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EXHIBIT 99(h)
WHITE MOUNTAINS INSURANCE GROUP, LTD.
80 South Main Street
Hanover, New Hampshire 03755-2053
October 16, 2000
LEHMAN BROTHERS INC.
3 World Financial Center
New York, NY 10285
LEHMAN COMMERCIAL PAPER INC.
3 World Financial Center
New York, NY 10285
Ladies and Gentlemen:
Reference is made to the CGU Acquisition Co. Senior Secured Credit
Facilities Commitment Letter, dated as of September 24, 2000, and the related
Fee Letter and Summary of Terms and Conditions (collectively, the "COMMITMENT
PAPERS"), by and among Lehman Brothers Inc. ("LBI"), Lehman Commercial Paper
Inc. ("LCPI") and White Mountains Insurance Group, Ltd. ("WMIG"). Terms used but
not defined in this letter agreement have the meanings assigned thereto in the
Commitment Papers.
1. In Section V part (b) of the "Initial Conditions" section to the
Summary of Terms and Conditions (the "TERM SHEET"), reference is made
to a commitment from Berkshire Hathaway Inc. to purchase $175 million
to $300 million of convertible preferred stock of WMIG (the "BERKSHIRE
PREFERRED STOCK") as a part of the financing of the Acquisition. In
Section VI "Negative Covenants" of the Term Sheet, reference also is
made to the commitment from Berkshire Hathaway to purchase convertible
preferred stock of WMIG. This letter agreement serves to confirm our
understanding that each of these sections of the Term Sheet should be,
and hereby are, amended to reflect that the Berkshire Preferred Stock
may be issued by WMIG, Parent or the Borrower, and that the conversion
feature of the Berkshire Preferred Stock may be replaced with a
separate warrant to purchase WMIG common stock.
2. In the second sentence of Section V part (c) of the "Initial
Conditions" section to the Term Sheet, reference is made to the Seller
Note. This letter agreement serves to confirm our understanding that
the Term Sheet should be, and hereby is, amended to reflect that the
Seller Note may be issued by, and therefore may constitute indebtedness
of, WMIG, Parent or the Borrower.
3. In Section VI "Affirmative Covenants" of the Term Sheet, reference
is made to an agreement to either convert the Seller Note to common
stock of the Parent or to refinance the Seller Note. This letter
agreement serves to confirm our understanding that the Term Sheet
should be, and hereby is, amended to reflect
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2
that the Seller Note may be converted into or purchased for common
stock of WMIG, Parent or the Borrower.
4. This letter agreement serves to confirm our understanding that the
Sources and Uses Table, attached hereto as Annex I-B, shall be
substituted for, and shall replace in full, Annex I-B to the Commitment
Papers.
5. This letter agreement serves to confirm our understanding that in
the last sentence of the second to last paragraph of Annex II to the
Term Sheet, the language "dispositions contemplated in clauses (v)
through (viii)" should be, and hereby is, replaced by the language
"dispositions contemplated in clauses (iv) through (vii)".
6. This letter agreement serves to confirm that Lehman Brothers Inc.
and Lehman Commercial Paper Inc. consent to Amendment No. 1 to the
Stock Purchase Agreement, dated as of October 15, 2000.
[Remainder of page left blank intentionally]
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3
This letter agreement may not be amended or any provision
hereof modified except by an instrument, in writing, signed by LBI, LCPI and
WMIG. This letter agreement may be executed in any number of counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one agreement. This letter agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
If the foregoing correctly sets forth our understanding,
please indicate your acceptance of the terms hereof by signing in the
appropriate space below, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
WHITE MOUNTAINS INSURANCE GROUP, LTD.
by: ____________________________
Name:
Title:
Accepted and agreed to as of the date first above written:
LEHMAN BROTHERS INC.
by:_____________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.
by:_____________________
Name:
Title:
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Annex I-B
CGU ACQUISITION CASH BASIS NEEDS AND SOURCES
<TABLE>
<CAPTION>
NEEDS SOURCES
<S> <C>
$2,100 base purchase price $ 250 WTM cash (1)
70 estimated earnings adjustments 400 WTM new equity (1)
(33) CGU LIFE adjustment (estimated) 75 WTM warrants (to BRK)
(8) Soc Gen adjustment (estimated) ------
(68) PILOT adjustment 725 estimated contributed cash
9 Munich Re adjustment ------
------
2,070 estimated adjusted purchase price 321 CGU cash on hand, net
------ 235 CGU subsidiary swap
------
1,100 refinance of existing CGU debt 556 estimated CGU cash
(200) CGU LIFE proceeds (estimated) ------
(120) Soc Gen proceeds (estimated) 225 Acquisition Co preferred, face value $300 (to BRK)
(285) PILOT proceeds 210 sub bridge loan from CGNU ("Seller Note")
------ 1,000 new term debt from third parties
495 estimated adjusted existing debt
------
------
30 estimated expenses $2,716 total sources
100 2001 debt service ======
------ ------
$2,695 total needs $ 21 CUSHION
====== ======
</TABLE>
(1) WTM has $100 million of additional cash which it may use in lieu of new WTM
equity or Acquisition Co preferred. In addition, WTM may increase the
amount of new equity to $450 million (and correspondingly decrease the
amount of WTM cash to $200 million). In any event, the total cash
contributed by WTM and received from the issuance of Acquisition Co
preferred will equal at least $950 million.
