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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
Guaranty National Corporation
------------------------------
(Name of Subject Company)
Orion Capital Corporation
The Connecticut Indemnity Company
Connecticut Specialty Insurance Company
Design Professionals Insurance Company
EBI Indemnity Company
Employee Benefits Insurance Company
The Fire and Casualty Insurance Company of Connecticut
Security Insurance Company of Hartford
---------------------------------------
(Bidder)
Common Stock, par value $1.00 per share
----------------------------------------
(Title of Class of Securities)
401192109
--------------------------------------
(CUSIP Number of Class of Securities)
Michael P. Maloney, Esq.
Vice President and General Counsel
ORION CAPITAL CORPORATION
600 Fifth Avenue
New York, New York 10020-2302
(212) 332-8080
------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
Copy to:
John J. McCann, Esq.
Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
(212) 632-3000
<PAGE> 2
This Statement is filed by Orion Capital Corporation ("Orion") and the
following of its wholly-owned subsidiaries: The Connecticut Indemnity Company,
Connecticut Specialty Insurance Company, Design Professionals Insurance Company,
EBI Indemnity Company, Employee Benefits Insurance Company, The Fire and
Casualty Insurance Company of Connecticut and Security Insurance Company of
Hartford (collectively with Orion, the "Purchasers") relating to the tender
offer of the Purchasers to purchase up to 4,600,000 shares of common stock, par
value $1.00 per share (the "Shares"), of Guaranty National Corporation, a
Colorado corporation (the "Company"). This Statement further amends the Schedule
14D-1 of the Purchasers, dated May 8, 1996 previously amended by Amendment No. 1
dated May 23, 1996 (as heretofore and hereby amended, the "Schedule 14D-1"), by
incorporating by reference herein the information set forth in the press release
dated May 31, 1996 of Orion attached as Exhibit (a)(11) hereto. This Statement
also amends Items 3, 7, 10 and 11 of the Schedule 14D-1 by adding the
information set forth below. Except as otherwise indicated herein, the Schedule
14D-1 remains unchanged in all other respects. Capitalized terms not otherwise
defined herein are defined as set forth in the Schedule 14D-1 or in the Offer to
Purchase of the Purchasers, dated May 8, 1996 (the "Original Offer to
Purchase"), as supplemented by the Supplement to the Offer Purchase dated June
4, 1996 (the
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"Supplement") which is attached as Exhibit (a)(10) hereto (together referred to
as the "Offer to Purchase").
Item 3. Past Contacts, Transactions or Negotiations With the Subject Company
The information set forth in Item 3 of the Schedule 14D-1 is hereby
supplemented as follows:
At the request of the Chairman of the Special Committee, Mr. Gruber
met with him on May 28, 1996. The Chairman told Mr. Gruber that, while the
Special Committee's financial advisor had not yet given the Committee its
written opinion, it was his personal belief that the financial advisor would be
willing to opine favorably if the Offer price were increased to $19 per Share.
Mr. Gruber pointed out that such an increase would more than double the
financial advisor's fee, which in his view was unconscionable. Mr. Gruber
reiterated the intention of the Purchasers not to raise or reduce the Offer
price of $17.50 per Share. He again pointed out that the retention of the
Special Committee's financial advisor was structured in such a way as to create
an inevitable conflict of interest on the part of the financial advisor and, in
the Purchasers' opinion, called into question the credibility of the Special
Committee's evaluation process. The Chairman of the Special Committee informed
Mr. Gruber that a meeting of the Special Committee was scheduled for 8:00 p.m.,
Denver time, on May 29, 1996.
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Following Mr. Gruber's meeting with the Chairman of the Special
Committee on May 28, the Purchasers confirmed to legal counsel for the Company
and the Special Committee on May 29 that, if at least 4,600,000 Shares are
validly tendered and accepted for payment and paid for, then:
1. The Purchasers will not purchase, prior to the third anniversary of
the Expiration Date, additional Shares (if after giving effect to such purchase
they would own more than 81% of the outstanding Shares) other than pursuant to
an offer made to all holders of Shares and which is conditioned on the
acceptance of such offer by holders owning at least a majority of the Shares
then outstanding which are not held by the Purchasers and their affiliates.
2. If an offer is made to holders of Shares, as described in paragraph
1 above, prior to the third anniversary of the Expiration Date, the Purchasers
will offer a purchase price involving cash consideration equal to at least
$17.50 per Share.
3. The Purchasers will support adoption of a policy by the Board of
Directors that any repurchase of Shares by the Company prior to the third
anniversary of the Expiration Date should be approved by a majority of those
members of the Board of Directors who are independent of and not employed by any
of the Purchasers.
