<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1998
REGISTRATION NO. 333-41633
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MBIA INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT 6399 06-1185706
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
113 KING STREET
ARMONK, NEW YORK 10504
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
LOUIS G. LENZI, ESQ.
MBIA INC.
113 KING STREET
ARMONK, NEW YORK 10504
(914) 273-4545
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
Copies to
ANDREW L. SOMMER, ESQ. RAM D. WERTHEIM, ESQ. ROBERT L. FRIEDMAN, ESQ.
DEBEVOISE & PLIMPTON 875 CAPMAC HOLDINGS INC. 885 SIMPSON THACHER &
THIRD AVENUE NEW YORK, THIRD AVENUE NEW YORK, BARTLETT 425 LEXINGTON
NEW YORK 10022 NEW YORK 10022 AVENUE NEW YORK, NEW
YORK 10017
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and upon
consummation of the transactions described in the enclosed Proxy
Statement/Prospectus.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
MBIA INC.
PROSPECTUS
----------------
CAPMAC HOLDINGS INC.
PROXY STATEMENT
----------------
SUPPLEMENT TO PROXY STATEMENT/PROSPECTUS
DATED DECEMBER 29, 1997
This Supplement (the "Supplement") supplements the Proxy
Statement/Prospectus, dated December 29, 1997 (the "Proxy
Statement/Prospectus"), previously furnished to the stockholders of CapMAC
Holdings Inc., a Delaware corporation ("CapMAC"), relating to the special
meeting of stockholders of CapMAC to be held on February 10th, 1998 (the
"Special Meeting"). As described in the Proxy Statement/Prospectus, at the
Special Meeting the CapMAC stockholders will be asked to consider and act on a
proposal providing for the merger (the "Merger") of CapMAC with and into CMA
Acquisition Corporation, a Delaware corporation ("Sub") and a subsidiary of
MBIA Inc., a Connecticut corporation ("MBIA") in accordance with the terms of
the Agreement and Plan of Merger, dated as of November 13, 1997 (the "Original
Agreement", and, as amended by Amendment No. 1 thereto, dated January 16, 1998
(the "Amendment), the "Merger Agreement"), among MBIA, Sub and CapMAC.
By virtue of the Amendment, the Merger Agreement now provides that each
share of CapMAC Common Stock issued and outstanding immediately prior to the
effective time of the Merger (other than shares held by CapMAC as treasury
stock or owned by MBIA or Sub or any other direct or indirect subsidiary of
MBIA or CapMAC, all of which will be canceled) will be converted into the
right to receive that number of shares of MBIA Common Stock equal to the
quotient (the "Exchange Ratio") determined by dividing $31.00 (rather than
$35.00 as provided in the Original Agreement) by the average of the closing
sales prices of MBIA Common Stock as reported on the NYSE Composite Tape on
each of the fifteen consecutive trading days immediately preceding the third
trading day prior to the effective time of the Merger, rounded to the nearest
1/10,000th. In contrast to the original terms of the Merger, such Exchange
Rate will not be subject to any "collars" in the event of a significant change
in the price of MBIA Common Stock.
This Supplement should be read in conjunction with the information set forth
in the Proxy Statement/Prospectus. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Proxy
Statement/Prospectus. If you wish to receive another copy of the Proxy
Statement/Prospectus, please call CapMAC's Investor Relations Office ((212)
755-1155) or Charles Koons of MacKenzie Partners, Inc. ((212) 929-5500). The
information contained herein with respect to the change in the Exchange Ratio
and the other amendments to the Original Agreement effected by the Amendment
supersedes the description of the Exchange Ratio and related matters in the
Proxy Statement/Prospectus, including under "SUMMARY OF PROXY
STATEMENT/PROSPECTUS--The Proposed Merger", "SUMMARY PRO FORMA PER SHARE AND
OTHER DATA", "RISK FACTORS--Determination of Exchange Ratio", "SELECTED PRO
FORMA FINANCIAL DATA", "THE PROPOSED MERGER--Conversion of Shares", "THE
PROPOSED MERGER--The Merger Agreement--Other Acquisition Proposals; Fees and
Expenses; Termination".
