Medallion Financial Corp. (NASDAQ: MFIN) has entered into a purchase and settlement agreement to repurchase trust preferred securities (TruPS) with a liquidation amount of $15.0 million from BIMIZCI Fund LLC and ZimCal Asset Management LLC. The company agreed to buy back the securities at 73.66% of face value, resulting in a purchase price of $11.049 million plus accumulated distributions through the repurchase date.
The transaction includes a five-year standstill agreement, prohibiting the investor parties from engaging in proxy solicitations or other campaigns against Medallion. Additionally, the investors agreed to dispose of any remaining shares of Medallion common stock by December 31, 2026. The deal is subject to customary closing conditions and is expected to close within thirty days, with the Purchase Agreement to be filed with the U.S. Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K.
Medallion will record a gain in the fourth quarter of 2026, representing the difference between the $15.0 million carrying value of the TruPS and the acquisition cost. Andrew Murstein, President and CEO of Medallion, stated that the transaction is expected to be immediately accretive and delivers value for common shareholders. He noted that repurchasing nearly half of the company's outstanding TruPS at a discount demonstrates confidence in the strength and flexibility of its lending platform.
Murstein highlighted that Medallion's common stock recently traded at its highest level in approximately twelve years, returning to levels last seen before ride-sharing disrupted the taxi-medallion industry. The company has reduced its net taxi-medallion-related assets to just 0.1% of total assets, a shift Murstein said demonstrates its transformation into a diversified specialty finance company.
Since 2022, Medallion has returned approximately $84.7 million in capital to common shareholders through $40.6 million in stock repurchases and $44.1 million in dividends. This includes approximately $23.6 million returned in the current year.
Stephen Hodges, Founder of ZimCal Asset Management LLC, said the company invested in Medallion due to its business potential. He described recent discussions with management as constructive, leading to a mutually acceptable resolution that serves the interests of all stockholders.
Medallion Financial Corp., headquartered in New York City, originates and services consumer and mezzanine loans in industries including recreation and home improvement. Its largest subsidiary, Medallion Bank, is headquartered in Salt Lake City, Utah.