<PAGE> 1
As filed with the Securities and Exchange Commission on March 18, 1994.
REGISTRATION NO. 33-_____________
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_________________________
UNITED COMPANIES FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
LOUISIANA 71-0430414
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4041 ESSEN LANE
BATON ROUGE, LA. 70809
TELEPHONE (504) 924-6007
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
DALE E. REDMAN
CHIEF FINANCIAL OFFICER
4041 ESSEN LANE
BATON ROUGE, LA. 70809
(504) 924-6007
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_________________________
Copy to:
LEE C. KANTROW
KANTROW, SPAHT, WEAVER & BLITZER
(A PROFESSIONAL LAW CORPORATION)
P.O. BOX 2997
BATON ROUGE, LA 70821-2997
(504) 383-4703
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: { }
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. {X}
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
Title of each class Proposed maximum Proposed maximum
of securities Amount to be offering price aggregate Amount of
to be registered registered per share(1) offering price(1) registration fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $2.00 200,000 $ 41.50 $ 8,300,000.00 $ 2,862.07
par value and related
rights (2)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended, based on the closing
price reported on the NASDAQ National Stock Market, on March 15, 1994.
(2) Includes rights to purchase the registrant's Series A Junior Participating
Preferred Stock pursuant to the registrant's Rights Plan dated as of February
1, 1989.
_________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under to securities laws of any such State.
SUBJECT TO COMPLETION, DATED MARCH 18, 1994.
200,000 SHARES OF
UNITED COMPANIES FINANCIAL CORPORATION
COMMON STOCK
{LOGO}
_________________________
This Prospectus relates to 200,000 shares of common stock, par value
$2.00 per share (the "Common Stock") of United Companies Financial
Corporation (the "Company") which may be offered for sale from time to
time by the Selling Stockholders upon their exercise of certain stock
purchase warrants of the Company (the "Warrants") held by them
permitting their purchase of such shares from the Company at an
exercise price of $8.75 per share. The Warrants are exercisable at
any time on or after February 1, 1994, to and before 5:00 p.m. Baton
Rouge, Louisiana, local time on July 1, 1995. See "Selling
Stockholders and Plan of Distribution". In connection with any sales
of the Common Stock, the Selling Stockholders and any brokers
participating in such sales may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Act").
The Selling Stockholders described in this Prospectus under the
caption "Selling Stockholders and Plan of Distribution" may offer the
shares of Common Stock upon their exercise of the Warrants in
transactions on the National Association of Securities Dealers
Automated Quotations System National Stock Market (the "NASDAQ NSM"),
otherwise in the over- the-counter market or in private transactions.
The Company will not receive any of the proceeds from any sale of the
shares of Common Stock by the Selling Stockholders. On December 13,
1993, the Securities and Exchange Commission declared effective a
shelf registration statement filed on behalf of certain shareholders
of the Company covering 1,951,204 shares of the Company's Common
Stock. For more information regarding the possible sale of Common
Stock of the Company which could affect the market price therefor, see
"Risk Factors - Possible Volatility of Stock Price."
Shares of Common Stock of the Company are reported on the NASDAQ NSM
under the symbol "UCFC".
SEE "RISK FACTORS" FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH ____, 1994.
<PAGE> 3
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE
STATE OF NORTH CAROLINA (THE "NORTH CAROLINA INSURANCE COMMISSIONER") HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS THE NORTH CAROLINA INSURANCE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
LOUISIANA INSURANCE LAWS AND REGULATIONS PROVIDE THAT NO PERSON MAY
ACQUIRE CONTROL OF THE COMPANY AND THUS INDIRECT CONTROL OF ITS INSURANCE
SUBSIDIARIES, UNITED COMPANIES LIFE INSURANCE COMPANY AND UNITED GENERAL TITLE
INSURANCE COMPANY, UNLESS SUCH PERSON HAS PROVIDED CERTAIN REQUIRED INFORMATION
TO THE INSURANCE COMMISSIONER OF THE STATE OF LOUISIANA AND SUCH ACQUISITION
HAS BEEN APPROVED BY THE INSURANCE COMMISSIONER OF THE STATE OF LOUISIANA,
AFTER PUBLIC HEARING. UNDER LOUISIANA INSURANCE LAWS AND REGULATIONS, ANY
PERSON WHO OWNS, CONTROLS OR HAS THE POWER TO VOTE 10% OR MORE OF THE VOTING
SECURITIES OF A CORPORATION IS PRESUMED TO HAVE CONTROL OF THAT CORPORATION AND
ITS SUBSIDIARIES. CONSEQUENTLY, NO PURCHASER IN THIS OFFERING MAY ACQUIRE,
DIRECTLY OR INDIRECTLY, AN AMOUNT OF COMMON STOCK WHICH WOULD BRING SUCH
PURCHASER'S TOTAL HOLDINGS TO 10% OR MORE OF THE VOTING SECURITIES OF THE
COMPANY, UNLESS SUCH PURCHASER HAS PROVIDED THE REQUIRED INFORMATION TO THE
INSURANCE COMMISSIONER OF THE STATE OF LOUISIANA AND THE ACQUISITION HAS BEEN
APPROVED BY THE INSURANCE COMMISSIONER OF THE STATE OF LOUISIANA.
The Company intends to furnish its stockholders annual reports
containing audited financial statements audited by an independent auditor.
AVAILABLE INFORMATION
The Company is subject to informational requirements of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
regional offices of the Commission: Seven World Trade Center, 13th Floor, New
York, New York 10045 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60601. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-3 and exhibits thereto (the "Registration
Statement") which the Company has filed with the Commission under the
Securities Act of 1933, as amended, and to which reference is hereby made. The
Registration Statement and the exhibits thereto may be inspected without charge
at the Commission's office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
upon payment of the prescribed fees.
2
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act (Commission File No. 1-7067) are hereby incorporated by
reference in this Prospectus: (1) the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993; and (2) the description of the Common
Stock contained in the Company's Registration Statement on Form 8-A (Commission
File No. 1-06548) including any amendments or reports filed for the purpose
of updating such description.
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
Upon written or oral request, the Company will provide without charge
to each person to whom a copy of this Prospectus is delivered, a copy of any
and all of the documents incorporated herein by reference (other than exhibits
to such documents, unless such exhibits are specifically incorporated by
reference into such documents). Requests shall be directed to United Companies
Financial Corporation, 4041 Essen Lane, Baton Rouge, Louisiana 70809,
Attention: Investor Relations, telephone (504) 924-6007.
THE COMPANY
United Companies Financial Corporation (the "Company" or "UCFC"),
founded in 1946, is a financial services holding company having mortgage and
insurance operations. The Company provides selected financial products and
services to geographically diverse target markets and conducts its mortgage
operations through United Companies Lending Corporation ("UC Lending" or
"UCLC") and its insurance operations primarily through United Companies Life
Insurance Company ("UC Life" or "UCLIC"). Principal lines of business include
the origination of first mortgage home equity loans to borrowers who may not
otherwise qualify for conventional loans and the sale and servicing of such
loans, and the sale of single premium deferred annuity contracts marketed to
individuals.
The Company was incorporated in the State of Louisiana in 1946. The
Company's headquarters is located at 4041 Essen Lane, Baton Rouge, Louisiana
70809, and its telephone number is (504) 924-6007. It currently has
approximately 1,200 employees.
