UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Titan Holdings, Inc.
(Name of Issuer)
Common Stock ($0.01 par value per share)
(Title of Class of Securities)
888303 10 4
(CUSIP Number)
John A. MacColl
Executive Vice President - General Counsel
USF&G Corporation
P.O. Box 1138
Baltimore, Maryland 21203
(410) 547-3000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 7, 1997
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(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: |_|
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Page 1 of 11 Pages
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CUSIP No.: 888303 10 4 Page 2 of 11 Pages
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(1) NAME OF REPORTING PERSON: USF&G Corporation
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 52-1220567
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |_|
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
BK, WC, OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)|_|
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
State of Maryland
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NUMBER OF (7) SOLE VOTING POWER
SHARES 0
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BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 2,579,295(1)
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EACH (9) SOLE DISPOSITIVE POWER
REPORTING 0
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PERSON (10) SHARED DISPOSITIVE POWER
WITH 2,579,295(1)
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,579,295
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.5 %
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(14) TYPE OF REPORTING PERSON*
CO, IC
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) The Reporting Person disclaims beneficial ownership of all shares of Titan
Common Stock. Filing is being made as a result of the Voting Agreement as
described herein.
<PAGE>
Item 1. Security and Issuer
This Statement relates to the common stock, par value $0.01 per share
("Common Stock"), of Titan Holdings, Inc., a Texas corporation ("Titan"). The
address of the principal executive offices of Titan is 2700 Northeast Loop 410,
Suite 500, San Antonio, Texas 78217.
Item 2. Identity and Background
(a) This statement is filed by USF&G Corporation, a Maryland corporation
("USF&G"). The principal business of USF&G is the insurance products
and services business.
(b) Address: 6225 Smith Avenue, Baltimore, Maryland 21209
(c) Set forth in Schedule I to this Schedule 13D is the name, business
address and present principal occupation or employment of each of
USF&G's executive officers and directors.
(d) During the last five years, neither USF&G nor, to USF&G's knowledge,
any of the other persons with respect to whom information is given in
response to this Item 2 has been convicted in a criminal proceeding.
(e) During the last five years, neither USF&G nor, to USF&G's knowledge,
any of the other persons with respect to whom information is given in
response to this Item 2 has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction resulting in
a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws.
(f) To USF&G's knowledge, all directors and executive officers of USF&G
named in Schedule I to this Schedule 13D are citizens of the United
States.
Item 3. Source and Amount of Funds or Other Consideration
In connection with the execution of the Merger Agreement (as defined
in Item 4 below), Mark E. Watson, Jr., a shareholder of Titan, and
affiliated entities (collectively, the "Titan Shareholders") and USF&G have
entered into a Voting and Support Agreement dated as of August 7, 1997 (the
"Voting Agreement"). The number of shares of Titan Common Stock
beneficially owned by each of the Titan Shareholders is set forth on
Schedule II to this Schedule 13D. Pursuant to the Merger Agreement, each
share of Titan Common Stock will be converted into the right to receive
0.46516 of a share of USF&G Common Stock and an amount of cash equal to
$11.60, subject to adjustment as more fully described in Item 4 below. No
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additional consideration was given in exchange for the Voting Agreement.
USF&G expects to pay the cash portion of the consideration payable to the
shareholders of Titan from internal resources or existing credit
facilities.
Item 4. Purpose of the Transaction
(a)-(b) USF&G and the Titan Shareholders entered into the Voting Agreement
in order to facilitate consummation of the merger contemplated by the Agreement
and Plan of Merger dated as of August 7, 1997 (the "Merger Agreement") among
Titan, USF&G and United States Fidelity and Guaranty Company ("USF&G Company"),
a wholly-owned Maryland subsidiary of USF&G, pursuant to which USF&G has agreed
to acquire all of the outstanding common stock of Titan ("Titan Common Stock")
through a merger of Titan with and into USF&G Company (the "Merger").
Pursuant to the Voting Agreement, the Titan Shareholders, only in their
individual capacity as shareholders of Titan, agreed to vote or direct the vote
of all the shares of Titan Common Stock over which the Titan Shareholders have
voting power or control (the "Titan Shares") (a) in favor of the Merger
Agreement and (b) against (i) approval of any proposal made in opposition to or
in competition with the Merger or any of the other transactions contemplated by
the Merger Agreement, (ii) any merger, consolidation, sale of assets, business
combination, share exchange, reorganization or recapitalization of Titan or any
of its subsidiaries, with or involving any party other than USF&G or one of its
subsidiaries, (iii) any liquidation, dissolution or winding up of Titan, (iv)
any extraordinary dividend by Titan, (v) any change in the capital structure of
Titan (other than pursuant to the Merger Agreement) and (vi) any other action
that may reasonably be expected to impede, interfere with, delay, postpone or
attempt to discourage the Merger or the other transactions contemplated by the
Merger Agreement or the Voting Agreement or result in a breach of any of the
covenants, representations, warranties or other obligations or agreements of
Titan under the Merger Agreement which would materially and adversely affect
Titan or its ability to consummate the transactions contemplated by the Merger
Agreement.