On January , 1998, the most recent practicable date prior to the printing
of this Supplement, the closing price of MBIA Common Stock as reported on the
NYSE Composite Tape was $ per share, and the closing price of CapMAC Common
Stock as reported on the NYSE Composite Tape was $ per share. Based on
approximately 19,959,121 shares of CapMAC Common Stock outstanding as of
December 19, 1997 (on a fully diluted basis) and using an Exchange Ratio of
based on the MBIA Common Stock Price of $ on January , 1998, the most
recent practicable price prior to printing this Supplement, the value of the
aggregate
<PAGE>
consideration that will be issued to CapMAC stockholders in the Merger would
be approximately $ million. The actual value of the consideration issued to
the CapMAC stockholders in the Merger will depend on the Exchange Ratio and
the MBIA Common Stock Price at the Effective Time, STOCKHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR MBIA COMMON STOCK.
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this Supplement and the Proxy
Statement/Prospectus and in documents incorporated therein by reference may be
considered forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, including, without
limitation, (i) the statements in "THE PROPOSED MERGER--CapMAC's Reasons for
the Merger; Recommendation of the CapMAC Board","--Opinion of CapMAC's
Financial Advisor" and "--Plans for CapMAC After the Merger" concerning, among
other things, (a) prospective considerations that the CapMAC Board took into
account in arriving at its respective recommendation in favor of the Merger,
(b) MBIA management's belief with respect to the geographic and strategic fit
of CapMAC with MBIA's existing business and (c) MBIA's plans for consolidating
CapMAC's operations and MBIA management's expectations concerning the time to
complete such consolidation, and (ii) variations in the foregoing statements
whenever they appear in this Supplement and the Proxy Statement/Prospectus and
the documents incorporated therein by reference. Forward-looking statements
are made based upon either MBIA or CapMAC management's current expectations
and beliefs concerning future developments and their potential effects upon
MBIA or CapMAC, respectively. There can be no assurance that future
developments affecting either MBIA or CapMAC will be those anticipated by
their respective managements. Actual results differ materially from those
included in the forward-looking statements. These forward-looking statements
involve risks and uncertainties including, but not limited to, the following:
changes in general economic conditions, including the performance of financial
markets and interest rates; competitive, regulatory, or tax changes that
affect the cost of or demand for MBIA's or CapMAC's products; the uncertainty
inherent in establishing appropriate levels of loss reserves by CapMAC, the
potential reduction in the total estimated present value of future revenues
actually realized by CapMAC by factors such as early termination of insurance
contracts, accelerated prepayments of underlying obligations or lower than
anticipated utilization of insured structured programs, such as commercial
paper conduits; MBIA's failure to achieve anticipated levels of earnings or
operational efficiencies related to recently acquired companies, as well as
other cost-saving initiatives; and difficulties in combining the operations of
MBIA with the operations of CapMAC, and the potential loss of key personnel in
connection with the Merger.
While CapMAC and MBIA each reassess material trends and uncertainties
affecting each company's financial condition and results of operations, in
connection with its preparation of management's discussion and analysis of
financial condition and results of operations contained in each company's
quarterly and annual reports, neither CapMAC nor MBIA intends to review or
revise in light of future events any particular forward-looking statement
referenced in this Supplement and the Proxy Statement/Prospectus or
incorporated therein by reference.
The information referred to above should be considered by CapMAC
stockholders when reviewing any forward-looking statements contained in this
Supplement and the Proxy Statement/Prospectus, in any documents incorporated
therein by reference, in any of CapMAC's or MBIA's public filings or press
releases or in any oral statements made by either CapMAC or MBIA or any of
their respective officers or other persons acting on their behalf. By means of
this cautionary statement, each of CapMAC and MBIA intends to avail itself of
the safe harbor from liability with respect to forward-looking statements that
is provided by Section 27A and Section 21E referred to above.
THE DATE OF THIS SUPPLEMENT TO THE
PROXY STATEMENT/PROSPECTUS IS JANUARY , 1998
2
<PAGE>
CERTAIN AVAILABLE INFORMATION
The Proxy Statement/Prospectus incorporates documents by reference which are
not presented herein or delivered herewith, including, without limitation,
MBIA's current report on Form 8-K dated January 16, 1998 and CapMAC's current
report on Form 8-K dated January 20, 1998. A copy of such documents is
available without charge to any person, including any beneficial owner, to
whom this Supplement and the Proxy Statement/Prospectus is delivered, upon
written or oral request of such person. Requests for such documents relating
to MBIA should be directed to MBIA Inc., 113 King Street, Armonk, New York
10504, Attention: Investor Relations, telephone number (914) 273-4545; and
documents relating to CapMAC should be directed to CapMAC Holdings Inc., 885
Third Avenue, New York, New York 10022, Attention: Investor Relations,
telephone number (212) 755-1155.