RISK FACTORS
An investment in the Common Stock of the Company involves certain
risks. In addition to other information contained or incorporated by reference
in this Prospectus, prospective purchasers of the Company's Common Stock should
carefully consider the following factors:
Decline in Real Estate Values; Recessionary Environment. The risks
associated with the Company's business become more acute in any economic
slowdown. Periods of economic slowdown may be accompanied by decreased demand
for consumer credit and declining real estate values in many areas of the
country, including certain of the areas in which the Company originates loans.
Any material decline in real estate values in states in which the Company
operates could have a material adverse effect on the Company. Such declines in
real estate values increase the loan-to-value ratios of loans previously made
by the Company, thereby weakening collateral coverage and increasing the
possibility of a loss in the event of default. In addition, foreclosures and
losses generally increase during economic slowdowns or recessions.
Interest Rates. The primary assets and liabilities of the Company are
interest rate sensitive. Profitability is directly affected by the level of
and fluctuations in interest rates and is dependent upon the Company's ability
to
3
<PAGE> 5
earn a spread between the earnings on its assets and the costs of its
liabilities. Additionally, the value and effective maturity of the Company's
assets and the cost and duration of its liabilities are affected by changes in
interest rates. See "-- Duration of Annuities" below. While the Company
monitors the interest rate environment and employs an approach to
asset/liability management designed to mitigate the impact of changes in
interest rates and to maintain adequate margin and liquidity, there can be no
assurance that the profitability and/or liquidity of the Company would not be
adversely affected during any period of unexpected volatility in the interest
rate environment. Further, a substantial increase in interest rates could
adversely affect the ability of the Company to originate loans as well as the
gains recognized by the Company upon their securitization and sale. A
significant reduction in interest rates also could decrease the size of the
loan servicing portfolio by increasing the level of loan prepayments. In
addition, a reduction in the difference between long-term and short-term
interest rates could have an adverse impact on the profitability of the
Company.
Capitalized Excess Servicing Income. At December 31, 1993, the
Company's balance sheet reflected capitalized excess servicing income (i.e.
unamortized loan sale gains) net of allowance for losses on loans serviced with
recourse of approximately $100.3 million. The Company derives a significant
portion of its income by realizing gains upon the sale of loans due to the
excess servicing income of such loans. Excess servicing income represents the
excess of the interest rate payable by a borrower on a loan over the interest
rate passed through to the investor acquiring an interest in such loan, less
the Company's normal servicing fee and other applicable recurring fees. When
loans are sold, the Company recognizes as current income the present value of
the excess servicing income expected to be realized over the anticipated
average life of loans sold less future estimated credit losses relating to the
loans sold. The capitalized excess servicing income is computed using
prepayment, default and interest rate assumptions that the Company believes
market participants would use for similar instruments at the time of sale. The
weighted average discount rate used to determine the present value of the
balance of capitalized excess servicing income reflected on the Company's
balance sheet at December 31, 1993, was approximately 9.8%. The Company is not
aware of an active market for this kind of receivable. No assurance can be
given that this receivable could in fact be sold at its stated value on the
balance sheet.
Capitalized excess income is amortized over the lesser of the estimated or
actual remaining servicing life of the underlying loans as an offset against
the excess servicing income component of servicing income actually received in
connection with such loans. Although management of the Company believes that
it has made reasonable estimates of the excess servicing income likely to be
realized, it should be recognized that the rate of prepayment and the amount of
defaults utilized by the Company are estimates and actual experience may vary
from these estimates. The Company periodically reviews its prepayment
assumptions in relation to current rates of prepayment and, if necessary,
writes down the remaining asset to the net present value of the estimated
remaining future excess servicing income. Rapid increases in interest rates or
competitive pressures may result in a reduction of excess servicing income,
thereby reducing the gains recognized by the Company upon the sale of loans in
the future.
Risk of Prepayments and Defaults. The gain recognized by the Company
upon sale of loans will have been overstated if the excess servicing income
actually received by the Company is less than originally assumed. An
acceleration of future prepayments could result in capitalized excess servicing
income amortization expense exceeding realized excess servicing income, thereby
adversely affecting the Company's servicing income and resulting in a charge to
earnings in the period of adjustment. Likewise, if delinquencies or
liquidations were to occur sooner in the portfolio of loans sold by the Company
and/or with greater frequency than was initially assumed, capitalized excess
servicing income amortization would occur more quickly than originally
anticipated, which would have an adverse effect on servicing income in the
period of such adjustment.
Contingent Credit Risk. Although the Company sells substantially all
home equity loans which it originates, the Company retains some degree of
credit risk on substantially all loans sold. During the period of time that
loans are held for sale by the Company, it is subject to the various business
risks associated with the lending business, including the risk of borrower
default, the risk of foreclosure and the risk that a rapid increase in interest
rates would result in a decline in the value of a loan to potential purchasers.
The Company retains a limited credit risk in the loans which are sold in the
secondary market and, to this extent, it continues to be subject to the risks
of default and foreclosure following the sales of the loans. In addition,
transactions effected in the secondary market
4
<PAGE> 6
require the Company to commit to repurchase or replace loans which do not
conform to the representations and warranties included as part of the sale
documentation.
Liquidity. The values of and markets for the Company's loans and
bonds are dependent on a number of factors, including general economic
conditions, interest rates, and governmental regulations. Adverse changes in
such factors may affect the Company's ability to purchase or sell loans and/or
bonds for acceptable prices within reasonable time frames. The ability of the
Company to sell loans and/or mortgage-backed securities in the secondary
market is essential for continuation of the Company's loan origination
operations. A prolonged, substantial reduction in the size of the secondary
market for home equity loans may adversely affect the Company's ability to sell
its loan originations and/or mortgage-backed securities in the secondary market
with consequent adverse impact on the Company's profitability and future
originations. In addition, adequate credit facilities are necessary to the
operations of the Company. The generally reduced availability of credit from
commercial banks continues to be of concern to the Company. There can be no
assurance that the Company's present credit facilities will be available in the
future on terms which the Company would consider favorable. Further, any
restrictions on the ability of the UC Life to purchase loans from UC Lending
could adversely affect the ability of the Company to continue loan origination
operations. In addition, increased surrenders of the Company's annuity
policies could adversely impact the Company's liquidity, potentially requiring
the sale of certain assets, such as bonds and loans, prior to maturity which
may result in a loss. Loan securitization transactions require the Company to
fund reserve accounts to cover losses in the pool of loans which back the
securities issued thereunder. These reserve account funding requirements
restrict the Company's ability to access cash flows from the excess interest
spread retained by it in such securitization transactions.
Duration of Annuities. Reserves for annuity policies constitute the
Company's primary liabilities. The duration of these liabilities is affected
by a number of factors, including interest rates, surrender penalties, ratings,
public confidence in the insurance industry generally, and in the Company
specifically, governmental regulations and tax laws. Since insurance
commissions incurred at the origination of annuity policies are generally
deferred and recognized over the estimated life of the policies, any unexpected
increase in surrenders of annuity contracts would require more rapid
recognition of these expenses, thereby adversely impacting profitability.
