletcher Asset Management Inc., for $7.00 per share. Fletcher will also receive a 10-year warrant to purchase up to $7.5 million worth of shares at $5.75 per share. The transaction is expected to close by November 16, 2009, subject to customary closing conditions.
Client assets increased 11% from $9.5 billion on June 30, 2009 to $10.6 billion at the end of the third quarter. The Company's Wealth Management division earned $6.1 million pretax in the period.
"Helped by strong marketing results and a recovering stock market, our operating businesses' results continued to improve. We had net client new money inflows of approximately $174 million and also saw our client assets increase by nearly 10% due to market appreciation," said George L. Ball, Chairman and Chief Executive Officer of Sanders Morris Harris Group. "The expansion of Edelman Financial Services by opening offices beyond the Washington, D.C. area is underway and proceeding as anticipated," he added. "It is a major opportunity for us."
The third quarter 2009 results from continuing operations include an after-tax loss of $413,000 related to the Company's Capital Markets business. That business is being sold to a new broker-dealer being formed by the management of the business in a transaction which has been executed and awaits formal FINRA approval. If the sale had been completed in the just-ended quarter, earnings would have been $0.06 per share.
The Company lost $8.4 million, or $0.31 per share, from continuing operations during the nine months ended September 30, 2009, compared to income of $33.9, or $1.27 per share, during the first nine months of 2008. The 2009 results reflect a $9.7 million after tax goodwill and other intangible assets impairment charge. The 2008 results include after tax investment gains of $28.0 million. Revenue was $144.1 million during the 2009 period, compared to $138.8 million during the prior year period.
Conference Call
The Company will host a conference call on Monday, November 9th to discuss third quarter 2009 financial and operational results. The call will begin at 9:00 a.m. Central Time, and is open to the public. To listen to the conference call, use U.S. dial-in number (800) 446-1671 or International dial-in number (847) 413-3362 and enter pass code 25765168. It is recommended that listeners phone in at least 10 minutes before the call is scheduled to begin to avoid delay. For those unable to listen to the live call, a replay of the conference call in its entirety will be available approximately two hours after its completion for 10 days by dialing (888) 843-8996 (U.S.), (630) 652-3044 (International)
and entering the pass code 25765168.
About Sanders Morris Harris Group
Sanders Morris Harris Group is a wealth management company that manages approximately $10.6 billion in client assets. Client assets include the gross value of assets under management directly or via outside managers and assets held in brokerage accounts for clients by outside clearing firms. Its corporate philosophy of investment in common aligns its interests with those of its clients. Sanders Morris Harris has more than 600 employees in 21 states. Additional information is available at www.smhgroup.com.
About Fletcher International, Ltd.
For more than 18 years, investments from Fletcher International, Ltd. and its affiliates, structured by Fletcher Asset Management, Inc., have supported dynamic and responsible management teams leading more than 50,000 people at dozens of companies. Additional information is available at www.fletcher.com.