UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
Name of Issuer: Washington National Corporation
Title of Class of Securities: Common Stock, $5 par value
CUSIP No. 939339107
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Daniel N. Sang, Esq.,
c/o Paulson & Co., Inc.
277 Park Avenue, New York, New York 10172
(212) 350-5151
(Date of Event Which Requires Filing Of This Statement)
July 29, 1997
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1 (b) (3) or (4), check the
following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
CUSIP No.: 939339107
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Paulson & Co. Inc.
2. Check the appropriate box if a member of a group: a. [ ] b. [ ]
3. SEC Use Only
4. Source of Funds
OO
5. Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e)
6. Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person
With:
7. Sole Voting Power: 770,800
8. Shared Voting Power: 0
9. Sole Dispositive Power: 770,800
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
770,800
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13. Percent of Class Represented by Amount in Row (11)
6.2%
14. Type of Reporting Person
CO
ITEM 1. SECURITY AND ISSUER
The title and class of equity securities to which this statement relates is:
Common Stock, $5 par value ("the Shares"), of Washington National Corporation
("the Issuer"). The Issuer's principal executive office is at 300 Tower
Parkway, Lincolnshire, IL 60069-3665.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed on behalf of Paulson & Co. Inc. ("The Reporting
Person" or "PCI"), a Delaware corporation and investment management firm
formed to provide investment advisory services, and manage or act as the
general partner of private investment firms, investment partnerships and
similar investment vehicles. PCI's office is at 277 Park Avenue, New York,
NY 10172. The Reporting Person is the general partner of Paulson Partners,
L.P. ("PP"), a Delaware limited partnership, and the investment manager of
Paulson International Ltd. ("PIL"), a Cayman Islands corporation. The
Reporting Person also oversees, manages and has discretion over certain
managed accounts ("the managed accounts"). The Reporting Person expressly
disclaims equitable ownership of and pecuniary interest in the Shares
respectively owned by PP, PIL or the managed accounts.
PCI is controlled by John A. Paulson. Mr. Paulson's principal occupation is
serving as president of the Reporting Person and his business address is at
277 Park Avenue, New York, New York 10172. Mr. Paulson is a citizen of the
United States.
During the last five years, none of the above persons or entities (a) has
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors); or (b) been party to a civil proceedings of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION
As of the date hereof, the Reporting Person is deemed to beneficially own
770,800 Shares. All 770,800 Shares are held either by PP, PIL or the managed
accounts overseen by the Reporting Person. All the Shares were purchased in
open market transactions. The Shares were purchased for an aggregate
purchase price of $21,594,354. The funds to purchase the Shares come from
the working capital of PP, PIL or the managed accounts, with such working
capital including the proceeds of margin loans entered into in the ordinary
course of business with Bear Stearns & Co.,Inc.
ITEM 4. PURPOSE OF TRANSACTIONS
The Shares deemed to be beneficially owned by the Reporting Person were
acquired for, and are being held for, investment purposes. The Reporting
Person has communicated to the management of the Issuer that it believes that
the $29.50 merger consideration to be paid by PennCorp Financial Group Inc.
("PennCorp") is inadequate, and recommends that, absent an increase in the
merger consideration by PennCorp, the Issuer terminate the merger agreement
upon its expiration and re-solicit potential purchasers. A copy of the
August 6, 1997 letter sent to the Issuer is attached hereto as Exhibit A. The
Reporting Person reserves the right to communicate further with management,
other shareholders of the Issuer, and other parties regarding the inadequacy
of the proposed merger consideration.
Depending upon market conditions and other factors that it may deem material,
the Reporting Person may purchase additional Shares for PP, PIL or the
managed accounts or may dispose of all or a portion of the Shares that it is
now deemed to beneficially own or may hereafter acquire.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
As of the date hereof, the Reporting Person, by virtue of its management of
PP, PIL, and managed accounts, is deemed to be the beneficial owner of
770,800 Shares. Based on the Issuer's filing on Form 10-Q on May 15, 1997,
as of May 9, 1997, there were 12,409,640 Shares outstanding. Therefore, the
Reporting Person may be deemed to beneficially own 6.2% of the outstanding
Shares. None of the Reporting Person, PP, PIL or the managed accounts by
themselves own greater than 5% of the outstanding Shares. The Reporting
Person has the sole power to vote, direct the vote, dispose of or direct the
disposition of all the Shares that it, PP, PIL or the managed accounts are
deemed to beneficially own.
