Item 1.01 Entry into a Material Definitive Agreement
Merger Agreement
On January 6, 2023, First Guaranty Bancshares, Inc. ("First Guaranty") and its
wholly-owned subsidiary, First Guaranty Bank ("FGB"), entered into an Agreement
and Plan of Merger (the "Agreement") with Lone Star Bank ("Lone Star"), pursuant
to which First Guaranty will, subject to the terms and conditions set forth in
the Agreement, acquire all of the issued and outstanding shares of Lone Star
common stock in exchange solely for shares of First Guaranty common stock
through the merger of Lone Star with and into FGB, with FGB as the surviving
banking corporation (the "Transaction").
Under the terms of the Agreement, First Guaranty will issue shares of First
Guaranty common stock with an assumed value of $23.67 per share on the closing
date of the Transaction to the shareholders of Lone Star with an aggregate value
equal to 1.5 times Lone Star's tangible book value as of the month end prior to
the closing date, subject to certain adjustments described in the Agreement.
Outstanding options to purchase Lone Star common stock will be cashed out. The
combined financial institutions will have approximately $3.2 billion in total
assets, $2.5 billion in total loans, and $2.8 billion in total deposits
following the close of the Transaction. The Agreement was approved by the board
of directors of each of First Guaranty, FGB, and Lone Star.
The Agreement contains customary representations and warranties by First
Guaranty and Lone Star and customary covenants of First Guaranty, FGB and Lone
Star, including, among others, covenants relating to (1) the conduct of each
party's business during the period prior to the consummation of the Transaction,
(2) Lone Star's obligations to facilitate its shareholders' consideration of,
and voting upon, the Agreement and the Transaction at a meeting of shareholders
held for that purpose, (3) the recommendation by the Lone Star board of
directors in favor of approval of the Agreement and the Transaction and (4) Lone
Star's non-solicitation obligations relating to alternative business combination
transactions.
The Agreement further provides that one current member of the Lone Star board of
directors will join the FGB board of directors following the consummation of the
Transaction (the "Effective Time").
Each party's obligation to consummate the Transaction is subject to customary
closing conditions, including, among others, (1) approval of the Agreement and
the Transaction by Lone Star's shareholders, (2) receipt of required regulatory
approvals without the imposition of a condition that, individually or in the
aggregate, would reasonably be expected to have a material adverse effect on
First Guaranty or FGB, taken as a whole, after giving effect to the Transaction,
and receipt of all other requisite consents or approvals, (3) the absence of any
law or order preventing or prohibiting the consummation of the transactions
contemplated by the Agreement (including the Transaction), (4) the effectiveness
of the registration statement for the First Guaranty common stock to be issued
in the Transaction, (5) receipt by each party of an opinion from their
respective counsel to the effect that the Transaction will qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, (6) subject to certain exceptions, the accuracy of the
representations and warranties of the other party, (7) the performance in all
material respects by the other party of its obligations under the Agreement, (8)
the shares of First Guaranty common stock to be issued in the Transaction shall
have been approved for listing on The Nasdaq Global Select Market, and (9) the
absence of any material adverse effect with respect to the other party.
In connection with the Agreement, all members of the Lone Star board of
directors who are not employees of Lone Star delivered non-competition and
director support agreements to First Guaranty.
The Agreement contains certain termination rights for both First Guaranty and
Lone Star and further provides that a termination fee of $1.0 million will be
payable by Lone Star to First Guaranty upon termination of the Agreement under
certain specified circumstances.
