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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 10, 1997
Date of earliest
event reported: June 10, 1997
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
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(Exact name of registrant as specified in its charter)
New York 0-25280 13-5570651
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1290 Avenue of the Americas
New York, New York 10104
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(Address of principal executive offices) (Zip Code)
(212) 554-1234
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(Registrant's telephone number, including area code)
None
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(Former name or address, if changed since last report)
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ITEM 5. OTHER EVENTS
SELECTION OF NEW PRESIDENT AND CEO
On July 9, 1997 Joseph J. Melone, Chairman and Chief Executive Officer of
The Equitable Life Assurance Society of the United States ("Equitable Life") and
President and Chief Executive Officer of The Equitable Companies Incorporated
(the "Holding Company"), announced the selection of Edward D. Miller to succeed
Mr. Melone as President and Chief Executive Officer of both Equitable Life and
the Holding Company. Mr. Melone said that he will recommend the appointments at
Board of Directors meetings to be held on July 17, 1997.
Mr. Miller also is expected to be elected a member of the Boards of
Directors of the Holding Company and Equitable Life, and will become a member of
the Executive Committee of AXA-UAP ("AXA"). Mr. Melone will continue as
Chairman of Equitable Life and will become Chairman of the Executive Committee
of the Holding Company.
Mr. Miller previously held a series of senior positions with Manufacturers
Hanover Trust Company, Chemical Banking Corporation and The Chase Manhattan
Corporation ("Chase"), most recently serving as Senior Vice Chairman of Chase
until April 1997.
REDEMPTION OF DEBENTURES AND PREFERRED STOCK OF THE HOLDING COMPANY
The Holding Company announced on June 27, 1997 that it has elected to
redeem (the "Redemptions") on August 4, 1997 (the "Call Date") all of its
outstanding 6-1/8% Convertible Subordinated Debentures due 2024 (the
"Debentures") and all outstanding shares of its Series C Cumulative Convertible
Preferred Stock (the "Series C Preferred Stock") and Series E Cumulative
Convertible Preferred Stock (the "Series E Preferred Stock", and together with
the Series C Preferred Stock, the "Preferred Stock").
On June 27, 1997 there were outstanding approximately $364.2 million
principal amount of the Debentures (having a carrying value of $339.5 million),
50,017 shares of the Series C Preferred Stock (having an aggregate liquidation
value of $25.0 million) and 822,460 shares of the Series E Preferred Stock
(having an aggregate liquidation value of $411.2 million). The redemption of
the Series C Preferred Stock includes the redemption of Depository Shares
representing shares of the Series C Preferred Stock. Approximately 95% of the
outstanding Series E Preferred Stock is owned by AXA.
Holders of record of the Debentures on the Call Date will be entitled to
receive that number of shares of Common Stock determined by dividing the
principal amount of the Debentures held by such holder by the Conversion Price
(currently $24.75) as of the opening of business on the Call Date (expected to
equal approximately 40.4040 shares of Common Stock for each $1,000 principal
amount of Debentures redeemed), together with cash representing interest accrued
from July 22, 1997,
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the prior interest payment date. Holders of record of the Series C Preferred
Stock and Series E Preferred Stock will be entitled to receive 20.4082 shares of
Common Stock for each share of Preferred Stock redeemed, together with cash
representing dividends accrued from July 22, 1997, the prior dividend payment
date. The Holding Company will pay cash in lieu of any fractional share of
Common Stock.
From and after the close of business on the Call Date, the Debentures and
the Preferred Stock shall cease to accrue interest and dividends, respectively,
and each holder thereof shall be deemed to be the holder of the number of shares
of Common Stock for which such securities are to be redeemed, regardless of
whether such holder has surrendered the certificates for the securities, and the
only right of such holder shall be to receive the shares of Common Stock and
cash representing accrued interest or dividends, as the case may be, since July
22, 1997 and cash in lieu of any fractional share thereof payable upon such
redemption, without interest, from the Call Date.
