Kingsway Financial Services Inc. (NYSE, TSX: KFS) has agreed to sell all of its outstanding shares of Jevco Insurance Company to The Westaim Corporation (TSX:WED), an investment manager, for approximately $263 million. The acquisition is subject to the receipt of all required regulatory approvals and is anticipated to close on or about Mar. 31, 2010. “Jevco and its management team are very pleased to have entered into this strong partnership with Westaim,” Jevco CEO Serge Lavoie said in a press release. “This transaction is designed to bring financial strength and stability to Jevco, and to bring comfort to our business partners. We are excited with the significant growth opportunities ahead, and look forward to our future with Westaim.” The purchase price represents approximately 94.5% of the book value of Jevco as of Dec. 31, 2009, subject to adjustments, Kingsway announced in a press release. Westaim is backed by value fund manager Goodwood Inc. and the Alberta Investment Management Corp, better known as AIMCo. Prior to the closing of the transaction, and subject to insurance regulatory approval, Kingsway will also receive a $40-million dividend from Jevco. AIMCo. has committed to providing Westaim with equity funding of $148 million through the purchase of subscription receipts for the purpose of financing the acquisition. GMP Securities LP has agreed to underwrite a $50-million offering of subscription receipts on a “bought deal” private placement basis and to offer an additional $59.5 million of subscription receipts on a best efforts basis, for total gross proceeds of up to $109.5 million. AIMCo. will backstop the best efforts portion of GMP’s commitment. Approximately $17.5 million in additional funding will be provided by directors and officers of Westaim, funds managed by Goodwood Inc., existing management of Jevco and certain other designated investors. “This acquisition will complete the transformation of Westaim into a company with a new focus on the Canadian insurance business,” Westaim president Cameron MacDonald said in a press release. The deal comes as Kingsway is engaged in a legal standoff with Pennsylvania’s insurance regulator. The two disagree about the legal status of Kingsway’s donation of its shares in the Lincoln General Insurance Company (now in run-off) to charities in late 2009.