TABLE OF CONTENTS
<TABLE>
<S> <C>
CERTAIN AVAILABLE INFORMATION............................................. 3
CERTAIN RECENT DEVELOPMENTS............................................... 4
General................................................................. 4
Background of the Merger Update......................................... 4
Amendment to Merger Agreement........................................... 6
Opinion of CapMAC's Financial Advisor................................... 8
Pro Forma Financial Information Update.................................. 11
Filings and Approvals by Insurance Regulators Update.................... 12
Annex A--Amendment No. 1, dated January 16, 1998 to the Agreement and Plan
of Merger dated as of November 13, 1997
Annex B--Opinion of Salomon Brothers Inc, dated January 16, 1998
</TABLE>
3
<PAGE>
CERTAIN RECENT DEVELOPMENTS
GENERAL
As a result of certain developments described below under "--Background of
the Merger Update", the Original Agreement was amended in several respects.
The amendments include (i) a revised exchange ratio based on $31.00 (rather
than $35.00 as originally provided), (ii) the elimination of the "collar" from
the exchange ratio, (iii) the provision for an $8 million facility fee to be
paid to MBIA if the Original Agreement were terminated under the circumstances
triggering the payment of the $19.4 million Termination Fee, (iv) a 60-day
suspension of CapMAC's ability to provide information to and conduct
negotiations with any potential bidder and (v) a mutual right to terminate the
Merger Agreement if CapMAC's stockholders do not approve the Merger by March
15, 1998. The parties also agreed to amend the definition of "Material Adverse
Effect" in the Original Agreement so that no further adverse developments in
Asia would be considered a Material Adverse Effect for purposes of
preconditions to the Closing. See "--Amendment to Merger Agreement".
BACKGROUND OF THE MERGER UPDATE
In connection with its financial guaranty business, CapMAC's insurance
subsidiary Capital Markets Assurance Corporation ("CapMAC Assurance") has
issued guarantees of the payments due on obligations issued by entities
located in certain Asian countries, with a significant concentration in
government-owned entities in Korea. CapMAC Assurance has also issued
guarantees of the payment obligations on collateralized bond obligations that
were backed by various bonds issued by sovereign and corporate entities
located in emerging market countries, including various Asian countries.
CapMAC Assurance reinsured a portion of its exposure on such policies with
Asian Securitization and Infrastructure Assurance (pte) Ltd. ("ASIA Ltd"), a
Singapore-based bond guarantor specializing in Asian obligations in which
CapMAC has an 11% equity interest. CapMAC has invested $10.4 million in the
equity of ASIA Ltd and has committed to invest an additional $4.9 million of
equity. A subsidiary of CapMAC also provides advice to ASIA Ltd under a
technical assistance agreement. In addition, in a few instances a policy
issued by ASIA Ltd was used to obtain an investment grade rating with respect
to an obligation guaranteed by CapMAC Assurance. At the time that CapMAC
Assurance issued or committed to issue guarantees of Asian obligations and/or
reinsured such guarantees with ASIA Ltd, the countries in which such entities
were located were rated investment grade and ASIA Ltd was rated "A" by
Standard & Poor's Ratings Services Corporation ("S&P") and "AA" by Duff &
Phelps Credit Rating Co.
Between December 21, 1997 and December 31, 1997, due to increasing
instability in the Asian financial markets, S&P and Moody's Investors Service,
Inc. ("Moody's") downgraded to below investment grade the sovereign credit
ratings of various Asian countries, including various countries in which
CapMAC Assurance has exposure. On December 11, 1997 and December 22, 1997, S&P
twice downgraded its rating of Korea's sovereign dollar-denominated
obligations, from "A-" to "B+". Until late October 1997, S&P had rated Korea's
sovereign dollar-denominated obligations "AA-".
