Kan. Brooke Corp. to Merge with Oakmont Acquisition

Brooke Corp. has announced that it has entered into a definitive agreement by which Brooke Credit Corp., its finance company subsidiary, to merge with Oakmont Acquisition Corp. The planned merger will result in Brooke Credit becoming a public company with Brooke Corp. as its largest shareholder.

Oakmont is a blank check or special purpose acquisition company formed for the purpose of investing in an operating business to build long- term shareholder value. Oakmont was founded by Robert J. Skandalaris and Michael Azar. At Sept. 30, 2006, Oakmont had approximately $48.6 million in cash available for effecting a business combination.

Under the terms of the agreement, Brooke Credit will merge with and into Oakmont, with the surviving company operating under the name of Brooke Credit Corp. At closing, Brooke Corp. and warrant holders will receive merger consideration of approximately 17.5 million shares of Oakmont common stock with a current value of approximately $105.0 million. Brooke Corp. and warrant holders will receive an additional 4.0 million shares of Oakmont common stock should Brooke Credit achieve adjusted earnings (as defined in the definitive Agreement and Plan of Merger) of $15.0 million in 2007, and an additional 1.0 million shares should Brooke Credit achieve adjusted earnings of $19.0 million based on the same computation in 2008. The contingent consideration has a current value of approximately $30.0 million.

Immediately prior to the merger, Oakmont will effect a reincorporation merger in order to become a Kansas corporation. At the closing of the transaction, Brooke Corporation will own approximately 58.2 percent of the outstanding shares of common stock of Oakmont. Giving effect to the increased shares in the event the financial goals are achieved during 2007 and 2008, Brooke Corporation would own approximately 63.6 percent of the outstanding shares of common stock of Oakmont. These percentages of Brooke Corp.’s ownership of Oakmont common stock do not reflect the effect of any exercise of any outstanding Oakmont warrants; however, do reflect the effect of outstanding Brooke Credit warrants. If all of Oakmont outstanding warrants are exercised, then Brooke Credit would receive up to approximately $85.8 million in additional equity, and Brooke Corporation’s ownership interest would decrease to approximately 41.8 percent of Oakmont’s outstanding shares, assuming the 2007 and 2008 financials goals are achieved, and approximately 36.1 percent of outstanding shares if the financial goals are not achieved. The available cash of Oakmont is expected to be used for working capital, possible finance company acquisitions and to grow Brooke Credit’s loan portfolio.

Brooke Credit Corp. is a subsidiary of Brooke Corp. that originates loans to insurance agencies and related businesses. Brooke Credit’s loan portfolio balances totaled approximately $483.3 million on Dec. 31, 2006. Loans have been mostly sold as individual loans to participating lenders or as pooled loans to investors through asset-backed securitizations.

The transaction has been approved by the boards of Brooke Credit, Brooke Corporation and Oakmont, but is subject to customary closing conditions including the approval of Oakmont’s stockholders.

Source: Brooke Corp.

Topics Mergers & Acquisitions