Ratings. The Company's senior debt is rated "BBB" by Duff & Phelps,
Inc. ("D&P"), and its life insurance subsidiary is rated "A-" (Excellent) by
A.M. Best Company ("Best") and "A+" by D&P. D&P and Best are each independent
rating organizations. Best ratings are based on factors relevant to
policyholders and are not directed toward the protection of stockholders. On
June 1, 1993, Best, based on its current opinion of the life insurance
subsidiary's financial condition and operating performance, lowered the rating
from "A" (Excellent) to "A-" (Excellent). Ratings such as those held by the
Company and its life insurance subsidiary are important to maintaining public
confidence in the Company and the Company's ability to market its loan and
annuity products and services. Although the Company did not experience a
material reduction in the level of annuity sales or an increase in the rate of
annuity surrenders following this action by Best, this lower rating or any
further lowering of the life insurance subsidiary's rating could materially and
adversely affect the Company's ability to market its products, particularly the
sale of annuities through financial institutions, and could increase the
surrender of its annuity policies. Both of these consequences could, depending
upon the extent thereof, have a materially adverse effect on the Company's
liquidity and, under certain circumstances, net income and the ability of the
Company's mortgage subsidiary to originate new loans.
Investment Portfolio. The investment portfolio of UC Life, the
Company's life insurance company subsidiary, consists primarily of investment
grade publicly traded fixed maturity securities and mortgage loans meeting the
Company's underwriting standards. At December 31, 1993, 59.6% of UC Life's
total invested assets were invested in investment grade fixed maturity
securities and 31.7% were invested in mortgage loans. At December 31, 1993, UC
Life's holdings of below investment grade publicly traded bonds represented
1.2% of its bond portfolio. Of UC Life's mortgage loans, $189 million or 40.8%
of total real estate loans represented first mortgage commercial real estate
loans. During 1991, UC Life decided to limit its investment in commercial real
estate mortgage loans. Future investments in commercial mortgage loans,
however, may be made with respect to refinancing of loans currently owned by UC
Life or loans previously sold in two private placement transactions in
5
<PAGE> 7
1990. Continued adverse conditions in the real estate market may adversely
affect the Company's mortgage loan portfolio.
Possible Volatility of Stock Price. The market price of the Common
Stock may experience fluctuations that are unrelated to the operating
performance of the Company. In particular, the price of the Common Stock may
be affected by general market price movements as well as developments
specifically related to the mortgage and insurance industries such as, among
other things, interest rate movements. In addition, the Company's operating
income on a quarterly basis is significantly dependent upon the successful
completion of the Company's loan sales in the secondary market, and the
inability of the Company to complete significant loan sale transactions in a
particular quarter will likely have a material adverse impact on the Company's
operating results and could, therefore, negatively impact the price of the
Common Stock. On September 13, 1993, the Company filed a shelf registration
statement with the Commission on behalf of certain stockholders of the Company
covering 1,951,204 shares of the Company's Common Stock. This shelf
registration statement was declared effective by the Commission on December 13,
1993. The Company has been advised that some of the shares of the Company's
Common Stock which were registered pursuant to such shelf registration
statement have been sold by some of the Stockholders on whose behalf the shelf
registration statement was filed by the Company. Management of the Company
cannot predict the amount and timing of any other sales of such Common Stock
under the shelf registration statement, or the impact of any such sales on the
market for the Company's Common Stock. However, should a significant number of
shares of such Common Stock be sold by one or more of such stockholders within
a short time period, the market price of the Common Stock could be adversely
affected.
Timing of Loan Sales. The Company presently expects to endeavor to
effect public securitization transactions on approximately a quarterly basis
through its subsidiary's shelf registration statement. However, market or
other considerations could affect the timing of such transactions and delays in
such sales could reduce the amount of gains recognized from the sale of loans
in a given quarter which constitutes a significant portion of the Company's
income.
Government Regulation and Legislation. The Company's mortgage and
insurance businesses are subject to extensive regulation, supervision and
licensing by federal and state authorities. Regulated matters include, without
limitation, maximum interest rates and fees which may be charged by the
Company, disclosures in connection with loan originations, credit reporting
requirements, servicing requirements, insurance premium rates and coverage
issues, federal and state taxation, and multiple qualification and licensing
requirements for doing business in various jurisdictions. While the Company
believes that it maintains all requisite licenses, permits and approvals and is
in compliance with all material respects with applicable federal and state
regulations, there can be no assurance that more restrictive laws or
regulations will not be adopted which could make compliance in the future more
difficult and/or more expensive. Legislative and regulatory proposals are
frequently advanced which, if adopted, could adversely affect the Company's
profitability or the manner in which the Company conducts its activities. In
particular, legislation was introduced during 1993 in both the United States
Senate and House of Representatives that would impose disclosure requirements
and prohibit prepayment penalty charges, among other requirements, on loans
with a specified level of origination fees or a specified interest rate level.
Although management of the Company does not believe that the proposed
legislation in its current form will have a material impact on its business or
results of operations, a significant percentage of the Company's loans could be
subject to the restrictions of the proposed legislation. There can be no
assurance that the proposed legislation will be adopted in its current form. A
substantial amount of the Company's annuity policies are marketed through
financial institutions. In August, 1993, the United States Court of Appeals
for the Fifth Circuit, held that the United States Comptroller of the
Currency's decision to permit national banks to sell annuities in towns with
more than 5,000 inhabitants violated the National Bank Act. The ruling, if it
becomes final, will effectively and immediately prohibit annuity sales by
national banks in the States of Texas, Louisiana and Mississippi. The ruling,
particularly if it is adopted by other circuit courts in other regions of the
country, could have a material adverse effect on the ability of the Company to
market its annuities. Furthermore, any future regulatory restrictions on the
authority of financial institutions to market annuities could have a material
adverse effect on the ability of the Company to market this product.
6
<PAGE> 8
Competition. As a marketer of credit and annuity products, the
Company faces intense competition. Traditional competitors in the financial
services business include mortgage banking companies, commercial banks, credit
unions, thrift institutions, credit card issuers and finance companies.
Competitors in the annuity business include established insurance companies,
and there are an increasing number of insurance companies which have recently
begun to offer annuity products. Many of these competitors in the financial
services and annuity business are substantially larger and have more capital
and other resources than the Company. Competition can take many forms
including convenience in obtaining a loan or annuity, customer service,
marketing and distribution channels and interest or crediting rates. In
addition, the current level of gains realized by the Company and its existing
competitors on the sale of its non-conventional loans could attract additional
competitors into this market with the possible effect of lowering gains on
future loan sales owing to increased loan origination competition.
Holding Company Structure. As a holding company, the Company's
ability to meet debt service obligations and pay operating expenses and
dividends depends on receipt of sufficient funds from its subsidiaries. The
payment of dividends by UC Life to the Company is subject to restrictions set
forth in the insurance laws and regulations of Louisiana, its domiciliary
state. The Louisiana Insurance Code (the "Code") provides that no Louisiana
stock insurance company shall declare and pay any dividends to its stockholders
unless (i) its capital is fully paid in cash and is unimpaired and (ii) it has
a surplus beyond its capital stock and the initial minimum surplus required and
all other liabilities equal to 15% of its capital stock, provided that this
restriction shall not apply to an insurance company when its paid-in capital
and surplus exceed the minimum required by the Code by 100% or more.
Additional dividend restrictions are imposed by the Louisiana Insurance Holding
Company System Regulatory Law (the "Insurance Holding Company Law").