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4. If, at any time during the five years following the Expiration
Date, the Purchasers should wish to sell as a block all the Shares owned by
them, or propose a merger or consolidation involving the Company, they will not
do so unless (a) in the case of a sale of all Purchasers' Shares, the purchaser
of such Shares undertakes to offer to purchase all other Shares outstanding for
consideration of equivalent value to that offered to the Purchasers or (b) in
the case of a merger or consolidation, all Shares are exchanged for
substantially equivalent value.
On the morning of May 30, 1996, the Special Committee reported through
its counsel that it had determined to request an opinion from its financial
advisor with respect to the fairness of the Offer. Later that same morning, Mr.
Gruber called the Chairman of the Special Committee. During that conversation
Mr. Gruber confirmed again the undertakings of the Purchasers as set forth above
and again expressed his reservations concerning the fairness and objectivity of
the evaluation process.
On June 1, 1996, the Special Committee decided to recommend to the
Company's stockholders as follows:
. . . [i]n light of all the relevant circumstances, [that] the Offer
is inadequate because of the Offer price and the fact that the Offer
is for less than 100% of the publicly-held Shares, but nonetheless
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it is making no recommendation at this time to the Company's
shareholders. The Special Committee urges all shareholders to make
their own determination as to whether to tender . . . .
The Special Committee also decided to request its financial
advisor to solicit third party interest in acquiring all or
any part of the Company.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities
The information set forth in Item 7 of the Schedule 14D-1 is hereby
supplemented by incorporating the information set forth in Item 3 above.
Item 10. Additional Information.
The information set forth in Item 10 of the Schedule 14D-1 is hereby
supplemented by incorporating by reference the information set forth in the
Supplement, a copy of which is attached as Exhibit (a)(10) hereto.
Item 11. Material to be Filed as Exhibits
(a) (10) Supplement to the Offer to Purchase dated
June 4, 1996
(a) (11) Press Release dated June 4, 1996
of Orion Capital Corporation
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SIGNATURE
After due 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.
Dated: June 4, 1996
ORION CAPITAL CORPORATION
By /s/ Michael P. Maloney
--------------------------
Vice President, General
Counsel and Secretary
THE CONNECTICUT INDEMNITY COMPANY
CONNECTICUT SPECIALTY INSURANCE COMPANY
DESIGN PROFESSIONALS INSURANCE COMPANY
EBI INDEMNITY COMPANY
EMPLOYEE BENEFITS INSURANCE COMPANY
THE FIRE AND CASUALTY INSURANCE COMPANY OF
CONNECTICUT
SECURITY INSURANCE COMPANY OF HARTFORD
By /s/ Michael P. Maloney
---------------------------
Senior Vice President
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EXHIBIT INDEX
Exhibit Description
- ------- ------------
(a)(10) Supplement to the Offer to
Purchase dated June 4, 1996
(a)(11) Press Release dated June 4, 1996
of Orion Capital Corporation
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<PAGE> 1
SUPPLEMENT
TO
OFFER TO PURCHASE DATED MAY 8, 1996
UP TO 4,600,000 SHARES OF COMMON STOCK
OF
GUARANTY NATIONAL CORPORATION
AT
$17.50 NET PER SHARE IN CASH
BY
ORION CAPITAL CORPORATION
AND
CERTAIN WHOLLY-OWNED SUBSIDIARIES NAMED HEREIN
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS, AS HEREBY EXTENDED, WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
JUNE 12, 1996, UNLESS THE OFFER IS FURTHER EXTENDED.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. HOWEVER, THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE
RECEIPT OF ALL REQUIRED STATE INSURANCE DEPARTMENT REGULATORY APPROVALS ON TERMS
AND CONDITIONS SATISFACTORY TO THE PURCHASERS. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS. SEE "THE OFFER" -- SECTION 10. IF MORE THAN
4,600,000 SHARES ARE PROPERLY TENDERED AND NOT WITHDRAWN, THEN, SUBJECT TO THE
TERMS AND CONDITIONS OF THE OFFER, SUCH SHARES WILL BE ACCEPTED ON A PRO RATA
BASIS. SEE "THE OFFER" -- SECTION 2.
------------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $1.00 per share, of Guaranty National
Corporation should either (i) complete and sign the original Letter of
Transmittal previously circulated with the Offer to Purchase, dated May 8, 1996,
or a facsimile thereof in accordance with the instructions in such Letter Of
Transmittal and deliver the Letter of Transmittal with the Shares and all other
required documents to the Depositary, or follow the procedure for book-entry
transfer set forth in THE OFFER -- Section 3 of the Offer to Purchase, dated May
8, 1996, or (ii) request his broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such person if he desires to tender his
Shares.
