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 (Date of earliest event reported): January 26, 1999
MOTOR CLUB OF AMERICA
(Exact Name of Registrant as specified in its charter)
New Jersey 0-671 22-0747730
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
95 Route 17 South, Paramus, New Jersey 07653-0931
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 291-2000
__________________________________________________________
(Former name or former address, if changed since last report)
Item 5. Other Events. On January 26, 1999, the Registrant announced in a
Press Release that the Registrant and North East Insurance Company
("North East") have reached a non-binding agreement in principle
for the Registrant to acquire North East through a merger.
The text of that Press Release is attached as Exhibit 20.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description Pages Where Located
20 Press Release dated Pages 5 - 6
January 26 , 1999
SIGNATURES
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.
MOTOR CLUB OF AMERICA
By: /s/Stephen A. Gilbert
Stephen A. Gilbert, President
and Chief Executive Officer
Date: January 27, 1999
MOTOR CLUB OF AMERICA
EXHIBIT INDEX
TO
FORM 8-K CURRENT REPORT
Exhibit Number Description Pages Where Located
20 Press Release dated Pages 5 -6
January 26 , 1999
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.
THIS NEWS RELEASE IS ALSO AVAILABLE AT WWW.MOTR.COM
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