Specifically, extraordinary dividends by an insurance company are subject to a
prior approval requirement by the Louisiana Commissioner of Insurance (the
"Louisiana Commissioner") and an insurance company's surplus as regards
policyholders following any dividends or distributions to affiliates must be
reasonable in relation to the insurance company's outstanding liabilities and
adequate to its financial needs. Effective October 31, 1993, an extraordinary
dividend is defined as an amount in excess of the lesser of (a) 10% of surplus
as of the preceding December 31, or (b) the net gain from operations for the
preceding calendar year. The Insurance Holding Company Law also subjects all
transactions between a Louisiana insurance company and its affiliates to
certain fairness and reasonableness standards, and, furthermore, certain types
of transactions with its affiliates are subject to prior notice to the
Louisiana Commissioner who may disapprove the transaction if it is determined
that such transaction does not meet certain fairness and reasonableness
standards or if it may adversely affect the interests of policyholders. If
insurance regulators determine that payment of a dividend or any other payment
to an affiliate (such as a payment under a tax allocation agreement or for
employee or other services or pursuant to a surplus debenture) would, because
of the financial condition of the paying insurance company or otherwise, be
hazardous to such insurance company's policyholders or creditors, the
regulators may block payment of such dividend or such other payment to the
affiliate that would otherwise be permitted without prior approval. Under the
current statutory and regulatory scheme in Louisiana, UC Life has, as of
December 31, 1993, the capacity to pay dividends of $8.5 million. UC Life did
not pay any dividends to the Company during 1991, 1992 and 1993 in order to
retain capital in UC Life.
USE OF PROCEEDS
The shares of Common Stock to be offered hereby upon the exercise of
the Warrants are to be offered by the Selling Stockholders. See "Selling
Stockholders and Plan of Distribution". The Company will not receive any of
the proceeds from the sale of the Common Stock by the Selling Stockholders.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
Effective as of July 1, 1993, the Company issued a stock purchase
warrant to The Robinson-Humphrey Company, Inc. ("R-H"), which granted R-H the
right to purchase 200,000 shares of the Company's Common Stock (the "Warrant
Shares") at an exercise price of $8.75 per share, equal to the average of the
high and low sale prices of the Company's Common Stock on June 30, 1993, as
adjusted for the 100% stock dividend paid by the Company on October 18, 1993.
The stock purchase warrant was issued to R-H in exchange for financial advisory
services to be performed over a twenty-four month period beginning July 1,
1993.
7
<PAGE> 9
As of October 30, 1993, R-H assigned, with the Company's consent, a
portion of the stock purchase warrant held by it, representing the right to
purchase 40,000 shares of the Company's Common Stock, to an officer of R-H, Jon
R. Burke ("Burke"), leaving R-H with a right to purchase 160,000 shares of the
Company's Common Stock. R-H and Burke are referred to herein collectively as
the "Selling Stockholders" and singly as a "Selling Stockholder". The stock
purchase warrants of the Company issued to the Selling Stockholders are
referred to herein as the "Warrants".
The Warrants held by R-H and Burke contain terms, other than the
number of Warrant Shares subject thereto, that are materially identical. The
Warrants are exercisable in whole but not in part, at any time on or after
February 1, 1994 and before 5:00 p.m., Baton Rouge, Louisiana, local time, on
July 1, 1995 (the "Exercise Period"). As of the date hereof, the exercise
price of the Warrants is $8.75 per share (the "Exercise Price"). The Exercise
Price and the number of Warrant Shares are both subject to adjustment as
described below.
The Exercise Price and number of Warrant Shares are subject to
adjustment in certain events occurring prior to the exercise thereof,
including: (i) the payment of a dividend in, or other distribution of, Common
Stock, to the holders of the Company's issued and outstanding Common Stock;
(ii) the subdivision of the outstanding shares of the Company's Common Stock
into a larger number of shares of Common Stock or a combination of the
outstanding shares of the Company's Common Stock into a smaller number of
shares of Common Stock, or (iii) any other reclassification of the Company's
capital structure.
The Warrants require the Company to file a registration statement with
the Commission for the Warrant Shares no later than March 18, 1994, to
facilitate the sale of the Warrant Shares by the Selling Stockholders under the
Securities Act of 1933, as amended (the "Act"). The Company has covenanted to
keep the Registration Statement in effect for a period not exceeding eighteen
(18) months. The Company has also agreed to effect such filings under state
"blue sky" laws as the Selling Stockholders request. The Warrants also provide
that the Company shall indemnify and hold harmless the holder, its officers,
directors, and underwriters and any person who controls (within the meaning of
the Act) the holder from all losses, liabilities, damages, and expenses
(including reasonable attorneys' fees) caused by, arising out of, or based upon
any untrue statement of a material fact contained in the registration
statement, or any related prospectus, or any omission of a material fact
required or necessary to make the statements not misleading except to the
extent that the losses, liabilities, damages, or expenses resulted from any
untrue statement or omission contained in information furnished in writing to
the Company by the holder expressly for inclusion in the registration
statement. Further, the Warrants provide that the holders shall indemnify and
hold harmless the Company, its officers and directors and any person who
controls (within the meaning of the Act), the Company from all losses,
liabilities, damages, and expenses (including reasonable attorneys' fees)
caused by, arising out of, or based upon any untrue statement of a material
fact contained in the registration statement, or any related prospectus, or any
omission of a material fact required or necessary to make the statements not
misleading, to the extent that the losses, liabilities, damages, or expenses
resulted from any untrue statement or omission contained in information
furnished in writing to the Company by the holder expressly for inclusion in
the registration statement.
In addition to the financial advisory services to be provided by R-H
over a twenty-four month period beginning July 1, 1993, noted above, R-H acted
as placement agent for the Company in connection with an overseas private
placement, pursuant to Regulation S of the Securities and Exchange Commission,
of 800,000 shares of the Company's Cumulative Convertible Preferred Stock,
Series A, in June 1993, and makes a market in the Company's Common Stock.
Pursuant to the registration statement filed by the Company on behalf
of the Selling Stockholders, the Selling Stockholders may choose to sell all or
a portion of the Warrant Shares from time to time in transactions reported on
the NASDAQ NSM, otherwise in the over-the-counter market, or in private
transactions. The table below reflects the number and percentage of shares of
Common Stock owned by the Selling Stockholders as of March 9, 1994, the number
and percentage of outstanding shares being offered hereby for the Selling
Stockholders' accounts (assuming all of the Common Stock acquired upon exercise
are offered and sold) and the number and percentage of outstanding shares to
be owned by them following completion of the offering. Although the following
table is presented on the assumption that both of the Selling Stockholders
exercise their Warrants and will sell all of their Warrant Shares, the Company
cannot predict whether this in fact will occur, the timing or amount of any
actual sales, or any effect thereof on the market price of the Company's Common
Stock. Neither of the Selling Stockholders, nor any officer, director or
employee of R-H, holds any position or office with the Company.
8
<PAGE> 10
<TABLE>
<CAPTION>
==========================================================================================================
NUMBER OF % OF SHARES
NUMBER OF % OF SHARES OF SHARES OF NUMBER OF OF COMMON
SHARES OF COMMON STOCK COMMON STOCK TO SHARES OF STOCK
COMMON STOCK OUTSTANDING BE SOLD COMMON STOCK OUTSTANDING
OWNED PRIOR PRIOR TO PURSUANT TO OWNED AFTER OWNED AFTER
PURCHASER NAME TO OFFERING OFFERING OFFERING OFFERING OFFERING
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Robinson-Humphrey 175,074(1) 1.4% 160,000 (3) (3)
Company, Inc.
- ----------------------------------------------------------------------------------------------------------
Jon R. Burke 40,000(2) .3% 40,000 0 __
==========================================================================================================
</TABLE>
(1) Includes 15,074 shares of Common Stock held as principal and 160,000 shares
of Common Stock beneficially owned pursuant to the Warrant which is immediately
exercisable.