Any stockholder who desires to tender Shares and cannot deliver such Shares
and all other required documents to the Depositary by the expiration of the
Offer must tender such Shares pursuant to the guaranteed delivery procedure set
forth in THE OFFER - Section 3 of the Offer to Purchase, dated May 8, 1996.
Questions and requests for assistance or additional copies of this
Supplement, the Letter of Transmittal, the Offer to Purchase, dated May 8, 1996,
and other tender offer materials may be directed to the Information Agent or the
Dealer Manager at their respective addresses and telephone numbers set forth on
the back cover of this Supplement to the Offer to Purchase.
THIS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE OFFER TO PURCHASE,
DATED MAY 8, 1996, AND THE RELATED LETTER OF TRANSMITTAL, COPIES OF WHICH MAY BE
OBTAINED AT THE PURCHASERS' EXPENSE IN THE MANNER SET FORTH ON THE BACK COVER OF
THIS SUPPLEMENT. THE OFFER TO PURCHASE, DATED MAY 8, 1996, THIS SUPPLEMENT AND
THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE
READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------------
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
June 4, 1996
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To the Holders of Common Stock of
GUARANTY NATIONAL CORPORATION:
This Supplement, dated June 4, 1996, to the Offer To Purchase (this
"Supplement") supplements the Offer to Purchase, dated May 8, 1996 (the
"Original Offer to Purchase"). Together, the Original Offer to Purchase and this
Supplement are referred to herein as the "Offer to Purchase."
Except as otherwise stated herein, the terms and conditions set forth in
the Original Offer to Purchase and the Letter of Transmittal remain applicable
in all respects to the Offer (as defined below).
This Supplement contains important information which should be read
carefully before any decision is made with respect to the Offer.
This Supplement is being delivered for the purpose of extending the time
period of the Offer as well as supplementing certain terms of the Offer.
Capitalized terms used in this Supplement that are not defined herein shall have
the meanings ascribed to such terms in the Original Offer to Purchase.
SHARES TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO
THE EXPIRATION DATE (AS DEFINED HEREIN) AND, UNLESS THERETOFORE ACCEPTED FOR
PAYMENT PURSUANT TO THE OFFER, ALSO MAY BE WITHDRAWN AT ANY TIME AFTER JULY 6,
1996. SEE THE OFFER -- SECTION 4 OF THE ORIGINAL OFFER TO PURCHASE FOR THE
PROCEDURES FOR WITHDRAWING SHARES TENDERED PURSUANT TO THE OFFER.
STOCKHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED AND NOT PROPERLY
WITHDRAWN THEIR SHARES PURSUANT TO THE OFFER ARE NOT REQUIRED TO TAKE ANY
FURTHER ACTION, EXCEPT AS MAY BE REQUIRED BY THE PROCEDURE FOR GUARANTEED
DELIVERY IF SUCH PROCEDURE WAS UTILIZED.
INTRODUCTION
Orion Capital Corporation, a Delaware corporation ("Orion"), and certain of
its wholly-owned subsidiaries named below (collectively referred to herein with
Orion as the "Purchasers") hereby offer to purchase up to 4,600,000 of the
outstanding shares of Common Stock, par value $1.00 per share, of Guaranty
National Corporation, a Colorado corporation (the "Company"), at $17.50 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase and in the related Letter
of Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). Each outstanding share of Common Stock of the Company
is referred to herein as a "Share." The name of each Purchaser and the
percentage of Shares to be severally purchased by it pursuant to the Offer are
as follows: Orion (17.4%), The Connecticut Indemnity Company (15.0%),
Connecticut Specialty Insurance Company (2.5%), Design Professionals Insurance
Company (3.5%), EBI Indemnity Company (2.9%), Employee Benefits Insurance
Company (2.9%), The Fire and Casualty Insurance Company of Connecticut (5.2%)
and Security Insurance Company of Hartford (50.6%). Each Purchaser reserves the
right to purchase any Shares not purchased by the other Purchasers. The
Purchasers also reserve the right to amend the Offer to reduce the number of
Shares which will be purchased pursuant to the Offer, including as a result of
the Insurance Regulatory Condition (as defined below).
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. HOWEVER, THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS,
SATISFACTION OF THE INSURANCE REGULATORY CONDITION. SUCH CONDITION AND THE OTHER
CONDITIONS TO THE OFFER ARE SET FORTH IN THE OFFER -- SECTION 10. IF MORE THAN
4,600,000 SHARES ARE PROPERLY TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN,
THEN, SUBJECT TO THE TERMS AND CONDITIONS OF THE OFFER, TENDERED SHARES WILL BE
ACCEPTED ON A PRO RATA BASIS (WITH APPROPRIATE ADJUSTMENTS TO AVOID PURCHASES OF
FRACTIONAL SHARES) ACCORDING TO THE NUMBER OF SHARES PROPERLY TENDERED BY EACH
STOCKHOLDER AT OR PRIOR TO THE EXPIRATION DATE AND NOT WITHDRAWN.
