SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report: January 26, 1999
(Date of earliest event reported)
NORTH EAST INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Maine 0-11184 01-0278387
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
482 Payne Road, Scarborough, Maine 04074
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (207) 883-2232
Item 5. Other Events.
On January 26, 1999 North East Insurance Company announced that it had
reached a non-binding agreement in principle for Motor Club of America to
acquire North East Insurance Company through a Merger. A copy of the North
East Insurance Company's press release announcing the agreement in principle
is filed as an exhibit to this report.
Item 6. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release dated January 26, 1999 of North East
Insurance Company, announcing agreement in principle to be
acquired by Motor Club of America.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
NORTH EAST INSURANCE COMPANY
Date: January 27, 1999 By: /s/ Robert G. Schatz
--------------------
President and Chief
Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- --------------------------------------------
99.1 Press release dated January 26, 1999 of North East Insurance
Company, announcing agreement to be acquired by Motor Club of
America.
FOR IMMEDIATE RELEASE
CONTACTS:
Robert G. Schatz Patrick J. Haveron, CPA
President/CEO Executive Vice President/CFO
North East Insurance Company Motor Club of America
P.O. Box 1418 95 Route 17 South
Scarborough, Maine 04070-1418 Paramus, New Jersey 07653
Tel - 207/883-2232 Tel - 201/291-2112
E-Mail - [email protected]
MOTOR CLUB OF AMERICA TO ACQUIRE
NORTH EAST INSURANCE COMPANY
PARAMUS, NEW JERSEY AND SCARBOROUGH, MAINE, January 26, 1999 -- MOTOR CLUB
OF AMERICA, a property and casualty insurance holding company (NASDAQ:
MOTR), and NORTH EAST INSURANCE COMPANY, a property and casualty insurer
(NASDAQ: NEIC), today announced that the respective companies have reached a
non-binding agreement in principle for MOTR to acquire NEIC through a
merger.
The agreement provides that NEIC shareholders will receive, at their
individual election, (a) $3.30 per share in cash per common share of NEIC,
(b) one common share of MOTR for each 5.25 shares of NEIC common, or (c) a
combination thereof. If shareholders in the aggregate elect to exchange
more than 50% of their shares for MOTR stock, there will be a proration
mechanism to reduce the aggregate percentage to 50%.
The agreement in principle is subject to customary conditions, including
negotiation, execution and delivery of a definitive merger agreement, and
mutually satisfactory due diligence and documentation. Among other
conditions, the transaction would also require state regulatory approvals,
final approval by the Boards of Directors of both companies, and approval by
the vote of the MOTR shareholders and of the NEIC shareholders.
Stephen A. Gilbert, President and CEO of Motor Club of America, said, "We
believe the transaction with North East offers our Company an excellent
opportunity to begin the successful execution of our strategy to diversify
outside the State of New Jersey. It also provides North East shareholders
with the opportunity to share in the future success of the combined
Companies going forward. We feel this transaction will enhance North East's
results while enabling it to retain its unique identity. We look forward to
working with the employees and agents of North East in building a prosperous
future for both Companies."
North East President Robert G. Schatz said, "This transaction offers our
shareholders a significant premium for their shares and offers our
policyholders and agents the advantages of affiliation by North East with a
larger and stronger insurer."
The companies anticipate entering into a definitive merger agreement in the
near future. Under that agreement, North East would become a wholly-owned
subsidiary of Motor Club of America, thereby joining the ranks of Motor Club
of America Insurance Company and Preserver Insurance Company. Although
controlled by new owners, North East's operations will continue to be
managed locally. Gilbert said, "We have been very impressed with the
quality of North East's management team and employees. We expect job loss
to be minimal and hope that North East employees will choose to remain with
us after the acquisition. In particular, as part of this transaction, we
are pleased to confirm that Ronald A. Libby would stay on as Chief Operating
Officer of North East. From the standpoint of policyholders and agents,
this merger should assure a stronger and better-rated North East."
In connection with this transaction, North East announced that it has
terminated the rights offering to its shareholders for common stock of the
company.
Cochran, Caronia & Co. is serving as financial advisor to Motor Club of
America. Sandler, O'Neill & Partners, L.P. is serving as financial advisor
to North East.
Motor Club of America is a property and casualty insurance holding company
for Motor Club of America Insurance Company, which writes personal
automobile insurance, and Preserver Insurance Company, which writes small
commercial and homeowners insurance. Both subsidiaries are rated B+ (Very
Good) by A.M. Best, a widely recognized insurance rating and information
service.
North East Insurance Company is a property and casualty insurer located in
Scarborough, Maine. North East is rated B- (Fair) by A.M. Best. Its common
stock has been publicly traded since 1981.