(2) Reflects the beneficial ownership of 40,000 shares of Common Stock pursuant
to the Warrant which is immediately exercisable.
(3) R-H makes a market in the Company's Common Stock, and its holdings of
shares of Common Stock vary and cannot accurately be predicted.
The Warrant Shares owned by the Selling Stockholders may be sold in
one or more of the following transactions: (a) block trades in which the
broker or dealer so engaged will attempt to sell the Warrant Shares as agent
but may position and resell a portion of the block as principal to facilitate
any transaction, (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to the registration statement
relating thereto, (c) ordinary brokerage transactions and transactions in which
the broker may or may not solicit purchasers, and (d) in private transactions.
In effecting sales, brokers and dealers, if any, engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers
or dealers may receive commissions or discounts from the Selling Stockholders
in amounts to be negotiated (and, if such broker-dealer acts as agent for the
purchaser of such shares, from such purchaser). Brokers-dealers may agree with
any Selling Stockholder to sell a specified number of Warrant Shares at a
stipulated price per Warrant Share, and, to the extent such a broker-dealer is
unable to do so acting as agent for a Selling Stockholder, to purchase as
principal any unsold shares at the price required to fulfill the broker-dealer
commitment to such Selling Stockholder. Broker-dealers who acquire Warrant
Shares as principal may thereafter resell such Warrant Shares from time to time
in transactions (which may involve crosses and block transactions and which may
involve sales to and through other broker-dealers, including transactions, of
the nature described above) in the over-the-counter market, in negotiated
transactions or otherwise and in connection with such resales may pay to or
receive from the purchasers of such Warrant Shares commissions as described
above.
9
<PAGE> 11
DESCRIPTION OF CAPITAL STOCK
GENERAL
Set forth below is a description of the material terms and provisions
of the equity securities of the Company. The following description does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Articles of Incorporation, as amended, of the Company (the
"Articles of Incorporation") and the By-Laws, as amended, of the Company (the
"By-Laws") and the Rights Plan of the Company dated as of February 1, 1989 (the
"Rights Plan"). The Articles of Incorporation, the By-Laws, and the Rights
Plan are exhibits to the Company's Annual Report on Form 10-K and are available
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates or may be requested by writing Dale
E. Redman, Chief Financial Officer of the Company, at 4041 Essen Lane, Baton
Rouge, Louisiana 70809.
The Company is authorized to issue (i) 20,000,000 shares of Common
Stock, par value $2.00 per share and (ii) 5,000,000 shares of preferred stock,
par value $2.00 per share, which may be issued in one or more series with such
voting powers, designations, preferences, rights, qualifications, limitations
and restrictions as shall be specified by the Board of Directors. The Board of
Directors has approved and recommended for approval by the shareholders of the
Company at the 1994 Annual Meeting of Shareholders an amendment to the
Company's Articles of Incorporation to increase (i) the number of authorized
shares of Common Stock of the Company from 20,000,000 shares to 100,000,000
shares and (ii) the number of authorized shares of preferred stock from
5,000,000 shares to 20,000,000 shares. The Board of Directors may issue
preferred stock with voting and conversion rights which could adversely affect
the voting power of the holders of Common Stock, and which could, among other
things, have the effect of delaying, deferring or preventing a change in
control of the Company. In connection with the Rights Plan, the Board of
Directors authorized issuance of 200,000 shares of Series A Junior
Participating Preferred Stock to holders of rights issued under the Rights
Plan. See "--Rights Plan" below.
As of March 1, 1994, 12,340,376 shares of Common Stock were issued and
outstanding.
6.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A, ISSUE PRICE $25.00 PER
SHARE
On June 29, 1993, the Company sold to twenty-two institutional
investors located primarily in the United Kingdom 800,000 shares of 6.5%
Cumulative Convertible Preferred Stock, Series A, Issue Price $25.00 per share
(the "Preferred Stock") pursuant to Regulation S promulgated by the Commission.
On August 26, 1993, the Company called for redemption all outstanding shares of
the Preferred Stock. The holders of the Preferred Stock had the right to
convert their shares of Preferred Stock into Common Stock. Each share of
Preferred Stock had a conversion price of $20.50 and was convertible into
1.2195 shares of Common Stock (prior to the 100% Common Stock dividend paid on
October 18, 1993, to stockholders of record on October 1, 1993) at the option
of the holders of the Preferred Stock. All of the holders of Preferred Stock
elected to convert their shares of Preferred Stock to Common Stock for a total
of 975,602 shares of Common Stock (now constituting 1,951,204 shares of Common
Stock after the 100% stock dividend). The Company has filed a shelf
registration statement on Form S-1 (Registration Statement No. 33- 68626)
covering the resale by the holders thereof of the 1,951,204 shares of Common
Stock issued upon such conversion and such shelf registration statement was
declared effective by the Commission on December 13, 1993. The Company has
covenanted with the former holders of Preferred Stock to keep such shelf
registration statement effective until the earlier of three years from June 29,
1993, or the sale by the former holders of the Preferred Stock of all of the
shares of Common Stock covered by the shelf registration statement.
COMMON STOCK
Dividends
Holders of the Company's Common Stock are entitled to receive such
dividends as may be legally declared by the Board of Directors. The
declaration and amount of future dividends may depend, in part, on restrictive
covenants contained in certain loan agreements and certain state regulations
regarding minimum capitalization
10
<PAGE> 12
requirements for insurance companies that have the effect of limiting dividends
from UC Life and United General Title Insurance Company, the Company's title
insurance subsidiary, to the Company. In addition, the terms of the Company's
serial preferred stock also prohibit the payment of dividends on Common Stock
whenever dividends on such serial preferred stock are in arrears.
Under provisions of the Company's revolving credit facility
restricting the payment of dividends, approximately $26.0 million of retained
earnings was available for the payment of dividends at December 31, 1993. In
addition to the state regulatory provisions referenced above requiring minimum
capitalization for insurance companies and limiting the ability of insurance
companies to pay dividends or make other payments to affiliates, the ability of
UC Life to pay dividends to the Company is restricted under certain
circumstances by the fact that payment of dividends by UC Life would result in
an increase in UC Life's federal income taxes.
Voting Rights
Holders of Common Stock are entitled to one vote for each share held
of record. Except as discussed below, action of the stockholders may generally
be taken by the affirmative vote of a majority of the shares present or
represented at a duly called meeting at which a quorum is present or
represented.
Other Rights
Holders of Common Stock have no preemptive or subscription rights and
have no liability for further calls or assessments. Subject to the prior
rights of the Preferred Stock, all shares of Common Stock are entitled to share
ratably in net assets of the Company upon liquidation.
The transfer agent and registrar for the Common Stock is Chemical Bank
of New York, New York.
SPECIAL CHARTER AND LOUISIANA LAW PROVISIONS
Certain provisions of the Articles of Incorporation of the Company,
Louisiana law, and the Company's Rights Plans, may have the effect of delaying,
deterring or discouraging, among other things, a non-negotiated tender or
exchange offer for the Company's Common Stock or a proxy contest for control of
the Company.