As of the date hereof, the net par amount (i.e., the principal amount
guaranteed after giving effect to reinsurance) of direct obligations insured
by CapMAC Assurance in Korea, Indonesia and Thailand, which were downgraded by
S&P, are $425 million, $55 million and $25 million, respectively. In addition,
CapMAC Assurance has reinsured an aggregate of approximately $320 million par
amount of its policies for obligations in Korea, Indonesia and Thailand, of
which $232.5 million has been reinsured with ASIA Ltd CapMAC Assurance has
also reinsured an aggregate of approximately $481 million par amount of its
policies on other investment grade obligations with ASIA Ltd, of which
approximately $214 million is reinsurance for direct investment grade
obligations issued by or on behalf of entities located in China, Hong Kong and
Malaysia. In addition, CapMAC Assurance has relied on two policies issued by
ASIA Ltd in the amounts of $30 million and $40 million, respectively, to
obtain investment grade ratings on obligations insured by CapMAC Assurance.
There have been no claims under any of these policies, the portfolio continues
to perform within expectations and CapMAC's management currently does not
anticipate any claims under such policies.
On January 7, 1998, S&P placed ASIA Ltd on credit watch due to its large
concentration of policies guaranteeing obligations of entities located in
Korea and Indonesia, whose sovereign credit ratings had been
4
<PAGE>
lowered to "B+" and "BB" respectively. S&P indicated that unless ASIA Ltd
arranged by January 15, 1998 to have all of its Korean exposure assumed by a
third party, its rating would be downgraded to "BB". Between January 8 and
January 15, 1998, ASIA Ltd, with the assistance of CapMAC and its other
stockholders, tried to arrange a facility to assume ASIA Ltd's Korean
exposure, but was unable to do so in that short time period. ASIA Ltd is
continuing its efforts to implement a facility that would enable S&P to
restore an investment grade rating. If ASIA Ltd fails to implement such a
facility, its business would be adversely affected and CapMAC's investment in
ASIA Ltd could be impaired.
On January 8, 1998, in connection with its review of the exposure to Asian
countries of all monoline financial guaranty companies, S&P asked CapMAC
Assurance to provide information about its Asian exposure and to submit by
January 16 information about its capital ratios based on certain tests used by
S&P to determine the capital adequacy of financial guaranty companies. The
next day S&P provided to CapMAC the capital ratios that it would be requiring
for Asian obligations in light of the recent downgrades.
On January 15, 1998, S&P downgraded ASIA Ltd's rating to "BB". ASIA Ltd's
downgrading also resulted in corresponding downgrades in some obligations
within CapMAC Assurance's insured portfolio. In addition, S&P advised CapMAC
that in assessing CapMAC Assurance's capital adequacy it would no longer give
any credit for the reinsurance that CapMAC Assurance had received from ASIA
Ltd because such reinsurance was now from a non-investment grade provider.
In response to these developments and CapMAC's concern that S&P might
require CapMAC Assurance to obtain additional capital support, on January 8th
and 9th CapMAC started discussions with third party reinsurers about
participating in a reinsurance facility that would provide CapMAC Assurance
with additional capital support in the event such support were to be required
by S&P. By January 13th, several reinsurers had indicated their willingness to
participate in and/or syndicate such a reinsurance facility, subject to their
evaluation of further information.
On January 14, 1998, CapMAC provided to S&P the requested information about
its capital adequacy, which indicated that after applying the tests used by
S&P to the Asian obligations guaranteed by CapMAC Assurance, as well as those
reinsured by ASIA Ltd, CapMAC Assurance's capital ratios were below the ratios
that S&P indicated were required for a triple-A monoline financial guaranty
company. At the same time, CapMAC informed S&P that it was confident, based on
its discussions with various reinsurers, that within a few days it would be
able to arrange a reinsurance facility that would bring CapMAC Assurance's
capital ratios back into compliance with S&P's requirements.
On the morning of January 15, S&P informed CapMAC that it needed to provide
S&P that same afternoon (when S&P planned to review ASIA Ltd's credit ratings
and CapMAC Assurance's Asian exposure in light of recent events) with
satisfactory assurances for a reinsurance or other capital support facility
that would bring CapMAC Assurance's capital ratios into compliance with S&P's
requirements. Based on its discussions with S&P, CapMAC estimated the amount
of such additional support to be $100 million. Due to its concern that it
would not be able to deliver such assurances in form acceptable to S&P by the
specified deadline, which could result in CapMAC Assurance's ratings being
placed on credit watch, CapMAC called MBIA to ask it to provide the capital
support required by S&P, at least until alternative reinsurance arrangements
could be put in place.