If, upon consummation of the Offer, Orion and its subsidiaries together own
less than 80% of the outstanding Shares, Orion and/or one or more of its
subsidiaries may purchase additional Shares in order to acquire an 80% ownership
interest in the Company, subject to the availability of funds and other
investment opportunities. Such purchases may be made through open market or
privately negotiated purchases or another tender offer (which may be for less
than all the Shares), subject to market conditions, at prices which may be
<PAGE> 3
greater or less than the Offer price for the Shares. There can be no assurance
that Orion and its subsidiaries will acquire such additional Shares or over what
period of time such additional Shares, if any, might be acquired.
Once Orion and its subsidiaries have acquired 80% of the outstanding
Shares, Orion intends to purchase additional Shares, directly or indirectly
through its wholly-owned subsidiaries, from time to time in order to offset any
dilution caused by future issuances of securities by the Company whether as a
result of grants under employee benefit plans or otherwise.
Except as set forth above, the Purchasers intend, in connection with
certain future purchases of Shares by them, to observe certain undertakings made
by them in this Supplement. See SPECIAL FACTORS -- Background of the
Transaction.
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SPECIAL FACTORS
BACKGROUND OF THE TRANSACTION
On May 21, 1996, Messrs. Gruber, Sanborn and Shepherd participated by
conference telephone in a meeting of the Board of Directors of the Company
called to consider a report from the Special Committee of the Board which had
been established and authorized to evaluate the Offer.
The Chairman of the Special Committee reported that a financial advisor had
been retained to evaluate the Offer and outlined the financial advisor's fee
arrangement. Mr. Gruber pointed out that the incentive fees which are part of
the financial advisor's arrangement raised serious questions about the
objectivity and fairness of the evaluation process.
Based on public filings by the Company, the Purchasers understand that
pursuant to a letter agreement dated May 16, 1996, the Special Committee engaged
the financial advisor to act as its exclusive financial advisor with respect to
the Offer. The Company has agreed to pay the financial advisor a fee of $100,000
for such services, and a fee of $450,000 if the Special Committee requests a
fairness opinion, due upon the completion of the work necessary to render such
an opinion (against which amount the financial advisor would credit $50,000 of
the $100,000 initially paid to it). Additionally, if the Purchasers acquire
Shares (whether in the Offer or as part of a merger transaction or otherwise) at
a price greater than $17.50 per Share, an additional fee equal to 10% of the
product of (x) the difference between the per Share consideration offered to be
paid and $17.50 and (y) 4,600,000 Shares will be payable to the financial
advisor. If the Purchasers seek to acquire in excess of 4,600,000 Shares, an
additional fee equal to 1% of the product of (x) the per Share price offered by
the Purchasers and (y) the number of Shares sought to be purchased by the
Purchasers in excess of 4,600,000 will be payable to the financial advisor. If
the Company consummates a transaction with a third party, an additional fee
equal to .75% of the aggregate consideration paid in connection with such other
transaction will be payable to the financial advisor. The Company has also
agreed to reimburse all of the financial advisor's reasonable out-of-pocket
expenses, including fees and disbursements of counsel, incurred in connection
with its engagement, and to indemnify the financial advisor against certain
losses, claims, damages or liabilities arising in connection with its
engagement, including liabilities under federal or state securities laws, or
otherwise relating to the engagement.
At the meeting on May 21, 1996 and at the request of the Chairman of the
Special Committee, Mr. Gruber responded to questions concerning the Offer. Mr.
Gruber affirmed in his responses to the Special Committee several matters which
had previously been set forth in the Original Offer to Purchase, including the
Purchasers' continued belief that the Offer price of $17.50 per Share is fair
and adequate and that the Purchasers had no intention to increase or reduce that
price.
At the request of the Special Committee, following the meeting of the Board
of Directors, Mr. Gruber and the Purchasers' legal and financial advisors met at
Orion's New York offices with the Special Committee's financial advisor and
legal counsel to the advisor. Members of the Special Committee participated by
telephone. The Special Committee's advisors asked Mr. Gruber substantially the
same questions as had previously been answered for the Board of Directors.
Mr. Gruber and his advisors were then asked to leave the meeting so that
the Special Committee could consult with its advisors. When Mr. Gruber was
invited to return, he was informed that the Company would make a filing on
Schedule 14D-9 in which it would decline to make any recommendation to the
Company's stockholders with respect to the Offer.
On May 23, 1996, the Purchasers amended their filings on Schedule 14D-1 and
Schedule 13E-3 to reflect their having informed the Special Committee and its
financial advisor of the following:
(a) The Purchasers intend to increase their aggregate holdings to
approximately 80% of the outstanding Shares of the Company, not more.