Special Vote Provisions and Takeover Consideration Provisions in the
Company's Articles of Incorporation
The Articles of Incorporation of the Company include certain
provisions (the "Special Vote Provisions") requiring the affirmative vote of
80% of the outstanding shares of the Company's voting stock before the Company
may enter into (i) a merger or consolidation with any other corporation, (ii) a
sale or lease of substantially all of the assets of the Company to any other
corporation, person or entity, or (iii) a sale or lease to the Company by any
other corporation, person or other entity of assets having a value greater than
$1 million in exchange for voting stock of the Company, in each case if such
other corporation, person or other entity, directly or indirectly, owns or
controls 10% or more of the Company's voting stock prior to any such
transaction. The Special Vote Provisions apply only to the above-described
transactions which do not receive prior approval of the Board of Directors.
The Articles of Incorporation of the Company also contain certain
provisions (the "Takeover Consideration Provisions") authorizing the Board of
Directors, in evaluating an offer from a third party to merge with or acquire
the shares or assets of the Company, to give due consideration of certain
factors not directly related either to the price per share offered for or the
then market price of the Company's Common Stock. The factors that the Board of
Directors is authorized to consider under the Takeover Consideration Provisions
include, without limitation: (i) the consideration being offered in the
acquisition proposal as it relates to the then current value of the Company in
a freely negotiated transaction, and to the Board of Directors' then estimate
of the future value of the Company as an independent entity; (ii) the social,
legal and economic effects of the acquisition proposal on the Company and its
subsidiaries, and the franchisees, employees, suppliers, customers, creditors
and business of the Company and its subsidiaries; (iii) the financial condition
and earnings prospects of the potential offeror, including but not limited
11
<PAGE> 13
to, debt service and other existing or likely financial obligations of the
potential offeror, and the possible effect of such condition upon the Company
and its subsidiaries and other elements of the communities in which the Company
and its subsidiaries operate or are located; and (iv) the competence,
experience and integrity of the potential offerer.
Pursuant to Section 92G of the Louisiana Business Corporation Law (the
"LBCL"), the Board of Directors is also authorized to consider the factors set
forth therein (which are generally comparable to those set forth in the
Takeover Consideration Provisions) and any other factors which it deems
relevant in evaluating a tender offer or an offer to make a tender or exchange
offer or to effect a merger or consolidation.
The Special Vote Provisions and the Takeover Consideration Provisions
may be altered only by the affirmative vote of 80% of the outstanding shares of
the Company's voting stock.
Directors' and Officers' Exculpation and Indemnification
The Articles of Incorporation, as amended, provide that no director or
officer of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director or
officer except for liability (i) for breach of the directors' or officers' duty
of loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 92(D) of the LBCL, which specifies certain corporate
transactions, such as certain dividend declarations and dispositions of assets,
as unlawful, or (iv) for any transaction from which the director or officer
derived an improper personal benefit. With the exception of the items noted in
(i) through (iv) above, the effect of this provision of the Articles of
Incorporation is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director or officer for breach of fiduciary duty as
a director or officer. This provision does not limit or eliminate the rights
of the Company or any stockholders to seek non-monetary relief, such as an
injunction or rescission in the event of a breach of a director's or officer's
fiduciary duty.
Pursuant to Section 83 of the LBCL, the Company has adopted provisions
in its Articles of Incorporation which require the Company to indemnify its
directors and officers to the fullest extent permitted by Louisiana law.
Louisiana Fair Price and Control Share Acquisition Statutes
As a Louisiana corporation, the Company is subject to the provisions
of the LBCL which contain "fair price" and "control share acquisition"
provisions. Each of these provisions imposes significant restrictions on the
ability of an acquiror of a large block of voting stock of a Louisiana
corporation to exercise control over the corporation.
The "fair price" provisions are set forth in Sections 132-134 of the
LBCL and are designed to restrict the ability of a Louisiana corporation to
enter into mergers or other extraordinary corporate transactions with certain
stockholders. These provisions require that certain business combinations
between a Louisiana corporation and "interested stockholders" must be approved
by (i) the corporation's Board of Directors, (ii) the affirmative vote of at
least 80% of the voting stock of the corporation, and (iii) the affirmative
vote of two-thirds of the voting stock of the corporation (excluding stock held
by the interested stockholders), unless the business combination satisfies
certain "fair price" tests regarding the payments to be made to stockholders
and meets certain other procedural requirements. An "interested stockholder"
is defined as any person (other than the corporation, any subsidiary of the
corporation or any employee benefit plan of the corporation or any subsidiary)
that is the beneficial owner of 10% or more of the voting stock of the
corporation. In general, the "fair price" tests measure the value stockholders
receive for their stock from an interested stockholder in transactions within a
two year period.
The "control share acquisition" provisions of the LBCL are set forth
in Sections 135-140.2. In general, these provisions provide that persons who,
after May 4, 1987, acquire stock that would normally entitle them to exercise
20% or more of the voting power of the corporation will not be able to vote the
shares acquired by them in excess of 20% of such voting power unless their
ability to vote is reinstated by the stockholders of the corporation at a
meeting held after the acquiring person requests such a vote. A corporation is
required to call such a meeting
12
<PAGE> 14
only if the person proposing to make a control share acquisition (an "acquiring
stockholder") has demonstrated a financial ability to make a successful
acquisition and such proposed acquisition is lawful. At such a meeting, the
voting rights of the acquiring stockholder will be reinstated for shares held
by the acquiring stockholder in excess of 20% of the Company's voting power if
approved by the affirmative vote of (i) a majority of all shares of the Company
then entitled to vote and (ii) a majority of all shares of the Company then
entitled to vote (excluding shares beneficially owned by the acquiring
stockholder, its officers and its directors who are also its employees). If
the voting rights of the acquiring stockholder are reinstated, such stockholder
can acquire additional voting shares within certain threshold levels, without
obtaining additional stockholder approval. However, if the acquiring
stockholder acquires additional shares in an acquisition that places such
stockholder above the threshold ownership levels of one-third and one-half of
all voting shares, the additional shares acquired in such an acquisition in
excess of such ownership levels will not have voting rights unless reinstated
by the stockholders pursuant to the voting procedures described above. A
corporation must call a stockholders' meeting within 50 days of the date that
both the corporation and the proposed acquiring stockholder file definitive
proxy materials with the Commission.
Louisiana Insurance Code
UC Life is a Louisiana chartered life insurance company. Section 731
of the Louisiana Insurance Code (La.R.S. 22:731) provides that a Louisiana
insurer may merge or consolidate with or acquire control of another insurer, or
a person may acquire control of a Louisiana insurance company only if the plan
of merger or consolidation or acquisition of control is submitted to or
receives advance approval from the Louisiana Commissioner of Insurance after a
public hearing thereon. Section 731 provides that the Louisiana Commissioner
of Insurance may disapprove any such merger, consolidation or other acquisition
of control for any of the following reasons: (i) the effect thereof would be
substantially to lessen competition in insurance in Louisiana or tend to create
a monopoly therein; (ii) the financial condition of any acquiring party is such
as might jeopardize the financial stability of the insurer, or prejudice the
interests of its policyholders or the interests of any remaining security
holders who are unaffiliated with such acquiring party; (iii) the terms of the
offer, request, invitation, agreement or acquisition are unfair and
unreasonable to the security holders of the insurer; (iv) the plans or
proposals which the acquiring party has to liquidate the insurer, sell its
assets or consolidate or merge it with any person, or to make any other
material change in its business or corporate structure or management are unfair
and unreasonable to policyholders of the insurer and not in the public
interest; or (v) the competence, experience and integrity of those persons who
would control the operation of the insurer are such that it would not be in the
interest of policyholders of the insurer and of the public to permit the
merger, consolidation or other acquisition of control.