In response to CapMAC's request, MBIA indicated that it would be prepared to
provide a commitment for the necessary additional capital support, but that,
in order to avoid prejudicing its rights under the Original Agreement, MBIA
would do so only if CapMAC would acknowledge that the effect on CapMAC of
CapMAC Assurance's Asian exposure and the imminent action contemplated by S&P
gave MBIA the right to terminate the Original Agreement. CapMAC accepted
MBIA's condition. MBIA then informed S&P that it would provide the required
capital support to CapMAC Assurance, up to $90 million. CapMAC had made
arrangements with other reinsurers for the additional required amount. As a
result, S&P did not take any action with respect to CapMAC Assurance's
ratings.
During a meeting of CapMAC's Board of Directors convened later that
afternoon to report all of these developments to the Board, Moody's called
CapMAC to report that given its concerns about (i) CapMAC
5
<PAGE>
Assurance's Asian exposure, (ii) the possible impact that recent events in
Asia, including S&P's downgrading of ASIA Ltd, could have on CapMAC and (iii)
the fact that such events created some uncertainty about whether the Merger
would in fact be consummated, Moody's was considering immediately placing
CapMAC Assurance on review for possible downgrade. At CapMAC's request,
Moody's gave CapMAC until the next morning for CapMAC and MBIA to affirm that
the Merger would not be affected by these events. Given these developments and
the significant consequences that credit watch status by either Moody's or S&P
could have on CapMAC, the Board of Directors authorized John B. Caouette,
Chairman of the Board, President and Chief Executive Officer of CapMAC, to
commence discussions with David H. Elliott, Chairman of MBIA, that evening to
reaffirm the Merger and renegotiate the terms if necessary.
That evening Messrs. Caouette and Elliott discussed these latest
developments and Moody's request that CapMAC and MBIA reaffirm the Merger. Mr.
Elliott indicated that MBIA was prepared to do so, but that due to the
additional capital that MBIA estimated would be required by S&P to support
CapMAC Assurance's Asian exposure, it could only do so if CapMAC agreed to a
reduction in the Merger Consideration. After deliberating with his advisors,
Mr. Elliott proposed to Mr. Caouette that the exchange ratio be revised so
that the Merger Consideration at the Effective Time would equal $30.50 per
share of CapMAC Common Stock (rather than $35.00 as originally provided) and
that in contrast to the original terms, such exchange ratio would not be
subject to any "collars" in the event of a significant change in the price of
MBIA Common Stock. It was also proposed that MBIA be compensated on some basis
for its commitment to provide the necessary capital support to CapMAC, and
lastly that CapMAC's ability to provide information to and conduct
negotiations with any potential bidder be suspended for a 90-day period.
After further discussions between them and among their respective advisors,
around midnight on January 15, 1998, Messrs. Elliott and Caouette agreed to an
exchange ratio based on $31.00, without any "collars", a facility fee of $8
million in consideration for MBIA's capital support commitment to be paid to
MBIA if the Merger Agreement were terminated under the circumstances
triggering the payment of the $19.4 million Termination Fee, a 60-day
suspension of CapMAC's ability to provide information to and conduct
negotiations with any potential bidder and a mutual right to terminate the
Merger Agreement if CapMAC's stockholders did not approve the Merger by March
15, 1998. The parties also agreed to amend the definition of "Material Adverse
Effect" in the Original Agreement so that no further adverse developments in
Asia would be considered a Material Adverse Effect for purposes of the
preconditions to the Closing.
Early the next morning of January 16, 1998, the Board of Directors of CapMAC
met to consider the revised terms of the Merger. At that meeting, Mr. Caouette
gave the Board the background leading up to the negotiations on January 15,
1998, he and the Company's legal advisors outlined the proposed revisions in
the terms of the Merger and Salomon Brothers discussed financial aspects of
the revised terms. Salomon Brothers rendered its oral opinion, confirmed by a
subsequent written opinion dated the same date, that as of that date the
revised consideration to be received by the holders of CapMAC Common Stock in
the Merger was fair from a financial point of view to such stockholders. After
discussion and consideration, the CapMAC Board voted unanimously (with 1
director not present) to approve the Amendment to the Original Agreement
incorporating these revised terms. Mr. Elliott telephoned each of the members
of the Board of Directors of MBIA early in the morning of January 16, 1998 and
advised them of the previous evening's developments, including the terms of
the Amendment. Each of the members of the Board orally indicated his or her
approval of the Amendment and subsequently executed a unanimous written
consent of the Board approving the Amendment. The Amendment was signed by the
two companies late in the morning of January 16, 1998.
