Avemco, the Bethesda-based aviation insurance and financing company announced yesterday it has received a $14 million loan from a group of banks and plans to use part of the money to acquire Classified Financial Corp., a Wisconsin auto insurance company.
Avemco has acquired approximately 11.6 percent of the stock of Classified Financial Corp. and is negotiating to buy more stock in the company, Chairman Arnold Johnson said at a meeting with securities analysts in New York.
Avemco paid $410,000 for its stake in Classified Financial and will have availabel from its new loan package up to $6 million to acquire additional shares, an Avemco official said.
The $14 million unsecured loan agreement is with a group of banks headed by First Natinal Bank of Chicago.
Classified Financial specializes in insuring cars for members of associations and wrote premiums of $9.7 million in the nine months ended Sept. 30. Like Avemco it sells insurance directly rather than through agents.
Avemco is the largest insurer of private aircraft in the country and has subsidiaries involved in product marketing, aircraft financing and real estate.
Avemco executives said they are negotiating with Classified Financial representatives for a merger, but have not decide whether to seek control of the company through a tender offer or other means.
Johnson told analyst Avemco will use the reminder of its $14 million credit line to refinance existing debt and for "ongoing corporate purposes."