Louisiana's Insurance Holding Company System Regulatory Law,
constituting Part XXI-A of the Louisiana Insurance Code (La.R.S. 22:1001-
1015), requires the filing of periodic registration statements by the Company
with the Louisiana Commissioner of Insurance and regulates transactions among
members of an insurance holding company system such as that of the Company.
Any change of control (10% or more of voting securities is presumed to
constitute control for purposes of this legislation) requires notification to,
hearing before and approval of the Louisiana Commissioner of Insurance.
RIGHTS PLAN
In February 1989, the Board of Directors of the Company declared a
dividend of one preferred stock purchase right (a "Right") for each outstanding
share of Common Stock and has authorized the issuance of one Right with respect
to each share of Common Stock issued after February 13, 1989, and before the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined). The Rights have antitakeover
effects. The Rights will cause substantial dilution to a person or group that
attempts to acquire the Company on terms not approved by the Board of
Directors, except pursuant to an offer conditioned on a substantial number of
Rights being acquired.
Each Right entitles the registered holder upon exercise on and after
the Distribution Date to purchase from the Company one one- hundredth of a
share of Series A Junior Participating Preferred Stock, par value $2.00 per
share (the "Preferred Shares"), of the Company at a price of $80.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights and the Preferred Shares
13
<PAGE> 15
into which such Rights are exercisable, are set forth in a Rights Agreement
dated as of February 1, 1989 (the "Rights Plan"), between the Company and
Manufacturers Hanover Trust Company (now Chemical Bank), acting as Rights
Agent.
Until the earlier of the close of business on (i) the tenth day
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
45% percent or more of the outstanding shares of Common Stock, or (ii) the
tenth day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any person becomes an Acquiring
Person) following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 50% or more of the outstanding
shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be transferred with and only with shares
of the Common Stock. The Rights will expire on January 31, 1999 (the "Final
Expiration Date"), unless the Rights are earlier redeemed or exchanged by the
Company.
The Purchase Price payable, and the number of Preferred Shares or
other securities of property issuable, on exercise of the Rights are subject to
adjustment from time to time to prevent dilution in the event of a stock
dividend on the Preferred Shares or other events described in the Rights Plan.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common
Stock. In the event of liquidation, the holders of the Preferred Shares will
be entitled to a minimum preferential liquidation payment of $100.00 per share
but will be entitled to an aggregate payment of 100 times the payment made per
share of Common Stock. Each Preferred Share will have 100 votes, voting
together with the Common Stock. Finally, in the event of merger, consolidation
or other transaction in which shares of Common Stock are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
share of Common Stock. The Rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one share of Common Stock.
The Rights Plan contains a "flip-over" feature allowing the exercise
of the Rights so that the holder thereof (except those Rights held by the
Acquiring Person) will receive shares of Common Stock of the Acquiring Person
at half price causing substantial dilution to the Acquiring Person. In
general, this "flip-over" feature provides that in the event that the Company
is acquired by an Acquiring Person in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
to an Acquiring Person, proper provision will be made so that each holder of a
Right, other than Rights that are or were beneficially owned by the Acquiring
Person after the date upon which the Acquiring Person became such (which will
thereafter be void), will thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, that number of shares of
common stock of the Acquiring Person which at the time of such transaction will
have a market value of two times the Purchase Price.
The Rights Plan also contains a "flip-in" feature allowing holders of
Rights (except those held by an Acquiring Person) to purchase Common Stock of
the Company at half price. In general this "flip-in" feature provides that in
the event that (i) any person becomes the beneficial owner of 50% or more of
the outstanding Common Stock (unless such person first acquires 45% or more of
the outstanding Common Stock by a purchase pursuant to a tender offer for all
of the Common Stock for cash, which purchase increases such person's beneficial
ownership to 90% or more of the outstanding Common Stock), (ii) an Acquiring
Person engages in one or more "self-dealing" transactions as set forth in the
Rights Plan, or (iii) during such time as there is an Acquiring Person, there
shall be a reclassification of securities or a recapitalization or
reorganization of the Company or other transaction or series of transactions
involving the Company which has the effect of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
of the Company or any of its subsidiaries beneficially owned by the Acquiring
Person, proper provision shall be made so that each holder of a Right, other
than Rights that are or were beneficially owned by the Acquiring Person after
the date upon which the
14
<PAGE> 16
Acquiring Person became such (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of Common Stock
(or, in the event that there are insufficient authorized shares of Common
Stock, substitute consideration such as cash, property, or other securities of
the Company) having a market value of two times the Purchase Price.
At any time after the acquisition by an Acquiring Person of beneficial
ownership of 45% or more of the outstanding Common Stock and prior to the
acquisition by such person of 50% or more of the outstanding Common Stock, the
Board of Directors of the Company may exchange the Rights (other than Rights
owned by such person which have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or one one-hundredth of a
Preferred Share (or of a share of a class or series of the Company's preferred
stock having equivalent rights, preferences and privileges), per Right (subject
to adjustment).
At any time prior to the tenth day following a public announcement
that an Acquiring Person has acquired beneficial ownership of 45% or more of
the outstanding Common Stock, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). Immediately upon any redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holder of the
Rights will be to receive the Redemption Price. The date on which the
redemption of the Rights occurs pursuant to the foregoing provisions is
referred to herein as the "Redemption Date".
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding shares of the Common Stock then known to the Company to be
beneficially owned by any Acquiring Person and (ii) 30%, except that from and
after such time as any person becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder of a Right will not, by reason
of being such a holder, have rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
15
<PAGE> 17
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be
passed upon for the Company by the law firm of Kantrow, Spaht, Weaver & Blitzer
(A Professional Law Corporation), P. O. Box 2997, Baton Rouge, Louisiana,
70821. As of December 31, 1993, individual stockholders of the firm of
Kantrow, Spaht, Weaver & Blitzer (A Professional Law Corporation) owned,
directly or indirectly, approximately 20,766 shares of the Company's Common
Stock.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Registration Statement by reference from the Company's
Annual Report on Form 10-K for the year ended December 31, 1993 have been
audited by Deloitte & Touche, independent auditors, as stated in their report,
which is incorporated herein by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
16
<PAGE> 18
====================================== ======================================
No dealer, salesman or any
other person has been authorized to 200,000 Shares
give any information or to make any
representation in connection with
this offering other than those
contained in this Prospectus and, if United Companies
given or made, such other information Financial Corporation
or representations must not be relied
upon as having been so authorized by
the Company or the Selling {LOGO}
Stockholders. This Prospectus does
not constitute an offer to sell or
a solicitation of an offer to buy by
anyone in any jurisdiction in which
such offer to sell or solicitation is
not authorized, or in which the person Common Stock
making such offer to sell or a
solicitation is not qualified to do so
nor to any person to whom it is unlawful
to make such offer or solicitation.
Neither the delivery of this Prospectus
nor any sale hereunder shall, under any
circumstances, create any implication
that there has been no change in the
affairs of the Company since the date
as of which information is furnished.