The representations, warranties and covenants of each party set forth in the
Agreement were made only for purposes of the Agreement and as of specific dates,
and were and are solely for the benefit of the parties to the Agreement, may be
subject to limitations agreed upon by the parties, including being qualified by
confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Agreement instead of establishing these matters as
facts, and may be subject to standards of materiality applicable to the parties
that differ from those applicable to investors. Accordingly, the representations
and warranties may not describe the actual state of affairs at the date they
were made or at any other time, and investors should not rely on them or any
descriptions of them as statements of facts or conditions of First Guaranty,
Lone Star, or any of their respective subsidiaries or affiliates. Moreover,
information concerning the subject matter of the representations, warranties and
covenants may change after the date of the Agreement, which subsequent
information may or may not be fully reflected in the parties' public
disclosures. In addition, such representations and warranties (1) will not
survive consummation of the Transaction, unless otherwise specified therein, and
(2) were made only as of the date of the Agreement or such other date as is
specified in the Agreement. Accordingly, the Agreement is included with this
filing only to provide investors with information regarding the terms of the
Agreement, and not to provide investors with any other factual information
regarding First Guaranty, Lone Star, their respective affiliates, or their
respective businesses. The Agreement should not be read alone, but should
instead be read in conjunction with the other information regarding First
Guaranty, Lone Star, their respective affiliates or their respective businesses,
the Agreement, and the Transaction that will be contained in, or incorporated by
reference into, the Registration Statement on Form S-4 that will include a proxy
statement of Lone Star and a prospectus of First Guaranty, as well as in the
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and other filings by First Guaranty with the Securities and Exchange
Commission (the "SEC") from time to time.
The foregoing description of the Agreement and the Transaction does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K
(this "Report") and is incorporated herein by reference.
--------------------------------------------------------------------------------
Voting Agreements
In connection with the Agreement, Lone Star and First Guaranty entered into a
voting agreement with each director of Lone Star who owns shares of Lone Star
common stock, a form of which is attached hereto as Exhibit 10.1 (the "Voting
Agreement"). The Lone Star directors who are party to the Voting Agreement
beneficially own in the aggregate approximately 24.03% of the outstanding shares
of Lone Star common stock. The Voting Agreement requires, among other things,
that the party thereto vote all of his shares of Lone Star common stock in favor
of the Transaction and the other transactions contemplated by the Agreement and
to, subject to certain exceptions, refrain from transfers of any such shares of
Lone Star common stock prior to the Effective Time.
The foregoing description of the Voting Agreement does not purport to be
complete and is qualified in its entirety by reference to the form of Voting
Agreement, which is attached as Exhibit 10.1 to this Report, and incorporated
herein by reference.
Item 7.01 Regulation FD Disclosure.
On January 9, 2023, First Guaranty and Lone Star issued a joint press release
announcing the signing of the Agreement. The press release is attached to this
report at Exhibit 99.1, which is incorporated herein by reference.
Attached to this Report as Exhibit 99.2, which is incorporated herein by
reference, is a map showing the existing locations of FGB and Lone Star.
The information being furnished pursuant to Item 7.01 of this Report (including
Exhibits 99.1 and 99.2) shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, and such
information shall not be deemed incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.
Important Information and Where to Find It
This Report does not constitute an offer to sell or the solicitation of an offer
to buy any securities or a solicitation of any vote or approval with respect to
the proposed acquisition by First Guaranty of Lone Star. No offer of securities
shall be made except by means of a prospectus meeting the requirements of the
Securities Act of 1933, as amended, and no offer to sell or solicitation of an
offer to buy shall be made in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
In connection with the proposed Transaction, First Guaranty will file with the
SEC a Registration Statement on Form S-4 that will include a proxy statement of
Lone Star and a prospectus of First Guaranty (the "Proxy Statement/Prospectus"),
and First Guaranty may file with the SEC other relevant documents concerning the
proposed Transaction. The definitive Proxy Statement/Prospectus will be mailed
to shareholders of Lone Star. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS,
SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC BY FIRST GUARANTY, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT FIRST GUARANTY,
FGB, LONE STAR AND THE PROPOSED TRANSACTION.
Free copies of the Proxy Statement/Prospectus, as well as other filings
containing information about First Guaranty, may be obtained at the SEC's
website (http://www.sec.gov) when they are filed by First Guaranty. You will
also be able to obtain these documents, when they are filed, free of charge,
from First Guaranty at www.fgb.net under the heading "SEC Filings." Copies of
the Proxy Statement/Prospectus can also be obtained, when it becomes available,
free of charge, by directing a request to First Guaranty Bancshares, Inc., 400
East Thomas Street, Hammond, Louisiana 70401, Attn: Investor Relations, (985)
375-0343.
Participants in the Solicitation
This Report is not a solicitation of a proxy from any security holder of Lone
Star. However, Lone Star and certain of their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
the shareholders of Lone Star in respect of the proposed Transaction.