The Debentures and the Preferred Stock to be redeemed are convertible at
the option of the holder on the terms and subject to the conditions set forth in
the instruments governing these securities. The right of holders of Debentures
and Preferred Stock to convert all or a portion of such securities into shares
of Common Stock shall terminate at the close of business on the Call Date.
Upon redemption of the Debentures and Preferred Stock or conversion thereof
prior to the Call Date, approximately 32.5 million additional shares of Common
Stock will be issued by the Holding Company. On July 1, 1997 the Holding
Company had approximately 187.3 million Common Shares outstanding.
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The following table sets forth the consolidated capitalization of the
Holding Company at March 31, 1997 and as adjusted to give effect to the
Redemptions as of such date. The financial data at March 31, 1997 in the
following table are derived from the Holding Company's unaudited consolidated
balance sheet at March 31, 1997.
<TABLE>
<CAPTION>
AT MARCH 31, 1997
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HOLDING COMPANY HOLDING COMPANY
HISTORICAL AS ADJUSTED
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(IN MILLIONS)
<S> <C> <C>
DEBT:
Short-term debt
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20.0 $ 20.0
Subsidiaries of Holding Company. . . . . . . . . . . . . . . . 2,708.5 2,708.5
Long-term debt
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 908.3 569.0
Subsidiaries of Holding Company. . . . . . . . . . . . . . . . 3,104.0 3,104.0
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Total debt. . . . . . . . . . . . . . . . . . . . . . . . 6,740.8 6,401.5
SHAREHOLDERS' EQUITY:
Series C Convertible Preferred Stock; $1.00 par value;
$500.00 stated value; 2.0 million shares authorized;
50,017 shares issued and outstanding (liquidation value
$25.0 million); no shares issued and outstanding as
adjusted . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.4 --
Series D Convertible Preferred Stock; $1.00 par value;
$550.00 stated value; 60,000 shares authorized, issued
and outstanding (liquidation value $30.0 million) . . . . . . 325.4 325.4
Stock Employee Compensation Trust (Series D Convertible
Preferred Stock held in trust) . . . . . . . . . . . . . . . . (325.4) (325.4)
Series E Convertible Preferred Stock; $1.00 par value;
$500.00 stated value; 2.0 million shares authorized;
822,460 shares issued and outstanding (liquidation
value $411.2 million); no shares issued and outstanding
as adjusted. . . . . . . . . . . . . . . . . . . . . . . . . . 380.2 --
Common Stock; $0.01 par value; 500 million shares
authorized; 186.5 million shares issued and outstanding;
219.0 million shares issued and outstanding as
adjusted . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 2.2
Capital in excess of par value. . . . . . . . . . . . . . . . . . 2,797.3 3,537.3
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 752.7 752.7
Net unrealized investment losses. . . . . . . . . . . . . . . . . (58.5) (58.5)
Minimum pension liability . . . . . . . . . . . . . . . . . . . . (12.9) (12.9)
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Total shareholders' equity. . . . . . . . . . . . . . . . 3,885.1 4,220.8
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Total Capitalization. . . . . . . . . . . . . . . . . . . . . . . $10,625.9 $10,622.3
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Common Shareholders' Equity . . . . . . . . . . . . . . . . . . . $ 3,448.9 $ 4,220.8
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</TABLE>
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ALLIANCE
Under current law, Alliance Capital Management L.P. ("Alliance"), as a
partnership, generally is not subject to Federal income tax. However,
current law also provides that, as a consequence of the public trading of
units representing assignments of beneficial ownership of limited partnership
interests of Alliance ("Units"), Alliance will be treated as a corporation
for Federal income tax purposes beginning on January 1, 1998. Alliance,
Equitable Life and AXA have been examining possible actions, if any, which
might be responsive to this potential change in Alliance's tax status. On
June 24, 1997, Alliance announced plans for a transaction (the
"Transaction"), to be accomplished through a merger expected to be
consummated in December 1997. In connection with such merger, Alliance
Capital Management Corporation II ("ACMC II"), a Delaware corporation, would
become the general partner of Alliance as discussed below and Alliance would
merge with a wholly-owned subsidiary of ACMC II formed for the sole purpose
of consummating the merger, with Alliance as the surviving entity. In such
merger, holders of Units would exchange their existing Units for an equal
number of shares of Class A Common Stock of ACMC II, unless such holders
elected to continue as limited partners in Alliance, which would cease to be
a publicly traded limited partnership as described in the following sentence,
or elected to participate in a cash alternative as described below should
Equitable Life decide to offer such an alternative. Following the
Transaction, the Units would be subject to severe restrictions on
transferability, and Alliance would become a private limited partnership.