_____________________
TABLE OF CONTENTS
Page
----
Available Information . . . . . 2
Incorporation of Certain
Documents by Reference . . . . 3
The Company . . . . . . . . . . 3
Risk Factors . . . . . . . . . 3
Use of Proceeds . . . . . . . . 7 ________________
Selling Stockholders and Plan
of Distribution . . . . . . . 7 PROSPECTUS
Description of Capital Stock . 10 ________________
Legal Matters . . . . . . . . . 16
Experts . . . . . . . . . . . . 16
_____________________
March ___, 1994
====================================== ======================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the
issuance and distribution of the securities being registered (all amounts are
estimated except for the Securities and Exchange Commission registration fee):
TOTAL
-----
Registration Fee - Securities and
Exchange Commission . . . . . . . . . . . . . . . . . . $ 2,862.07
Blue Sky fees and expenses (including legal fees) . . . . *
Accounting fees and expenses . . . . . . . . . . . . . . *
Legal fees and expenses . . . . . . . . . . . . . . . . . *
Cost of printing and engraving . . . . . . . . . . . . . *
Transfer agents' fees . . . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . *
---------
Total . . . . . . . . . . . . . . . . . . . . . . . *
=========
*To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 83 of the Louisiana Business Corporation Law (the "LBCL")
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
business, foreign or nonprofit corporation, partnership, joint venture, or other
enterprise. The indemnity may include expenses, including attorney fees,
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Section 83 further provides that a Louisiana corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions except that no indemnification is
permitted without judicial approval if the director or officer shall have been
adjudged to be liable for willful or intentional misconduct in the performance
of his duty to the corporation. Where an officer or director is successful on
the merits or otherwise in any defense of any action referred to above or any
claim therein, the corporation must indemnify him against such expenses that
such officer or director actually incurred. Section 83 permits a corporation to
pay expenses incurred by the officer or director in defending an action, suit or
proceeding in advance of the final disposition thereof if approved by the board
of directors.
Pursuant to Section 83 of the LBCL, the Company has adopted provisions
in its Articles of Incorporation which require the Company to indemnify its
directors and officers to the fullest extent permitted by the LBCL.
The Articles of Incorporation, as amended, provide that no director or
officer of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director or
officer except for liability (i) for breach of the directors' or officers' duty
of loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 92(D) of the LBCL, or (iv) for any transaction from
which the director or officer derived an improper personal benefit. Section
92(D) of the LBCL specifies certain corporate transactions, such as certain
dividend declarations and dispositions of assets, as unlawful. The effect of
this provision of the Articles of Incorporation is to eliminate the rights of
the Company and its stockholders (through stockholders' derivative suits on
behalf of the Company) to recover monetary damages against a director or officer
for breach of fiduciary duty as a director or officer. This provision does not
limit or eliminate the rights of the Company or any stockholders to seek
non-monetary relief, such as an injunction or rescission in the event of a
breach of a director's
II-1
<PAGE> 20
or officer's fiduciary duty.
ITEM 16. EXHIBITS
(a) Exhibits
Exhibit Description of Document
No.
4.2(1) Series A Junior Participating Preferred Stock Purchase
Rights
5.1(2) Opinion of Kantrow, Spaht, Weaver & Blitzer (A
Professional Law Corporation)
23.1(3) Consent of Deloitte & Touche
23.2(2) Consent of Kantrow, Spaht, Weaver & Blitzer (A
Professional Law Corporation) (Included in Exhibit 5.1)
24.1(3) Power of Attorney
(1) Incorporated herein by reference to the designated Exhibit of the
Company's form 10-K dated December 31, 1993.
(2) To be filed by amendment.
(3) Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) of this
section do not apply if the registration statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
II-2
<PAGE> 21
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the provisions described above in Item 15,
the Company has been advised that, in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 22
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED IN THE CITY OF BATON ROUGE, STATE OF LOUISIANA, ON THE 18TH DAY
OF MARCH, 1994.
UNITED COMPANIES FINANCIAL CORPORATION
By:/s/ SHERRY E. ANDERSON
Sherry E. Anderson, Senior Vice President and Secretary
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY AUTHORIZES J. TERRELL
BROWN AND DALE E. REDMAN AND EACH OF THEM ACTING INDIVIDUALLY, WITH FULL POWER
OF SUBSTITUTION, TO FILE ONE OR MORE AMENDMENTS, INCLUDING POST-EFFECTIVE
AMENDMENTS, TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH WITH THE SECURITIES
AND EXCHANGE COMMISSION, WHICH AMENDMENTS MAY MAKE SUCH CHANGES AS J. TERRELL
BROWN OR DALE E. REDMAN DEEMS APPROPRIATE; AND EACH PERSON WHOSE SIGNATURE
APPEARS BELOW, INDIVIDUALLY AND IN EACH CAPACITY STATED BELOW, HEREBY APPOINTS
J. TERRELL BROWN AND DALE E. REDMAN, AND EITHER OF THEM ACTING INDIVIDUALLY,
WITH FULL POWER OF SUBSTITUTION, AS ATTORNEY-IN-FACT TO EXECUTE IN HIS NAME AND
ON HIS BEHALF ANY SUCH AMENDMENTS TO THIS REGISTRATION STATEMENT.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
Signature Title Date
--------- ----- ----
Chairman of the Board March 9, 1994
/s/ HARRIS J. CHUSTZ of Directors (Principal
Harris J. Chustz Executive Officer)
Chief Executive Officer, March 9, 1994
/s/ J. TERRELL BROWN President and Director
J. Terrell Brown (Principal Executive Officer)
Executive Vice President, March 9, 1994
/s/ DALE E. REDMAN Chief Financial Officer,
Dale E. Redman Assistant Secretary and
Director (Principal
Financial Officer)
Senior Vice President and March 9, 1994
/s/ JESSE O. GRIFFIN Controller (Principal
Jesse O. Griffin Accounting Officer)
Director March 9, 1994
/s/ JAMES J. BAILEY, III
James J. Bailey, III
Director March 9, 1994
/s/ ROBERT H. BARROW
Robert H. Barrow
Director March 9, 1994
/s/ RICHARD A. CAMPBELL
Richard A. Campbell
II-4
<PAGE> 23
/s/ ROBERT D. KILPATRICK Director March 9, 1994
_____________________________
Robert D. Kilpatrick
/s/ O. MILES POLLARD, JR. Director March 9, 1994
_____________________________
O. Miles Pollard, Jr.
Director March __, 1994
_____________________________
Charles S. Prosser, M.D.
/s/ WILLIAM H. WRIGHT, JR. Director March 9, 1994
_____________________________
William H. Wright, Jr.
II-5
<PAGE> 24
EXHIBIT INDEX
Exhibit No. Description of Document
----------- -----------------------
4.2(1) Series A Junior Participating Preferred Stock Purchase
Rights
5.1(2) Opinion of Kantrow, Spaht, Weaver & Blitzer (A
Professional Law Corporation)
23.1(3) Consent of Deloitte & Touche
23.2(2) Consent of Kantrow, Spaht, Weaver & Blitzer (A
Professional Law Corporation) (Included in Exhibit 5.1)
24.1(3) Power of Attorney
(1) Incorporated herein by reference to the designated Exhibit of the
Company's form 10-K dated December 31, 1993.
(2) To be filed by amendment.
(3) Filed herewith.
II-6
<PAGE> 1
EXHIBIT 23.1
<TABLE>
<S> <C> <C>
{DELOITTE & TOUCHE LOGO} Suite 501 Telephone: (504)928-0108
8550 United Plaza Boulevard Facsimile: (504)928-0449
Baton Rouge, Louisiana 70809-2261
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
United Companies Financial Corporation on Form S-3 of our report dated February
18, 1994, appearing in and incorporated by reference in the Annual Report on
Form 10-K of United Companies Finacial Corporation for the year ended December
31, 1993 and to reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE
Deloitte & Touche
Baton Rouge, Louisana
March 14,1994
Deloitte Touche
Tohmatsu
International