Information about Lone Star's directors and executive officers will be contained
in the Proxy Statement/Prospectus. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the proxy solicitation and
a description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the Proxy Statement/Prospectus and other
relevant materials to be filed with the SEC when they become available. Free
copies of this document may be obtained as described in the preceding paragraph.
Forward-Looking Statements
This Report contains estimates, predictions, opinions, projections and other
"forward-looking statements" as that phrase is defined in the Private Securities
Litigation Reform Act of 1995. Such statements include, without limitation,
statements relating to the impact First Guaranty or Lone Star expect the
Transaction to have on the combined entities' operations, financial condition,
and financial results, and First Guaranty's expectations about its ability to
successfully integrate the combined businesses and the amount of cost savings
and other benefits First Guaranty expects to realize as a result of the
Transaction. Forward-looking statements also include, without limitation,
predictions or expectations of future business or financial performance as well
as its goals and objectives for future operations, financial and business
trends, business prospects, and management's outlook or expectations for
earnings, revenues, expenses, capital levels, liquidity levels, asset quality or
other future financial or business performance, strategies or expectations, and
are subject to risks and uncertainties. These statements often,
--------------------------------------------------------------------------------
but not always, are preceded by, are followed by or otherwise include the words
"believe," "expect," "anticipate," "intend," "estimate," "continue," "seek,"
"plan," "can," "should," "could," "would," "will," "to be," "predict,"
"potential," "may," "likely," "will likely result," "target," "project" and
"outlook" or the negative version of those words or other comparable words or
phrases of a future or forward-looking nature. These forward-looking statements
are not historical facts and are based on current expectations, estimates and
projections about our industry, based on certain assumptions and beliefs of
management, many of which, by their nature, are inherently uncertain and beyond
their control. Although First Guaranty and Lone Star believe that the
expectations reflected in these forward-looking statements are reasonable as of
the date made, actual results may prove to be materially different from the
results expressed or implied by the forward-looking statements based on factors
including various risks and uncertainties set forth in First Guaranty's filings
with the SEC from time to time. Such risks and uncertainties include, but are
not limited to, the possibility that the proposed Transaction does not close
when expected or at all because required regulatory, shareholder or other
approvals and other conditions to closing are not received or satisfied on a
timely basis or at all; the delay in or failure to close for any other reason;
the outcome of any legal proceedings that may be instituted against First
Guaranty or Lone Star; the occurrence of any event, change or other circumstance
that could give rise to the right of one or both parties to terminate the
Agreement; the risk that the businesses of First Guaranty and Lone Star will not
be integrated successfully; the possibility that the cost savings and any
synergies or other anticipated benefits from the proposed Transaction may not be
fully realized or may take longer to realize than expected; disruption from the
proposed Transaction making it more difficult to maintain relationships with
employees, customers or other parties with whom First Guaranty or Lone Star have
business relationships; diversion of management time on Transaction-related
issues; risks relating to the potential dilutive effect of the shares of First
Guaranty common stock to be issued in the proposed Transaction; the reaction to
the proposed Transaction of the companies' customers, employees and
counterparties; and other factors, many of which are beyond the control of First
Guaranty and Lone Star.
For additional information, refer to the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
sections of First Guaranty's Annual Report on Form 10-K for the year ended
December 31, 2021 and any updates to those risk factors set forth in First
Guaranty's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other
filings, which have been filed by First Guaranty with the SEC and are available
on the SEC's website at www.sec.gov. You should not place undue reliance on any
such forward-looking statements. All forward-looking statements, expressed or
implied, included herein are expressly qualified in their entirety by the
cautionary statements contained or referred to herein. Any forward-looking
statement speaks only as of the date on which it is made, and we do not
undertake any obligation to publicly update or revise any forward-looking
statement, whether written or oral, and whether as a result of new information,
future developments or otherwise, except as specifically required by law.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit Number Description of Exhibit
Agreement and Plan of Merger, by and among First Guaranty Bancshares,
2.1* Inc., First Guaranty Bank and Lone Star Bank, dated January 6, 2023
10.1 Form of Voting Agreement
99.1 Press Release, dated January 9, 2023
Map showing existing locations of First Guaranty Bank and Lone Star
99.2 Bank
* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any
omitted schedule will be furnished supplementally to the SEC upon request; provided, however,
that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, for any document so furnished.
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses
FIRST GUARANTY BANCSHARES, INC. 