The Titan Shareholders also agreed that they will not, and will not agree
to, sell, assign, dispose of, encumber, mortgage, hypothecate, or otherwise
transfer or encumber any of the Titan Shares to any person or entity other than,
subject to certain conditions, pledges of shares as collateral security under
loan agreements or pursuant to the Merger Agreement. The provisions of the
Voting Agreement terminate upon the earliest to occur of (i) the consummation of
the Merger, (ii) August 7, 1998, (iii) the termination of the Merger Agreement
pursuant to Section 7.1(a) or (g) thereof, or (iv) the termination of the Merger
Agreement pursuant to Section 7.1(b) or (c) thereof if, but only if, the Merger
Agreement is terminated pursuant to such subsections (b) or (c) solely for
reasons that are not directly or indirectly related to the commencement of, or
any person's or entity's direct or indirect indication of interest in making, an
Acquisition Proposal (as defined in the Merger Agreement) with respect to Titan.
<PAGE>
The foregoing summary of the Voting Agreement is qualified in its entirety
by reference to the form of Voting Agreement included as Exhibit 99.1 to this
Schedule 13D and incorporated herein in its entirety by reference.
Pursuant to the terms of the Merger Agreement, Titan will be merged with
and into USF&G Company, and each share of Titan Common Stock will be converted
into the right to receive 0.46516 of a share of USF&G Common Stock and an amount
in cash equal to $11.60. The consideration payable in connection with the Merger
is subject to adjustment as provided in the Merger Agreement, including
adjustment to the extent that the average closing price of USF&G Common Stock
during a 10-day trading period ending three trading days before the effective
date of the Merger is above $28.60 per share or below $21.20 per share and an
additional adjustment to insure that at all times 50% of the total consideration
is payable in cash and 50% is payable in USF&G Common Stock. The consummation of
the Merger is subject to the satisfaction or waiver of certain conditions,
including applicable regulatory approvals and approval by the holders of
two-thirds of the outstanding shares of Titan Common Stock, all as set forth in
the Merger Agreement.
The foregoing summary of certain provisions of the Merger Agreement is
qualified in its entirety by reference to a copy of the Merger Agreement
included as Exhibit 99.2 to this Schedule 13D and incorporated herein in its
entirety by reference.
USF&G may from time to time acquire shares of Titan Common Stock through
means other than the Merger Agreement, including the possible purchase of Titan
Common Stock for cash consideration on the open market. Any such cash purchases
will be made from internal resources or existing credit facilities.
(c)-(i) As a result of the consummation of the Merger, Titan will be merged
with and into USF&G Company and the existing subsidiaries of Titan will become
wholly-owned subsidiaries of USF&G and USF&G Company. As a result, the articles
of incorporation and bylaws of USF&G Company will be the articles of
incorporation and bylaws of the surviving corporation, and the directors and
officers of USF&G Company will be the directors and officers of the surviving
corporation. Further, as a result of the Merger, the Titan Common Stock will
become eligible for termination of registration pursuant to Section 12(g)(4) of
the Exchange Act, and will cease to be quoted on any quotation system or
exchange.
Under the terms of the Merger Agreement, Titan has agreed to certain
covenants relating to its conduct of business prior to the effectiveness of the
Merger, including restrictions on its ability to pay dividends or alter its
capital structure. Reference is made to the express terms of the Merger
Agreement.
(j) Other than as described above, USF&G has no plan or proposal which
relates to, or may result in, any of the matters listed in Items 4(a)-(i) of
Schedule 13D (although USF&G reserves the right to develop such plans and may
<PAGE>
develop plans or proposals with respect to Titan and its subsidiaries in
anticipation of, and for implementation after, consummation of the Merger).
Item 5. Interest in Securities of the Issuer
(a) - (b) As a result of the Voting Agreement, USF&G may be deemed to have
shared power to vote an aggregate of 2,579,295 shares of Titan Common Stock for
the limited purposes described in Item 4 above and in the Voting Agreement.
Such shares constitute approximately 25.5% of the issued and outstanding
shares of Titan Common Stock as of August 7, 1997. Further, USF&G may be deemed
to have shared power with respect to the disposition of such shares based upon
the restrictions on transfer of such shares described in Item 4 above and in the
Voting Agreement.
To USF&G's knowledge, no shares of Titan Common Stock are beneficially
owned by any of the persons named in Schedule I, except for such beneficial
ownership, if any, arising solely from the Voting Agreement.
