As filed with the Securities and Exchange Commission on June 5,2000
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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
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Date of Report (Date of earliest event reported): June 1, 2000
CHANDLER INSURANCE COMPANY, LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands
(State or jurisdiction of incorporation)
0-15286 N/A
(Commission File Number) (IRS Employer Identification No.)
5th Floor Anderson Square
P.O. Box 1854
Grand Cayman, Cayman Islands B.W.I. N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (345) 949-8177
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Item 5. Other Events
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On June 1, 2000, Brent LaGere, Chairman and CEO of Chandler Insurance
Company, Ltd., issued the following news release:
CHANDLER INSURANCE CHAIRMAN ANNOUNCES PLANS
TO TAKE COMPANY PRIVATE
GRAND CAYMAN, CAYMAN ISLANDS - JUNE 1, 2000 - Brent LaGere, Chairman and CEO
of CHANDLER INSURANCE COMPANY, LTD. (CIC), (NASDAQ: CHANF), a Cayman Island
based insurance holding company, today announced a plan led by senior company
management and key stockholders of the company which would result in CIC
becoming privately held. At the present time, CIC has 4,428,033 shares
issued of which 1,142,625 shares have been rescinded through litigation. The
1,142,625 shares rescinded through litigation, but not yet retired by the
company, are part of an overall court ordered divestiture plan involving
shares owned and controlled by M. J. Moroun and his related companies (the
CenTra group).
Under the going-private plan, approximately 1,200,000 of the remaining
3,285,408 shares would be retired through a reverse stock split. A proposed
price of $10.00 per share would be paid for the 1,200,000 shares (exclusive
of the CenTra group) if the going-private plan is approved by the company's
board of directors and shareholders. Senior management of CIC will present
this proposal at the next regularly scheduled board meeting of CIC on
June 5, 2000.
It is anticipated that the company's board of directors will appoint a
committee consisting of independent directors to assess the transaction, who
will likely engage an investment banking firm to render a fairness opinion.
LaGere stated the reason for the going private transaction is to reduce
corporate expenses and at the same time facilitate and simplify corporate
procedures. Further, LaGere said the focus and strategies of the company
have changed considerably over the past eight years. Currently, CIC, through
an indirect subsidiary, National American Insurance Company (NAICO), writes
primarily commercial business insurance and contract surety bonds. The
company had its initial public offering in June of 1986 and in its early
stages was principally the writer of automobile and general liability for
long-haul trucking concerns nationwide.
The company's indirect subsidiary, NAICO, principally writes all lines of
property-casualty insurance for businesses, including contractors,
manufacturers, retailers, wholesalers and various service industries. In
addition, it has a complete line of property-casualty coverages for political
subdivisions and a contractors surety bond program. As a regional carrier,
its focus is now on Oklahoma and the states contiguous to Oklahoma with a
heavy emphasis on Texas.
NAICO's written premiums reached a high of approximately $206,000,000 when it
primarily wrote long-haul trucking insurance. The company began to diversify
its business in the early 1990's. Its gross written premiums in 1999 totaled
$169,568,733. As a result, CIC does not have the same need for financing or
for a public presence as it did in the past.
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M.J. Moroun's purchase of CIC stock in 1992 (increasing his holdings to
approximately 49% of CIC's shares), the litigation that followed and
resulting divestiture order significantly reduced the shares available for
trading in the open market. LaGere stated that in his opinion, it is clearly
in the best interests of the company to be a private concern as the corporate
and administrative structure can be simplified and expenses can be reduced
accordingly. The company's indirect subsidiary, Chandler (U.S.A.), Inc.
incurred debt of $24 million in July 1999 to repay its direct parent and
facilitate the court ordered divestiture and reacquisition of the Moroun
controlled shares. A court ruled that Moroun's acquisition and continued
holding of the shares were unlawful and a federal court adopted a plan whereby
the company would repurchase them. LaGere said the privatization transaction
will require outside financing which will be provided, in part, by the
management group.
"The state of the entire property-casualty industry reflects a negative
outlook at this point but over time, if expenses can be reduced, the industry
should rebound allowing the company to improve its earnings and meet its debt
obligations," LaGere said. In addition to board and shareholder approval,
the transaction will also be subject to regulatory approval by authorities
regulating CIC and its subsidiaries, including NAICO.
Subject to obtaining the required regulatory approvals and financing, LaGere
expects the transaction to be completed by early Fall but no later than
January of 2001.
CAUTIONARY STATEMENT
Some of the statements made in this News Release, as well as statements made
by the Company in periodic press releases, oral statements made by the
Company's officials to analysts and shareholders in the course of
presentations about the Company and conference calls following earnings
releases, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. Such
factors include, among other things, (i) general economic and business
conditions; (ii) interest rate changes; (iii) competition and regulatory
environment in which the Company operates; (iv) claims frequency; (v) claims
severity; (vi) the number of new and renewal policy applications submitted
by the Company's agents; (vii) the ability of the Company to obtain adequate
reinsurance in amounts and at rates that will not adversely affect its
competitive position; (viii) NAICO's ability to maintain favorable insurance
company ratings; (ix) the ability of the Company and its third party
providers, agents and reinsurers to adequately address year 2000 issues; and
(x) other factors such as the ongoing litigation matters involving a
significant concentration of ownership of common stock.
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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
undersigned.
CHANDLER INSURANCE COMPANY, LTD.
Date: June 5, 2000 By: /s/ Mark C. Hart
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Mark C. Hart
Vice President - Accounting and
Treasurer
(Principal Accounting Officer)