All the transactions in the Shares effected by the Reporting Person in the
sixty days prior to July 29, 1997 through the date of this filing were
effected in open market transactions and are set forth below:
Price Per Share
Date Shares Purchased or (Sold) (excluding commission)
6/5/96 205,000 $27.7378
6/6/97 25,000 $27.8750
6/11/97 39,000 $27.7500
6/12/97 17,500 $27.6964
6/13/97 248,000 $27.7500
7/1/97 25,000 $28.5000
7/3/97 50,000 $28.4977
7/29/97 29,900 $28.4091
7/30/97 25,300 $28.5872
7/31/97 6,500 $28.7500
8/1/97 21,000 $28.7336
8/4/97 22,800 $28.8089
8/5/97 5,000 $28.8125
8/6/97 50,800 $28.7605
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SECURITIES OF THE ISSUER
The Reporting Person has no contract, arrangement, understanding or
relationship with any person with respect to the Shares.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The August 6, 1997 letter sent by John A. Paulson, the President of the
Reporting Person, to Robert W. Patin, the Chairman and CEO of the Issuer, is
attached hereto as Exhibit A.
SIGNATURE
The undersigned, after reasonable inquiry and to the best of his knowledge
and belief, certifies that the information set forth in this statement is
true, complete and correct.
/s/ John A. Paulson
________________
John A. Paulson
August 7, 1997
<PAGE>
EXHIBIT A
__________
[Paulson & Co. Inc. Letterhead]
August 6, 1997
Mr. Robert W. Patin
Chairman & Chief Executive Officer
Washington National Corp.
300 Tower Parkway
Lincolnshire, IL 60069-3665
Dear Bob,
As a substantial shareholder of Washington National Corp ("WNT"), we are
concerned about the price at which WNT is being sold. After reviewing the
current public and acquisition markets for life insurance companies, we
concluded that the $29.50 per share that PennCorp agreed to pay for WNT in
November 1996 (equating to 10.9x 1997E EPS, 9.8X 1998E EPS and 0.94x Book
Value) is considerably below the price WNT would receive if it was sold
today. As such, we would be supportive of a plan to allow the merger agreement
with PennCorp to expire on August 30, 1997, if PennCorp is unwilling to raise
its price, and have Morgan Stanley re-solicit potential purchasers.
The attached graph tracks the performance of the S&P Life Index against the
performance of WNT's stock price since the November 15, 1996 announcement of
the merger with PennCorp. Since that time the Life Index appreciated almost
40% while WNT's price was flat. WNT's relative stock price performance was
also charted beginning three months prior to the merger announcement to
eliminate deal speculation. The discrepancy was found to be ever greater as
the S&P Life Index appreciated almost 60% while WNT's price was flat. WNT's
stock price performance has been unduly capped by the $29.50 merger
consideration. Further highlighting the gross valuation discrepancy is a
comparison with fourteen life insurance companies tracked by Goldman Sachs.
The comparables trade at an average market/book value multiple of 2.3x with a
low of 1.5x book and a range of 1.5x - 4.7x.
Also attached are recent merger comparables for life insurance acquisitions.
This analysis shows that the multiples at which WNT agreed to be sold nine
months ago pale in comparison to the multiples being paid today. The recent
acquisitions of Equitable of Iowa by ING and Cigna Life by Lincoln National
at 2.6x and 3.0x book value, respectively, and at 17.0x and 24.0x earnings
highlight the gross discrepancy. There is absolutely no reason why your fine
company should trade at such a discount to the prices paid for comparable
companies.
Due to the inadequacy of the $29.50 merger consideration, we find it
difficult to support this transaction. Furthermore, we would find it
surprising, in light of the significant change in life insurance valuations
since the announcement of the merger, if Morgan Stanley would be able to
update its fairness opinion to WNT's Board of Directors at the $29.50 price.
We, therefore, reiterate our recommendation that, in the absence of an
improved offer from PennCorp, WNT allow the merger agreement to expire by its
terms and retain Morgan Stanley to re-solicit potential purchasers.
Respectfully,
John A. Paulson
President
____________________________________
<PAGE>
DESCRIPTION OF ATTACHMENTS TO AUGUST 6, 1997 LETTER FROM JOHN A. PAULSON TO
ROBERT W. PATIN (OMITTED DUE TO FORMAT):
1. Graph of stock price performance of Washington National Corp. and S&P
Life Insurance Index from November 15, 1996 to August 5, 1997.
2. Graph of stock price performance of Washington National Corp. and S&P
Life Insurance Index from August 15, 1996 to August 5, 1997.
3. Comparable analysis of 14 public life insurance companies, including
stock price, market capitalization, price/earnings, price/book value and
dividend yield.
4. Merger comparables of five life insurance acquisitions since February
1997, including cost of transaction, price/earnings and price/book value.
