Creates Investment Management Firm with Over $70 Billion in Assets
Under Management
CHICAGO and CHARLOTTE, N.C., March 25 /PRNewswire/ -- First Union
Corporation (NYSE: FTU) and EVEREN Capital Corporation (NYSE: EVR) today
announced an agreement to form an asset management joint venture that would
combine the Evergreen mutual fund complex with the Mentor Investment Group.
Under the agreement, First Union will contribute its ownership interests
in Evergreen and Mentor and receive a 95 percent ownership interest in the new
venture. EVEREN will contribute its ownership interest in Mentor and receive
a 5 percent ownership interest in the new venture. The new venture will have
over $70 billion of assets under management. Pro forma revenues and pre-tax
earnings of the combined entities for 1998 approximated $328 million and $156
million, respectively.
The transaction is subject to regulatory and other approvals and is
expected to be completed within four months.
Mentor offers both mutual funds and private account investment advisory
services. EVEREN obtained a 20 percent interest in Mentor pursuant to a July
1996 agreement with Wheat First Securities Inc. Subsequently, Wheat First was
acquired by First Union in January 1998. Under the original agreement, EVEREN
had the opportunity to increase its equity ownership of Mentor based upon the
company's relative contribution to Mentor's revenues through March 31, 1999.
Based on that formula, EVEREN and First Union agreed to reset EVEREN's
ownership interest in Mentor at 45 percent. Under the new agreement, EVEREN
may increase its initial 5 percent ownership interest in the expanded joint
venture to up to 10 percent based on its contribution to revenues. The new
agreement also contains provisions that enable either party to exit the
venture under certain conditions.
Following the close of the transaction, EVEREN Capital's 5 percent
interest is expected to be carried on its balance sheet at approximately $83
million. The company anticipates that it will realize a one-time pre-tax gain
of approximately $70 million and a net after-tax gain of approximately $42
million, or $1.17 per diluted share. Stockholders' equity, which was $408.6
million at December 31, 1998, is expected to increase by an amount equal to
the after-tax gain.
First Union also expects to record a gain in the second quarter which it
intends to use to partially offset its previously announced restructuring
charge.
"Through this partnership with EVEREN, we are building a complementary
asset management company and creating a well-rounded mutual fund and
institutional organization," said Don McMullen, First Union executive vice
president and head of the Capital Management Group. "This affirms First
Union's commitment to strategically growing its capital management business
and offering customers a wide array of financial services to meet their
changing needs."
According to EVEREN Capital Corporation Chairman and Chief Executive
Officer James R. Boris, "One of our strategic priorities this year was to
focus on determining how to capitalize our investment in Mentor to bring it
into our balance sheet in the form of stockholders' equity. We are delighted
that this transaction enables us to accomplish this near-term objective.
"More important, this winning combination of distribution and asset
management capabilities creates an even more exciting long-term opportunity
for us. Through this joint venture, we will continue our participation in a
dynamic, growing segment of our business with one of the country's leading
providers of financial services. We are confident that our new Evergreen
venture will undoubtedly prove to be a valuable franchise for EVEREN, our
clients and our stockholders."
The First Union-advised Evergreen Funds is one of the fastest growing fund
families in the industry with 82 funds and more than $55 billion in assets
under management.
"We are extremely proud of the mutual fund organization we have built at
First Union and look forward to its continued growth and success with our new
partners at EVEREN," McMullen said.
EVEREN Capital Corporation is a financial services holding company whose
primary subsidiary, EVEREN Securities, Inc., ranks among the 10 largest
national full-service securities brokerage firms in the U.S. EVEREN
Securities provides comprehensive investment, financial advisory and capital
markets services to individuals, governments, corporations and institutions.
The firm's 1,820 investment consultants, located in 171 branches, serve
653,000 client accounts, representing $63.4 billion in assets.
First Union Corporation is a leading provider of financial services to
more than 16 million retail and corporate customers throughout the East Coast
and the nation. First Union is the nation's sixth largest bank holding
company, based on assets of $237 billion as of December 31, 1998. The company
operates full service banking offices in Connecticut, Delaware, Florida,
Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South
Carolina, Tennessee, Virginia and Washington, D.C.
Except for historical information, statements included in this release may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve a number
of risks, uncertainties and other factors that could cause actual results to
differ materially, as discussed in the company's filings with the Securities
Exchange Commission.
SOURCE EVEREN Capital Corporation
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Related links:
http://www.everensec.com
Company News On-Call:
http://www.prnewswire.com/comp/121760.html or fax,
800-758-5804, ext. 121760
CONTACT:
Media, Elizabeth Cassanos, 312-574-5273, or
Wilson Medina, 312-574-5152, or Investors, Caron L. Schreiber,
312-574-5724, all of EVEREN Capital Corporation; or Media, Laurie
Hedrick, 704-374-6092, or Investors, Alice Lehman, 704-374-4139,
both of First Union Corporation
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