SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
North East Insurance Company
(Name of issuer)
Common Stock, par value $1.00 per share
(Title of class of securities)
659164107
(CUSIP number)
Murry N. Gunty
Ballantrae Partners, L.L.C.
75 West End Avenue
R-12E
New York, New York 10023
(212) 957-1337
with copy to
Lawrence T. Yanowitch, Esq.
Tucker, Flyer & Lewis
a professional corporation
1615 L Street, N.W.
Suite 400
Washington, D.C. 20036-5612
(202) 429-3254
(Name, address and telephone number of person
authorized to receive notices and communications)
June 10, 1996
(Date of event which requires filing of this statement)
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 [ ].
Check the following box if a fee is being paid with the
statement [ ].
(Continued on following pages)
(Page __ of __ Pages)
CUSIP No. 659164107 13D Page __ of __ Pages
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Ballantrae Partners, L.L.C.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER 7. SOLE VOTING POWER
OF - 0 -
SHARES 8. SHARED VOTING POWER
BENEFICIALLY - 0 -
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH - 0 -
REPORTING PERSON 10. SHARED DISPOSITIVE POWER
PERSON WITH - 0 -
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
- 0 -
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[x]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
- 0 -
14. TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
This Amendment No. 1 amends and supplements the statement on
Schedule 13D (the "Schedule 13D"), previously filed on behalf of
Ballantrae Partners, L.L.C., a Delaware limited liability company
("Ballantrae"), relating to the Common Stock, par value $1.00 per
share (the "Common Stock"), of North East Insurance Company, a
Maine corporation (the "Company"). Capitalized terms not
otherwise defined herein shall have the meanings set forth in the
Schedule 13D.
Item 4. Purpose of Transaction.
Item 4 is hereby amended and supplemented by adding the
following immediately prior to the last paragraph thereof:
On June 5, 1996, the Company sent to Ballantrae a
letter, a copy of which is attached hereto as Exhibit
1.1 and is incorporated herein by reference.
On June 10, 1996, Ballantrae sent to the Company a
letter, a copy of which is attached hereto as Exhibit
1.2 and is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
Exhibit 1.1. Letter dated June 5, 1996, from North
East Insurance Company to Ballantrae Partners, L.L.C.
Exhibit 1.2. Letter dated June 10, 1996, from
Ballantrae Partners, L.L.C. to North East Insurance Company.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
June 10, 1996
(Date)
/s/ Murry N. Gunty
(Signature)
Murry N. Gunty
Managing Director
(Name/Title)
Exhibit Index
Exhibit Page
1.1. Letter from North East Insurance Company to
Ballantrae Partners, L.L.C. 5
1.2. Letter from Ballantrae Partners, L.L.C. to
North East Insurance Company 7
Exhibit 1.1
North East Insurance Company
Scarborough Court
482 Payne Road - 4th Floor
Scarborough, Maine 04074
(207) 883-2232
Office of the President
Via Express Mail
June 5, 1996
Mr. Murry N. Gunty
Ballantrae Partners, L.L.C.
75 West End Avenue R-12E
New York, New York 10023
Dear Murry:
I wanted to follow up on our conversation of last Friday. My
initial reaction to your request that I join Ballantrae has not
changed after reflection and discussion with Board members and
others close to North East. While I appreciate your confidence
in me, I simply am not in a position to consider such a request
until my Board of Directors has had an opportunity to review and
evaluate your proposal to acquire control of North East.
You have also asked for assistance in putting together a Business
Plan for use in your Form A application. Assuming that
appropriate confidentiality protections are given, I would be
willing to ask my Board for permission to provide you with a copy
of North East's most recent Business Plan. It is my
understanding, however, that the Maine Bureau of Insurance is
looking for your group to put together its own independent plan.
We, too, are very interested in seeing this, particularly with
regard to your comments about raising significant new capital for
the Company.
I will say, Murry, that I was disturbed by your suggestion that
if I fail to join forces with Ballantrae at this point, you will
have no choice but to replace me. This is plainly inconsistent
with the position set forth in your Schedule 13D and statements
that you have made to us and others in recent weeks. Obviously,
if you succeed in getting control of North East, you will have
the power to replace management and the directors. I am sure you
understand, however, that my obligations run to North East and
that I will look for my Board for guidance in dealing with
Ballantrae.
In the meantime, we look forward to reviewing Ballantrae's Form A
application.
Very truly yours,
NORTH EAST INSURANCE COMPANY
/s/ Robert G. Schatz
Robert G. Schatz
mmc
pc: NEIC Board of Directors
Deborah L. Harmon, Managing Director - Ballantrae Partners
Jonathan S. Kern, Managing Director - Ballantrae Partners
Reginald Strickland, Managing Director - Ballantrae Partners
Exhibit 1.2
Ballantrae Partners, L.L.C.
