ACA Capital Holdings Announces 1-for-100,000 Reverse Stock Split of the Company's Common Stock

The reverse stock split became effective on July 13, 2009. The holders of more than 100,000 or more shares of Common Stock are entitled to receive one new share for each 100,000 shares held and cash consideration (described below) for any resulting fractional shares. Holders of Common Stock holding fewer than 100,000 shares immediately prior to the effective time of the reverse stock split will receive cash consideration from our exchange agent equal to the last trade price of the Common Stock on the OTC Bulletin Board on the day of this announcement of the reverse stock split plus a 10% premium. Based on information available to the Company, the holders of approximately 13% of the outstanding stock of the Company will receive cash in lieu of their shares. Remaining shareholders holding in excess of 100,000 shares of Common Stock are, to the Company's knowledge, Qualified Purchasers and will accordingly remain shareholders of the Company following the reverse stock split.

These actions were (i) duly approved by the Company's Board of Directors and (ii) consented to by a majority of the Company's shareholders. The Board has determined that the actions are in the best interests of the Company. Specifically, prior to the restructuring of the Company last summer, the Company was exempt from the registration requirements of the Investment Company Act because it was directly or through majority-owned subsidiaries in the business of being an insurance company. However, as a result of the restructuring last summer, the Company may be deemed no longer engaged in the insurance business. Therefore, the Company could be deemed subject to the Investment Company Act on the one-year anniversary of the restructuring since it does not own any business other than its interests in the former ACA insurance business. As a result, unless the Company is restructured or enters into other businesses so as to qualify for an exemption under the Investment Company Act, the Company may shortly be required to register as an investment company. Registration of the Company as an investment company, and compliance with the registration requirements, would be costly, time consuming and of no purpose for the Company. After full consideration of these issues, the Board has determined that it is the best interests of the shareholders to structure the Company so that it remains exempt from registration.

SOURCE: ACA Capital Holdings, Inc. / Manifold Capital Corp.

ACA Capital Holdings, Inc. / Manifold Capital Corp. 
Alan Roseman, 646-495-6114