SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
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)
July 2, 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 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. 3 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 July 2, 1996, Ballantrae sent to the Company a
letter, a copy of which is attached hereto as Exhibit
3.1 and is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
Exhibit 3.1. Letter dated July 2, 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.
July 3, 1996
(Date)
/s/ Murry N. Gunty
(Signature)
Murry N. Gunty
Managing Director
(Name/Title)
Exhibit Index
Exhibit Page
3.1. Letter dated July 2, 1996, from Ballantrae
Partners, L.L.C. to North East Insurance
Company 5
Exhibit 3.1
Ballantrae Partners, L.L.C.
75 West End Avenue, R-12E
New York, N.Y. 10023
Telephone (212) 957-1337
CONFIDENTIAL
July 2, 1996
Mr. Robert G. Schatz
Chairman of the Board
North East Insurance Company
482 Payne Road
Scarborough, ME 04074
Dear Bob:
We have been informed that NEIC is actively pursuing an offering
of approximately 1.5 million shares of its Common Stock at a
price of approximately $1.20-$1.30 per share, a price which is
substantially below both market value and book value. We believe
that the timing and pricing of the proposed offering is
detrimental to the shareholders of NEIC (and its future
shareholders), and therefore inconsistent with the Board's
fiduciary duties. We are writing this letter to request that the
Board of Directors immediately reconsider this offering.
As you know, we are in the process of purchasing the Trust
Certificate and the underlying 810,000 shares held in the Non-
Voting Trust which represent approximately 27% of NEIC's
outstanding Common Stock. We believe that upon consummation of
this transaction, the share price of NEIC's Common Stock will
rise significantly due to the elimination of the Non-Voting Trust
- -- a long standing cloud on the Company. As a result, we believe
that if NEIC delays its offering plans for a short period of
time, the Company will be able to raise capital at a price which
is much higher (and less dilutive) than $1.20-$1.30 or even
existing market value. In view of this, the current offering is
extremely untimely and would cause the shareholders of the
Company to experience significant and unnecessary dilution of
their investment in NEIC.
Regardless whether you agree with our assumptions, we do not
understand the business reasons for the timing of the offering.
We understand that the Company has shown an operating profit for
the past 5 quarters. However, the surplus of the Company has
dramatically improved over the past 24 months, and we do not see
the urgency for raising additional capital at this time.
More importantly, though, the proposed offering contemplates the
Company selling stock substantially below book value
(approximately $2 per share) and/or the market value ($1.50-$1.75
per share). Selling stock at below either book or market creates
unnecessary dilution to all shareholders. Given that there is no
urgency for NEIC to raise capital during this quarter, and given
that our Form A process should be resolved within the next 30-60
days, we believe that this course of action is ill-advised and
not in the best interests of shareholders.
Our lawyers tell us that this offering may be some attempt by
management to place shares of Common Stock at any price in the
hands of individuals who are under the control of management at
the expense of the existing shareholders (and Ballantrae as a
future shareholder). We do not understand why the Board would
react so extremely to our proposed purchase of the Trust
Certificate and the underlying shares -- an event which we
believe is essential to the future viability and growth of NEIC.
We are even further confounded by this because we understand that
if the offering is found to be in breach of the Board's fiduciary
duties to shareholders, the individual directors of NEIC may have
personal liability to the shareholders of NEIC.
We believe it is important for the Board (consistent with its
fiduciary duties to shareholders and the insureds) to explore all
viable avenues in raising capital to obtain the best possible
price for its Common Stock. As I have indicated in the past, if
there is a pronounced need or business purpose for raising
capital at this time, we urge you to consult with us on this
matter. the members of Ballantrae have substantial experience in
raising billions of dollars of capital. As our filings have
indicated, we welcome the opportunity to raise or invest
additional capital in NEIC in a manner both fair and non-dilutive
to all shareholders of NEIC. We believe that the pricing of such
capital would be at a premium to the pricing of the offering you
are contemplating with less of the proceeds going to underwriters
and lawyers.
Finally, should you elect to raise capital at this time (out of
necessity) for NEIC at a price below book and/or market values,
simple fairness dictates that ALL shareholders be given a pro-
rata right to participate in such an offering. We also assume,
to the extent that your offering contemplates placing a
significant number of shares to a group of related parties, that
such persons intend to comply with the Maine and New York Form A
processes and the federal securities laws.
We hope that the Board will immediately reconsider the proposed
offering and determine, as we have, that it is a hasty, ill-
advised course of action that is injurious to existing
shareholders and the insureds.
Sincerely,
/s/ Murry N. Gunty
Murry N. Gunty
Managing Director
Ballantrae Partners
cc: Tom Record, Maine Bureau of Insurance
Edward B. Batal, Director - North East Insurance Company
David D. Chase, Director - North East Insurance Company
Terrence P. Cummings, Director - North East Insurance
Company
Edward L. Dilworth, Jr., Director - North East Insurance
Company
Andrew Greenbaum, Director - North East Insurance Company
Robert A. Hancock, Director - North East Insurance Company
Wilson G. Hess, Director - North East Insurance Company
Joseph M. Hochadel, Director - North East Insurance Company
Bruce H. Suter, Director - North East Insurance Company
Jonathan S. Kern, Managing Director - Ballantrae Partners
Deborah L. Harmon, Managing Director - Ballantrae Partners
Lawrence T. Yanowitch, Tucker, Flyer & Lewis
Michael High, Drummond, Woodsum & MacMahon