75 West End Avenue, R-12E
New York, N.Y. 10023
Telephone (212) 957-1337
Murry N. Gunty
June 10, 1996
Mr. Robert G. Schatz
Chairman of the Board
North East Insurance Company
482 Payne Road
Scarborough, ME 04074
Dear Bob:
Congratulations on achieving profitability (on an operating
basis) in the first quarter. Though we were a bit disappointed
with the extraordinary charge that caused the $500,000 loss, we
were pleased to see that your core lines of business were
profitable.
I tried to reach you the other day and have not heard from you so
I thought I would write you a quick note concerning your June 5
letter.
The Business Plan
You indicated in your letter that I "request[ed] that [you] join
Ballantrae," and I "ask[ed] for assistance in putting together a
business plan for use in [our] Form A application."
On the contrary, I mentioned to you that the department indicated
in preliminary discussions that our stated intentions of
supporting the existing business plan of NEIC or adopting a "wait
and see" approach toward the course of business of the Company
may be unsatisfactory. In any event, we expect that such an
approval, despite our preferences, may be greeted with
considerable skepticism. Therefore, we believe that we are left
with two options. First, (and most desirable), is to work with
you, the Board of Directors, and the management of North East to
review the existing business plan and, if desirable, amend the
plan based on mutually agreed-upon ideas. We continue to believe
that this would be the best course of action for the Company and
its stockholders to both maximize shareholder value and protect
the policy holders. If the Company is unwilling to do this, the
alternative approach would be to develop an "independent business
plan," if necessary, in order to satisfy the requirements of the
Form A process. To the extent we take this approach, we may, by
definition, be forced to be in position to implement such a plan.
In any event, if we are required to develop a plan we need to
anticipate the questions of how it will be implemented. Clearly,
without your support it would be difficult for us to represent to
the department definitively that management would implement our
independent plan.
I did ask if you would be interested in being a part of the
execution of the plan to the extent that the Bureau requires that
Ballantrae develop and/or endorse a specific plan. However,
under no circumstance did I suggest that you join Ballantrae, nor
did I ask for your assistance in putting together our plan. Our
group has both the expertise and the capacity to prepare our own
business plan, if necessary.
Schedule 13D
As the above clearly states, we have not yet made a determination
as to our desired approach that we will take with respect to our
potential investment. Instead, during our telephone conversation
of May 31, I was giving you the courtesy of sharing our
evaluation process and the feedback from the Bureau of Insurance
of the State of Maine. With respect to the Schedule 13D filing
of Ballantrae, it states quite clearly in Item 4 on the bottom of
page 4 and the top of page 5 that we are currently evaluating our
options, and we will take actions in the future that we deem
appropriate. To further clarify I quote:
"Ballantrae will continue to evaluate its potential
investment in the Company on the basis of various factors,
including the Company's business, financial condition,
results of operations and prospects, general economic and
industry conditions, the securities markets in general and
those for the Company's securities in particular, as well as
other developments and investment opportunities. Based upon
such evaluation, Ballantrae will take such actions in the
future as Ballantrae may deem appropriate in light of the
circumstances existing from time to time."
Clearly, we are evaluating the feedback from the market, the
Company, industry experts and the Insurance Bureau. Based upon
this evaluation, we are trying to determine the appropriate
actions to be taken in the future.
In your letter you also indicated a concern about our comments
"to raise significant new capital" for the Company. Again, I
refer you to our Schedule 13D, page 5, in which we state that:
"Ballantrae intends to explore a variety of strategies for
enhancing the value of its potential investment, including,
without limitation, (i) transactions that would increase the
Company's working capital and access to capital, and (ii)
the possibility of representatives of Ballantrae serving on
the Board of Directors of the Company."
We neither have specific ideas at this time nor figures in mind
that would justify your statement in your letter.
I hope this letter clarifies some of the misunderstandings in
your letter. Bob, we continue to believe that it is in the best
interests of the stockholders and the insureds for the Company to
cooperate with us through the Form A process, and I look forward
to working with you to that end. We see Ballantrae's involvement
with North East as a win-win proposition, benefiting both the
shareholders and the insureds of the Company.
Sincerely,
/s/ Murry N. Gunty
Murry N. Gunty
cc: Tom Record, Maine Bureau of Insurance
Deborah L. Harmon, Ballantrae Partners, L.L.C.
Jonathan Kern, Ballantrae Partners, L.L.C.
Reginald Strickland, Ballantrae Partners, L.L.C.
Michael High, Drummond, Woodsum & MacMahon
Lawrence T. Yanowitch, Tucker, Flyer & Lewis