(b) The Purchasers believe that the Offer, pursuant to which the
Purchasers have agreed to accept and pay for all Shares tendered (subject
to possible proration), is more fair to stockholders of the
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<PAGE> 5
Company than to require that a minimum number of Shares be tendered before
any Shares will be accepted (as was suggested by the Special Committees's
advisors).
(c) The Purchasers do not expect that either delisting or
deregistration of the Company's Shares will occur as a result of the
completion of the Offer.
(d) The Purchasers have no present intention to seek a merger or other
business combination with the Company.
(e) The Purchasers expect that the Company will continue to have a
Board of Directors whose members include persons who are independent of and
not employed by or affiliated with Orion or the Company. The Purchasers
expect that any future service, insurance or other contractual arrangements
between the Company and Orion (or subsidiaries of either) should, and will,
continue to be subject to review by the entire Board of Directors of the
Company and, where required, by insurance regulatory authorities.
At the request of the Chairman of the Special Committee, Mr. Gruber met
with him on May 28, 1996. The Chairman told Mr. Gruber that, while the Special
Committee's financial advisor had not yet given the Committee its written
opinion, it was his personal belief that the financial advisor would be willing
to opine favorably if the Offer price were increased to $19 per Share. Mr.
Gruber pointed out that such an increase would more than double the financial
advisor's fee, which in his view was unconscionable. Mr. Gruber reiterated the
intention of the Purchasers not to raise or reduce the Offer price of $17.50 per
Share. He again pointed out that the retention of the Special Committee's
financial advisor was structured in such a way as to create an inevitable
conflict of interest on the part of the financial advisor and, in the
Purchasers' opinion, called into question the credibility of the Special
Committee's evaluation process. The Chairman of the Special Committee informed
Mr. Gruber that a meeting of the Special Committee was scheduled for 8:00 p.m.,
Denver time, on May 29, 1996.
Following Mr. Gruber's meeting with the Chairman of the Special Committee
on May 28, the Purchasers confirmed to legal counsel for the Company and the
Special Committee on May 29 that, if at least 4,600,000 Shares are validly
tendered and accepted for payment and paid for, then:
1. The Purchasers will not purchase, prior to the third anniversary of
the Expiration Date, additional Shares (if after giving effect to such
purchase they would own more than 81% of the outstanding Shares) other than
pursuant to an offer made to all holders of Shares which is conditioned on
the acceptance of such offer by holders owning at least a majority of the
Shares then outstanding which are not held by the Purchasers and their
affiliates.
2. If an offer is made to holders of Shares, as described in paragraph
1 above, prior to the third anniversary of the Expiration Date, the
Purchasers will offer a purchase price involving consideration equal to at
least $17.50 per Share.
3. The Purchasers will support adoption of a policy by the Board of
Directors of the Company that any repurchase of Shares by the Company prior
to the third anniversary of the Expiration Date should be approved by a
majority of those members of the Board of Directors who are independent of
and not employed by any of the Purchasers.
4. If, at any time during the five years following the Expiration
Date, the Purchasers should wish to sell as a block all the Shares owned by
them, or propose a merger or consolidation involving the Company, they will
not do so unless (a) in the case of a sale of all Purchasers' Shares, the
purchaser of such Shares undertakes to offer to purchase all other Shares
outstanding for consideration of equivalent value to that offered to the
Purchasers or (b) in the case of a merger or consolidation, all Shares are
exchanged for substantially equivalent value.
On the morning of May 30, 1996, the Special Committee reported through its
counsel that it had determined to request an opinion from its financial advisor
with respect to the fairness of the Offer. Later that same morning, Mr. Gruber
called the Chairman of the Special Committee. During that conversation,
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<PAGE> 6
Mr. Gruber confirmed again the undertakings of the Purchasers as set forth above
and again expressed his reservations concerning the fairness and objectivity of
the evaluation process.
FAIRNESS OF THE OFFER
On June 1, 1996, the Special Committee decided to recommend to the
Company's stockholders as follows:
. . . [i]n light of all the relevant circumstances, [that] the Offer is
inadequate because of the Offer price and the fact that the Offer is
for less than 100% of the publicly-held Shares, but nonetheless it is
making no recommendation at this time to the Company's shareholders.
The Special Committee urges all shareholders to make their own
determination as to whether to tender . . . .
The Special Committee also decided to request its financial advisor to solicit
third party interest in acquiring all or any part of the Company.
The Purchasers have not negotiated the Offer price with the Company and do
not intend to do so. In determining the Offer price, the Purchasers did not
prepare an analysis of the liquidation value of the Shares. The Shares are
publicly traded and have a readily ascertainable fair market value. On the other
hand, a liquidation analysis would require a number of assumptions concerning
projected loss development, the availability of reinsurance and the likely cost
thereof, among other matters. An analysis so dependent on assumptions, some of
which would be largely speculative, would not in the Purchasers' judgment be
meaningful in the circumstances.