In view of the circumstances outlined above, the CapMAC Board believes that
the revised terms of the Merger are fair to and in the best interests of
CapMAC and its stockholders and recommends that the holders of CapMAC Common
Stock vote FOR approval and adoption of the Merger Agreement.
AMENDMENT TO MERGER AGREEMENT
The following is a brief summary of certain aspects of the amendments to the
Original Agreement. This summary does not purport to be complete and is
qualified in its entirety by reference to the Amendment, a copy
6
<PAGE>
of which is included in this Supplement as Annex A, and the Original
Agreement, a copy of which is included in the Proxy Statement/Prospectus as
Annex A, and which are incorporated herein by reference.
Conversion of Shares
By virtue of the Amendment, the Merger Agreement now provides that each
share of CapMAC Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares held by CapMAC as treasury stock or owned by
MBIA or Sub or any other direct or indirect subsidiary of MBIA or CapMAC, all
of which will be canceled) will be converted into the right to receive that
number of shares of MBIA Common Stock equal to the quotient (the "Exchange
Ratio") determined by dividing $31.00 by the average of the closing sales
prices of MBIA Common Stock as reported on the NYSE Composite Tape on each of
the fifteen consecutive trading days immediately preceding the third trading
day prior to the Effective Time, rounded to the nearest 1/10,000th.
The Original Agreement provided that the numerator in the Exchange Ratio was
$35.00 and that the Exchange Ratio would be .6604 if the MBIA Common Stock
Price was less than $53.00 and .5 if the MBIA Common Stock Price was more than
$70.00 (the "Collar"). By virtue of the Amendment, the numerator in the
Exchange Ratio was lowered from $35 to $31 and the Collar was eliminated.
The table below illustrates the effect of the Amendment on the Exchange
Ratio. BECAUSE THE EXCHANGE RATIO IS DETERMINED BY DIVIDING $31.00 BY THE MBIA
COMMON STOCK PRICE, THE CALCULATION OF WHICH PRICE DEPENDS ON THE EFFECTIVE
TIME OF THE MERGER, THE ACTUAL NUMBER OF SHARES (OR FRACTION OF A SHARE) OF
MBIA COMMON STOCK EXCHANGEABLE IN THE MERGER FOR EACH SHARE OF CAPMAC COMMON
STOCK MAY DIFFER FROM THE NUMBER OF SHARES OF MBIA COMMON STOCK INDICATED IN
THE TABLE. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR MBIA
COMMON STOCK.
ILLUSTRATION OF THE EFFECT OF THE AMENDMENT ON THE EXCHANGE RATIO
<TABLE>
<CAPTION>
EXCHANGE RATIO PRIOR EXCHANGE RATIO SUBSEQUENT
TRADING AVERAGE TO THE AMENDMENT TO THE AMENDMENT
--------------- -------------------- -------------------------
<S> <C> <C>
$45.00........................ .6604 .6889
$55.00........................ .6364 .5636
$65.00........................ .5385 .4769
$75.00........................ .5000 .4133
</TABLE>
Based on the closing price as reported on the NYSE Composite Tape on January
, 1998 for the MBIA Common Stock of $ per share, shareholders of CapMAC
would receive . shares of MBIA Common Stock in exchange for each of their
shares of CapMAC Common Stock.
Definition of Material Adverse Effect
By virtue of the Amendment, the Merger Agreement now provides that the
definition of Material Adverse Effect is any adverse change or effect that is
materially adverse to the financial condition, results of operations, assets,
liabilities or business of a person or on the ability of such person to
perform its obligations hereunder, but shall exclude any change or effect
resulting from any occurrence or condition generally affecting the industry in
which such person and its subsidiaries operate (including without limitation
any change or proposed change in insurance laws or regulations in any
jurisdiction or official interpretations thereof), any occurrence or condition
relating to developments in Asia and any occurrence or condition arising out
of the transactions contemplated by this Agreement or the public announcement
thereof.
The Original Agreement did not include the phrase "excluding any occurrence
or condition relating to developments in Asia".
