Skyward Specialty completes $555M Apollo acquisition
Skyward Specialty Insurance Group, Inc. completed its acquisition of Apollo Group Holdings Limited, buying 100% of Apollo’s shares for approximately $555.0 million.
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Rhea-AI Filing Summary
Skyward Specialty Insurance Group, Inc. completed its acquisition of Apollo Group Holdings Limited, buying 100% of Apollo’s shares for approximately $555.0 million. The price included $371.0 million in cash and the issuance of 3,679,332 shares of Skyward common stock.
To help fund the cash portion and related costs, Skyward entered into an unsecured term loan credit agreement providing two delayed-draw facilities totaling $300.0 million, split equally between Tranche A and Tranche B. These loans bear interest at either term SOFR plus 150–190 basis points or a base rate plus 50–90 basis points, depending on the company’s debt-to-capitalization ratio, and mature in 2028 and 2029, respectively.
The facilities include customary covenants on additional indebtedness, capital returns, and financial metrics, and are guaranteed by certain non-insurance subsidiaries. Skyward also amended an existing credit agreement to allow pre-funding of revolving loans in connection with the Apollo acquisition, with detailed terms available in the referenced exhibits.
Insights
Skyward uses debt and equity to fund a sizable Apollo acquisition.
Skyward Specialty Insurance Group, Inc. completed the purchase of 100% of Apollo Group Holdings Limited’s share capital for about $555.0 million, combining $371.0 million in cash with 3,679,332 new common shares. This structure mixes leverage and equity issuance, spreading funding across the balance sheet rather than relying solely on one source.
To support the cash portion and transaction costs, Skyward arranged an unsecured delayed-draw term loan Facility totaling $300.0 million, split between Tranche A maturing on January 1, 2028 and Tranche B maturing on July 2, 2029. Interest is set at term SOFR plus 150–190% of a percentage point or a base rate plus 50–90% of a percentage point, with an additional undrawn fee of 0.20–0.35%, all tied to the company’s debt-to-capitalization ratio.
The Facility is unsecured but backed by guarantees from existing and future non-insurance subsidiaries and includes covenants on minimum consolidated net worth, maximum total debt to capitalization, minimum A.M. Best rating, and minimum liquidity. An amendment to an existing credit agreement also allowed pre-funding revolving loans for the deal. Overall impact on leverage, earnings, and integration will depend on Apollo’s future contribution, which is not quantified here.
8-K Event Classification
FAQ
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What transaction did Skyward Specialty Insurance Group (SKWD) announce?
Skyward Specialty Insurance Group, Inc. completed the acquisition of 100% of the issued and outstanding share capital of Apollo Group Holdings Limited, as described in its current report.
How much did Skyward Specialty pay to acquire Apollo and in what form?
The total consideration for Apollo was approximately $555.0 million, consisting of $371.0 million in cash plus the issuance of 3,679,332 shares of Skyward’s common stock.
How is Skyward Specialty financing the cash portion of the Apollo acquisition?
The $371.0 million cash consideration and related fees are being funded with proceeds from a new term loan Facility totaling $300.0 million and the Existing Credit Agreement, according to the disclosure.
What are the key terms of Skyward Specialty’s new term loan Facility?
The Facility provides two unsecured senior delayed draw term loans of $150.0 million each (Tranche A and Tranche B). Borrowings bear interest at either term SOFR plus 150–190 basis points or a base rate plus 50–90 basis points, with an additional undrawn fee of 0.20–0.35%, depending on Skyward’s debt-to-capitalization ratio.
When do the new term loan tranches entered by Skyward Specialty mature?
The Tranche A Term Facility matures on January 1, 2028, and the Tranche B Term Facility matures on July 2, 2029, as specified in the agreement.
What covenants are included in Skyward Specialty’s new credit Facility?
The Facility includes covenants limiting additional indebtedness above $10.0 million in certain cases, restricting some distributions and share repurchases upon specified events, and requiring minimum consolidated net worth, maximum total debt to capitalization, a minimum A.M. Best rating, and minimum liquidity.
Which subsidiaries guarantee Skyward Specialty’s obligations under the new Facility?
Under the Guaranty Agreement, the obligations are guaranteed by existing wholly-owned subsidiaries and subsequently acquired or organized subsidiaries, excluding insurance company subsidiaries and subject to specified exceptions.
AI-generated analysis. How Rhea-AI works. Not financial advice.