Depending on the number of holders of Units who elect not to exchange their
Units for ACMC II Class A Common Stock, the Units may become eligible for
termination of registration under Section 12(b)(4) of the Securities Exchange
Act of 1934. Application would be made to list the ACMC II Class A Common
Stock on the NYSE.
In addition, Equitable Life is considering offering a cash alternative in
the Transaction to allow holders of Units to sell their Units to Equitable Life.
The total cash amount in the Transaction would be limited to approximately $300
million or a lesser amount in order to preserve an adequate float in the ACMC II
Class A Common Stock following the Transaction. Equitable Life has not finally
determined whether to offer a cash alternative in the Transaction, the amount
thereof or the price per Unit it would offer.
Equitable Life intends to vote its Units in favor of the Transaction and to
elect to retain its Units and not exchange them for ACMC II Class A Common
Stock. As part of the Transaction, Alliance Capital Management Corporation, a
subsidiary of Equitable Life, would contribute its 1% general partnership
interest in Alliance to ACMC II in exchange for ACMC II Class B Common Stock and
ACMC II would replace Alliance Capital Management Corporation as the general
partner of Alliance and, as a consequence, would be subject to liabilities of
Alliance as provided by Delaware law. The ACMC II Class B Common Stock would
have sufficient voting power for Alliance Capital Management Corporation to
control ACMC II.
As a result of the Transaction, ACMC II would hold the partnership
interests in Alliance formerly represented by the Units that were exchanged and
would receive its pro rata share of Alliance's earnings and distributions.
Alliance currently expects its distribution policy to remain unchanged and that
ACMC II would pay substantially all of
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the distributions it receives from Alliance, less taxes, as dividends to holders
of its Class A and Class B Common Stock.
Alliance has stated that it would not proceed with plans for the
Transaction if, during 1997, it determines that changes in federal tax law would
make it preferable for Alliance to retain its current ownership form. Tax
legislation now under consideration by the Congress provides for permanent
partnership tax status for certain publicly traded partnerships, including
Alliance, but would subject those partnerships to a new excise tax on gross
income. The Transaction is also subject to customary regulatory approvals,
final approval by the Board of Directors of Alliance Capital Management
Corporation, the approval of Alliance's limited partners and certain other
conditions.
On June 24, 1997 Alliance announced that it would take a non-recurring
non-cash charge of $121 million in the quarter ending June 30, 1997 to reduce
the recorded value of goodwill and contracts associated with Alliance's
acquisition of Cursitor Holdings, L.P. and Cursitor Holdings Limited. Equitable
Life owns approximately 58% of Alliance. The impact of this charge taken by
Alliance on Equitable Life's after-tax consolidated net earnings to be reported
for the quarter ending June 30, 1997 is estimated to be approximately $60
million.
EQUITABLE REAL ESTATE
The previously announced sale of Equitable Real Estate Investment
Management, Inc. (other than its interest in Column Financial, Inc.) and
Equitable Agri-Business, Inc. was completed on June 10, 1997.
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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 under
signed hereunto duly authorized.
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
(Registrant)
By /s/ Stanley B. Tulin
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Name: Stanley B. Tulin
Title: Senior Executive Vice President
and Chief Financial Officer
DATE: July 10, 1997
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