(c) Neither USF&G, nor, to USF&G's knowledge, any person named in Schedule
I, has effected any transaction in Titan Common Stock during the past 60 days,
except as disclosed herein.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Other than as described in Items 4 and 5 above, to USF&G's knowledge there
are no contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 and between such persons and any
person with respect to any securities of Titan, including but not limited to
transfer or voting of any securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or loss, or the giving or withholding of proxies.
<PAGE>
Item 7. Material to be filed as Exhibits
EXHIBIT NO. DESCRIPTION
99.1 Voting and Support Agreement dated as of August
7, 1997, by and between USF&G Corporation, a
Maryland corporation, and Mark E. Watson, Jr. and
affiliates.(2)
99.2 Agreement and Plan of Merger dated as of August 7,
1997, by and among USF&G Corporation, a Maryland
corporation, United States Fidelity and Guaranty
Company, a Maryland corporation, and Titan
Holdings, Inc., a Texas corporation.(2)
(2) Incorporated by reference to Exhibit 10A to USF&G Corporation's quarterly
report on Form 10-Q for the quarter ending June 30, 1997.
Date: August 15, 1997
USF&G CORPORATION
By: /s/Dan L. Hale
Name: Dan L. Hale
Title: Executive Vice President - Chief
Financial Officer
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<TABLE>
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SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF USF&G
<S> <C> <C>
NAME TITLE PRINCIPAL OCCUPATION
OR EMPLOYMENT (IF
DIFFERENT FROM TITLE)
Norman P. Blake, Jr. Chairman, President
and Chief Executive Officer
Glenn W. Anderson President - Commercial Insurance
Group
John R. Berger President - F&G Re
Kenneth E. Cihiy Executive Vice President - Claim
Gary C. Dunton President - Family and
Business Insurance Group
Dan L. Hale Executive Vice President -
Chief Financial Officer
John F. Hoffen Secretary
Robert J. Lamendola President - Surety Group
Thomas K. Lewis, Jr. Executive Vice President -
Chief Information Officer
Stephen W. Lilienthal Executive Vice President -
Field Development and Operations
John A. MacColl Executive Vice President -
General Counsel and Human Resources
Ronald C. Mishler Vice President and Treasurer
Andrew A. Stern Executive Vice President - Strategic
Planning and Reinsurance Operations
Harry N. Stout President - F&G Life
John C. Sweeney Chairman - Falcon Asset Management
H. Furlong Baldwin Director Chairman of the Board and Chief
Executive Officer - Mercantile
Bankshares Corporation
Michael J. Birck Director President and Chief Executive
Officer - Tellabs, Inc.
George L. Bunting, Jr. Director President - Bunting Management Group
<PAGE>
Robert E. Davis Director Managing Director - Axess
Corporation
Kenneth M. Duberstein Director Chairman and Chief Executive
Officer - The Duberstein Group
Dale F. Frey Director Retired Chairman of the Board and
President - General Electric
Investment Corporation
Robert E. Gregory, Jr. Director Chairman of the Board and Chief
Executive Officer - London Fog
Corporation
Robert J. Hurst Director Vice Chairman - Goldman, Sachs
& Co.
Dr. Wilbur G. Lewellen Director Herman C. Krannert Distinguished
Professor of Management - Purdue
University
Paul E. Ingrey Director Retired President - F&G Re
Larry P. Scriggins Director Partner- Piper & Marbury L.L.P.
Anne Marie Whittemore Director Partner - McGuireWoods Battle &
Boothe, L.L.P.
R. James Woolsey Director Partner - Shea & Gardner
</TABLE>
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SCHEDULE II
PERCENTAGE OF
NUMBER OF SHARES OF OUTSTANDING SHARES
VOTING AGREEMENT INTERACTIVE COMMON STOCK OF INTERACTIVE COMMON
STOCKHOLDER BENEFICIALLY OWNED STOCK AS OF AUGUST 7, 1997
Mark E. Watson, Jr. 2,223,096 22.0%
MEW Family Limited
Partnership 256,199 2.5%
The Mark and Kathleen Watson
Charitable Trust 100,000 1.0%
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
99.1 Voting and Support Agreement dated as of August 7, 1997,
by and between USF&G Corporation, a Maryland corporation
and Mark E. Watson, Jr. and affiliates.(3)
99.2 Agreement and Plan of Merger dated as of August 7, 1997,
by and among USF&G Corporation, a Maryland corporation,
United States Fidelity & Guaranty Company, a Maryland
corporation and Titan Holdings, Inc., a Texas
corporation.(3)
(3) Incorporated by reference to Exhibit 10A to USF&G Corporation's Quarterly
Report Form 10-Q for the quarter ending June 30, 1997.
<PAGE>
