Dec 16 Shares of Patriot National Inc
fell 4.6 percent on Friday after it announced late Thursday that
it could not pay a special dividend pending a court hearing that
would happen late March at the earliest.
Patriot, which had originally planned to pay the $2.50
dividend on Dec. 9, said the Court of Chancery of the State of
Delaware also prohibited it from continuing a previously
announced stock repurchase program at least until a court
hearing expected some time after March 24.
The company, which helps insurers comply with regulations,
said on Dec. 7 that the court issued a temporary restraining
order related to a class action stockholder lawsuit but that it
still hoped to pay the dividend in January.
By the close of trade Thursday, Patriot shares were down
24.9 percent so far this year after sharp swings including a 20
percent drop on Dec. 12, the first trading day after the
scheduled payment date for its dividend.
"The market is building in the expectation it is less likely
they're going to get their dividend," said Kenneth Billingsley,
an analyst at Compass Point Research & Trading in Washington
D.C. He estimated the company's value at $4 per share, excluding
the $2.50 dividend.
Patriot shares fell as low as $4.72 on Friday. A company
representative was not immediately available for comment.
The company likely set the dividend to please shareholders
after merger talks with Ebix Inc fell through in early
November, Billingsley said.
Patriot National at the same time announced an expansion of
its buyback program and disclosed a new $280 million loan and a
$30 million credit facility that increased the company's
Whitney Maroney, founding partner at Millrace Asset Group in
Berwyn, Pennsylvania, said he sold his roughly 195,000 shares in
Patriot after the company announced the special dividend.
"We didn't think that paying a one-time special dividend was
in the best interest of shareholders," said Maroney. "It doesn't
do anything to grow the revenue for the company, specially when
you lever up to do it."
The dividend proposal met with a previous challenge when a
court slapped Patriot with a temporary restraining order against
the payment following a lawsuit filed by Hudson Bay - one of
Patriot's largest shareholders, according to the latest public
That restraining order was lifted after a Dec. 1 hearing in
(Reporting By Sinead Carew; Editing by Rodrigo Campos and