To the extent the Special Committee has determined to leave to each holder
of Shares the decision whether or not to tender Shares pursuant to the Offer,
the Purchasers believe the Special Committee has taken an appropriate step.
However, the statement that the financial advisor has been requested to solicit
interest in the sale -- including a piecemeal sale -- of the Company ignores the
potentially harmful effects of such a process on the employees and agents of the
Company. To embark on such a course of action based, apparently, on little more
than the speculative hopes of a financial advisor which stands to gain from the
process does not appear to be in the interest of stockholders, whether or not
they tender their Shares. If the Board of Directors should implement actions of
the sort suggested by the Special Committee, the Purchasers will have to
evaluate what future action is appropriate; actions could include extending the
Expiration Date, accepting Shares validly tendered by the Expiration Date or
terminating the Offer if it appears that the course of conduct being followed by
the Board of Directors will expose the holders of Shares, including the
Purchasers, to potentially materially adverse results.
PURPOSE AND STRUCTURE OF THE TRANSACTION; PLANS FOR THE COMPANY AFTER THE OFFER.
After completion or termination of the Offer and regardless of the number
of Shares purchased in the Offer (except as referred to in the next paragraph),
Orion reserves the right to purchase directly or through its subsidiaries
additional Shares in the open market, in privately negotiated transactions, in
another tender or exchange offer or otherwise. Any acquisition of Shares by
Orion or its subsidiaries would have to be made in accordance with applicable
legal requirements, including those under the Exchange Act. After completion or
termination of the Offer, Orion also reserves the right, but has no present
intention, (i) to sell Shares in open market or negotiated transactions, (ii) to
propose a merger or other similar business combination of the Company involving
consideration consisting of cash or securities or a combination of cash and
securities or (iii) to propose such a transaction involving consideration having
a value more or less than the amount to be paid per Share pursuant to the Offer.
See THE OFFER -- Section 11.
If, however, at least 4,600,000 Shares are validly tendered and accepted
for payment and paid for, the Purchasers intend to observe certain undertakings
made by them in this Supplement. See SPECIAL FACTORS -- Background of the
Transaction.
5
<PAGE> 7
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION; SECURITIES OWNERSHIP; RELATED
TRANSACTIONS
None of Orion's wholly-owned subsidiaries will tender Shares in the Offer.
Orion has been advised that each of Messrs. Becker, Cohn, Schuyler, Shepherd and
Thorne intends to tender his Shares, but that Mr. Sanborn does not intend to
tender his Shares. None of the Purchasers or any of their directors or executive
officers, in his capacity as such, makes any recommendation to the stockholders
of the Company regarding the Offer.
To the best of the Purchasers' knowledge, based on public filings by the
Company, the following of the Company's executive officers, directors,
affiliates and subsidiaries (other than those who are directors of a Purchaser),
presently intend to tender Shares to the Purchasers pursuant to the Offer:
(i) Fred T. Roberts, the President of the Company's Commercial Lines
Unit, intends to tender 4,315 Shares;
(ii) Jacqueline L. Melton, the Company's Senior Vice
President -- Human Resources, intends to tender 7,586 Shares;
(iii) James R. Pouliot, President of the Company's Viking Division,
intends to tender 13,000 Shares;
(iv) Michael L. Pautler, the Company's Senior Vice
President -- Finance and Treasurer, intends to tender 18,586 Shares; and
(v) Arthur J. Mastera, President of the Company's Personal Lines
Division, intends to tender 19,232 Shares.
The Purchasers understand that the tender of Shares by Messrs. Pouliot and
Pautler will result (as to 1,000 Shares in the case of Mr. Pouliot and 600
Shares in the case of Mr. Pautler) in liability under Section 16 of the Exchange
Act. Messrs. Pautler and Pouliot intend to pay to the Company, pursuant to the
rules and regulations promulgated under Section 16, the profits earned by them
in connection with the tender of those Shares.
According to public filings made by the Company, the Company believes that:
Mr. Ware, the Company's Chief Executive Officer and a member of
the Board of Directors of both the Company and Orion, Shelly J.
Hengsteler, the Company's Controller, and the members of the
Special Committee, Dennis Lacey, Carroll Speckman, M. Ann
Padilla, Tucker Hart Adams and Richard R. Thomas, do not intend
to tender any Shares in the Offer.
The above officers and directors may change the number of Shares
indicated, or change their determination as to whether or not
they intend to tender Shares in the Offer, at any time prior to
the expiration date of the Offer.
