Investar Holding Corp current report, 04 August 2017

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Investar Holding Corp. 8-K Summary

Business Context and Reporting Period

Date: August 4, 2017
Company: Investar Holding Corporation (NASDAQ: ISTR)
Event: Entry into a Material Definitive Agreement (Merger Agreement).

Investar Holding Corporation, the parent of Investar Bank, entered into an agreement to acquire BOJ Bancshares, Inc. (parent of The Highlands Bank). The transaction involves a series of mergers resulting in Investar as the surviving entity and The Highlands Bank merging into Investar Bank.

Key Financial Metrics and Transaction Terms

This filing details the terms of the acquisition rather than periodic financial performance metrics (revenue, profit, cash flow). Key financial terms include:

  • Total Consideration: $3,950,000 in cash plus 799,559 shares of Investar common stock.
  • Equity Adjustment: Consideration is subject to a downward adjustment if BOJ's adjusted tangible shareholders' equity is less than $16.5 million at closing.
  • Stock Price Collar:
    • Upper Cap: If Investar's average closing price exceeds $26.11 (115% of the $22.70 threshold), the share exchange ratio decreases.
    • Lower Floor: If the average closing price falls below $20.43 (90% of the threshold), the share exchange ratio increases.
    • Walk-Away Price: Parties are not obligated to close if the average closing price is not greater than $19.50.
  • Termination Fee: $890,000 payable by BOJ under specific termination circumstances.

Material Changes and Outlook

Expected Closing: Fourth quarter of 2017, subject to conditions.
Conditions to Closing:

  • Approval by BOJ shareholders.
  • Receipt of required regulatory approvals.
  • Accuracy of representations and warranties.
  • No material adverse change to either party.
Management Commentary: The transaction is expected to provide benefits regarding future financial and operating results, though specific synergy values are not quantified in this filing. Directors and officers of BOJ have entered into non-competition agreements for two years post-merger.

Risks and Contingencies

  • Regulatory Risk: Failure to obtain governmental or regulatory approvals could delay or terminate the merger.
  • Shareholder Approval: The transaction is contingent on BOJ shareholder approval.
  • Integration Risk: Potential difficulties in integrating businesses, realizing cost savings, or maintaining customer/employee relationships.
  • Market Risk: Fluctuations in Investar's stock price could alter the final share consideration or prevent closing if the price falls below $19.50.
  • Superior Proposal: BOJ retains the right to terminate to accept a superior proposal, subject to Investar's right to match.

Investor Verification Checklist

  • Verify the status of BOJ shareholder approval and regulatory clearance.
  • Monitor Investar's stock price relative to the $19.50 walk-away threshold and the $20.43/$26.11 collar levels.
  • Review the full Merger Agreement (Exhibit 2.1) for detailed representations and warranties.
  • Confirm the final adjusted tangible equity of BOJ to determine if the cash consideration will be reduced.
  • Assess the timeline for closing against the May 31, 2018 termination deadline.