The Purchasers understand that Tucker Hart Adams does not, in fact, own any
Shares.
THE OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. The Expiration Date of the Offer
has been extended from 12:00 Midnight, New York City time, on Wednesday, June 5,
1996 to 12:00 Midnight, New York City time, on Wednesday, June 12, 1996.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is further extended or amended, the terms and conditions of any
further extension or amendment), the Purchasers will accept for payment and pay
for all Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn in accordance with THE OFFER -- Section 4 of the Offer to Purchase.
The term "Expiration Date" now means 12:00 Midnight, New York City time, on
Wednesday, June 12, 1996, unless the Purchasers shall have further extended the
period of time for which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchasers, shall expire.
Tendering stockholders may continue to use the original Letter of
Transmittal and the original Notice of Guaranteed Delivery previously circulated
with the Original Offer to Purchase. Although the Letter of
6
<PAGE> 8
Transmittal previously circulated with the Offer to Purchase refers only to the
Original Offer to Purchase, and to the original Expiration Date of Wednesday,
June 5, 1996, stockholders using such document to tender their Shares will
nevertheless have until 12:00 Midnight, New York City time, on Wednesday, June
12, 1996 to tender their Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES; PRORATION. Upon the
terms and subject to the conditions of the Offer, including the provisions
thereof relating to proration, the Purchasers shall accept for payment (and
thereby purchase), and the Purchasers will pay for, up to 4,600,000 Shares
validly tendered and not properly withdrawn in accordance with THE
OFFER -- Section 4 (including Shares validly tendered and not withdrawn during
any extension of the Offer, if the Offer is extended, upon the terms and subject
to the conditions of such extension), as promptly as practicable after the
Expiration Date. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES
BEING TENDERED. The Purchasers expressly reserve the right to delay acceptance
for payment of or payment for Shares in order to comply in whole or in part with
any applicable law or regulation (including the Insurance Regulatory Condition)
but intend either to extend the Expiration Date, or to terminate the Offer if it
should appear that an Insurance Regulatory Condition (or any such law or
regulation) will delay for more than five (5) days the payment for Shares
accepted for payment. See THE OFFER -- Sections 10 and 11. The reservation by
the Purchasers of the right to delay acceptance for payment or payment for
Shares is subject to the provisions of applicable law under Rule 14e-1
promulgated under the Exchange Act, which require that the Purchasers pay the
consideration offered or return the Shares deposited by or on behalf of
stockholders promptly after termination or withdrawal of the Offer.
10. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, and in addition to (and not in limitation of) the Purchasers'
rights to amend the Offer at any time in their sole discretion, the Purchasers
will not be required to accept for payment, or pay for, any Shares tendered, and
may terminate, extend or amend the Offer, or, subject to the provisions of
applicable law which require that the Purchasers pay the consideration offered
or return the Shares deposited by or on behalf of stockholders promptly after
termination or withdrawal of the Offer, may delay the acceptance for payment or
the payment for Shares tendered, if, at any time on or after May 8, 1996, and at
or prior to the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer),
there shall occur any of the events set forth in THE OFFER -- Section 10 of the
Original Offer to Purchase, which in the exercise of Orion's reasonable
good-faith judgment on behalf of the Purchasers, in any case and regardless of
the circumstances giving rise to any such condition (including any action or
inaction by Orion or any of its subsidiaries or affiliates other than the
Company) makes it inadvisable to proceed with the Offer or with acceptance for
payment or payment for Shares.
11. CERTAIN LEGAL MATTERS. (a) State Insurance Approvals. The Purchasers
have advised the insurance regulatory authorities of California, Colorado,
Connecticut, Oklahoma, Texas and Wisconsin of their intention to commence the
Offer. Form A filings were made in California and Wisconsin, a Form E filing was
made in Texas and a Form D filing was made in Connecticut, all seeking approval
of the acquisition of the Shares by the Purchasers. If the purchase of Shares is
effected pursuant to the Offer, the Company's Oklahoma insurance subsidiary
will, following the Expiration Date, amend its Oklahoma Form B filing to reflect
the acquisition of Shares by the Purchasers.
Texas approved the acquisition of Shares on May 21, 1996 and Wisconsin
approved the acquisition of Shares on May 30, 1996. Colorado has advised that
the acquisition of Shares is exempt from Colorado's change of control filing
requirements. Connecticut and California have orally indicated that approval is
forthcoming.
If the Purchasers are delayed in receiving the formal approval of the
California or Connecticut Insurance Department, or are required to receive
approvals from any other state authorities, the Purchasers might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in accepting Shares for payment, or paying for Shares pursuant to the
Offer. In such case, one or more Purchasers may not be obligated to accept for
payment or pay for Shares. In addition, the Purchasers may terminate the Offer
if a Purchaser becomes subject to an order preventing it from purchasing Shares
or limiting its ability to exercise control of the Company or any of its
subsidiaries or affiliates or, if in the good faith, reasonable judgment of
7
<PAGE> 9
Orion, exercised on behalf of the Purchasers, necessary approvals have not been
obtained. See THE OFFER -- Section 3.
(c) Antitrust. On May 23, 1996, the 15-day waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), relating to the purchase of Shares pursuant to the Offer expired without
any request for additional information. Accordingly, the condition to the
Purchasers' obligation not to proceed with the Offer until the expiration or
termination of the applicable waiting period under the HSR Act has been
satisfied.
MISCELLANEOUS
Orion has been served with a complaint in an action entitled Eugenia
Gladstone Vogel v. Guaranty National Corporation, et al. which has been filed in
the Supreme Court for the State and County of New York. The complaint seeks
damages and other relief allegedly arising out of the Offer. In Orion's opinion,
the claims made in the complaint are without merit and Orion intends vigorously
to defend the litigation. Orion understands that two other actions have been
filed in the state courts in Colorado alleging similar claims and seeking
similar relief. Orion has not been served in either of those actions.
------------------------
No person has been authorized to give any information or make any
representation on behalf of the Purchasers not contained in the Offer to
Purchase or the Letter of Transmittal, and, if given or made, such information
or representation must not be relied upon as having been authorized.
ORION CAPITAL CORPORATION
and
THE CONNECTICUT INDEMNITY COMPANY
CONNECTICUT SPECIALTY INSURANCE
COMPANY
DESIGN PROFESSIONALS INSURANCE COMPANY
EBI INDEMNITY COMPANY
EMPLOYEE BENEFITS INSURANCE COMPANY
THE FIRE AND CASUALTY INSURANCE
COMPANY
OF CONNECTICUT
SECURITY INSURANCE COMPANY OF HARTFORD
June 4, 1996
8
<PAGE> 10
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Courier: By Hand:
State Street Bank State Street Bank Bank of Boston
and Trust Company and Trust Company c/o Boston Equiserve
Corporate Reorganization Corporate Reorganization Corporate Reorganization
P.O. Box 9061 2 Heritage Drive 55 Broadway
Boston, MA 02205-8686 North Quincy, MA 02171 3rd Floor
New York, New York 10006
</TABLE>
By Facsimile:
(617) 774-4519
Confirm by telephone
(617) 774-4511
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
specified below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A stockholder may also contact his broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550
(Call Collect)
or
Call Toll Free (800) 829-6551.
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
(212) 892-7700 (Call Collect)
9
<PAGE> 1
From: Vincent T. Papa Dawn Dover
(212) 332-8080 Robert Siegfried
Jeanne Hotchkiss Kekst and Company
(860) 674-6754 (212) 593-2655
FOR IMMEDIATE RELEASE
ORION CAPITAL EXTENDS CASH TENDER OFFER FOR
GUARANTY NATIONAL SHARES AT $17.50 PER SHARE;
ANNOUNCES REGULATORY APPROVALS
New York, NY, June 4, 1996 -- Orion Capital Corporation (NYSE: OC) today
announced the extension to June 12, 1996 of the Offer to Purchase by Orion and
certain of its subsidiaries of up to 4,600,000 shares of Guaranty National
Corporation common stock (NYSE: GNC) for cash of $17.50 per share. Subject to
the terms and conditions of the Offer, any and all shares validly tendered
will be accepted, subject to proration if more than 4,600,000 shares of common
stock are validly tendered.
Orion reported that the applicable waiting period under the Hart-Scott-Rodino
Act has expired. Orion also reported that approval of the acquisition of
Guaranty National shares by Orion has been obtained in writing from the
insurance regulatory authorities of the States of Wisconsin and Texas and that
the authorities of the States of California and Connecticut have orally
advised that such approvals are forthcoming. The Insurance Department of the
State of Colorado declared the transaction exempt.
Orion also announced that, in light of the decision of a Special Committee of
Guaranty National's Board to make no recommendation to stockholders with
respect to tendering their shares, Orion presently intends to proceed with the
Offer and, if at least 4,600,000 shares are validly tendered and accepted, to
give to Guaranty National certain undertakings with respect to future share
purchases. As of the close of business on June 3, 1996, 1,544,990 shares of
Guaranty National common stock have been tendered pursuant to the Offer to
Purchase.
Orion Capital Corporation is engaged in the specialty property and casualty
insurance business through wholly-owned subsidiaries which include EBI
Companies, DPIC Companies, Connecticut Specialty Insurance Group, SecurityRe
Companies and Wm. H. McGee & Co. Inc., as well as through its 49.5% ownership
interest in Guaranty National Corporation.