7
<PAGE>
Other Acquisition Proposals
By virtue of the Amendment, the Merger Agreement now provides that after
March 15, 1998, CapMAC may, directly or indirectly, furnish information and
access, in each case only in response to a written request for such
information or access made after January 16, 1998 by any person which was not
encouraged, solicited or initiated by CapMAC or any of its officers,
directors, employees, representatives or agents after the date of the Original
Agreement, and participate in discussions and negotiate with such person
concerning any Acquisition Proposal, if, and only to the extent that (i) such
person has submitted a bona fide definitive written Acquisition Proposal to
the Board of Directors of CapMAC, (ii) the Board, after consultation with its
independent financial advisors, determines that (x) the person making such
Acquisition Proposal is reasonably capable of completing such Acquisition
Proposal, taking into account the legal, financial, regulatory and other
aspects of such Acquisition Proposal and the person making such Acquisition
Proposal and (y) such Acquisition Proposal involves consideration to CapMAC's
stockholders and other terms and conditions that, taken as a whole, are
superior to the Merger, and (iii) the Board determines in good faith, based
upon the advice of outside counsel to CapMAC, that taking any such action is
necessary for the Board to comply with its fiduciary duty to stockholders
under applicable law.
The Original Agreement provided that CapMAC could take actions described in
the preceding paragraph at any time, and not only after March 15, 1998.
Termination
By virtue of the Amendment, the Merger Agreement now provides that the
Merger Agreement may be terminated and the Merger contemplated thereby may be
abandoned at any time prior to the Effective Time by MBIA or CapMAC if the
CapMAC stockholder approval shall not have been obtained on or before March
15, 1998. The Original Agreement contained no such provision.
Fees and Expenses
By virtue of the Amendment, the Merger Agreement now provides for an
additional fee of $8 million (the "Facility Fee") to be paid to MBIA by CapMAC
in any circumstance under which CapMAC pays to MBIA the Termination Fee of $19
million. The Amendment also provides that, in addition to the other
circumstances under which CapMAC must pay to MBIA the Termination Fee and the
Facility Fee described in the Proxy Statement/Prospectus under "--The Merger
Agreement--Fees and Expenses", if (1) MBIA terminates the Merger Agreement if
the CapMAC stockholder approval shall not have been obtained on or before
March 15, 1998 as described in the preceding paragraph, (2) prior to such
termination an Acquisition Proposal shall have been publicly announced (other
than an Acquisition Proposal made prior to the date of the Original Agreement)
and (3) within six months thereafter, (A) CapMAC enters into a definitive
agreement with respect to an Acquisition Proposal or an Acquisition Proposal
is consummated involving any party (x) with whom CapMAC had any discussions
with respect to an Acquisition Proposal, (y) to whom CapMAC furnished
information with respect to or with a view to an Acquisition Proposal or (z)
who had submitted a proposal or expressed any interest publicly in an
Acquisition Proposal, in the case of each of clauses (x), (y) and (z), prior
to such termination, or (B) CapMAC enters into a definitive agreement with
respect to a Superior Proposal, or a Superior Proposal is consummated, then,
in the case of either (A) or (B) above, CapMAC shall pay the Termination Fee
and the Facility Fee upon the earlier of the execution of such agreement or
upon consummation of such Acquisition Proposal or Superior Proposal.
OPINION OF CAPMAC'S FINANCIAL ADVISOR
In connection with the Amendment, Salomon Brothers was requested to render
an opinion as to the fairness, from a financial point of view, to the holders
of CapMAC Common Stock of the revised consideration to be received by such
holders in the Merger. Salomon Brothers rendered an opinion to the CapMAC
Board on January 16, 1998 to the effect that, based upon and subject to the
considerations set forth in such opinion, as of such date, the consideration
to be received by the holders of CapMAC Common Stock in the Merger was fair to
such holders from a financial point of view.
8
<PAGE>
The full text of Salomon Brothers' January 16, 1998 fairness opinion, which
sets forth the assumptions made, general procedures followed, matters
considered and limits on the review undertaken, is included as Annex B to this
Supplement. The summary of Salomon Brothers' opinion set forth below is
qualified in its entirety by reference to the full text of such opinion.
STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE OPINION IN ITS ENTIRETY.
In connection with rendering its opinion, Salomon Brothers reviewed and
analyzed, among other things, the following: (i) the Original Agreement,
including the Exhibits and Schedules thereto; (ii) the Amendment; (iii)
certain publicly available information concerning CapMAC, including the Annual
Reports on Form 10-K of CapMAC for each of the years in the two year period
ended December 31, 1996 and the Quarterly Reports on Form 10-Q of CapMAC for
each of the quarters from March 31, 1996 through September 30, 1997; (iv)
certain internal information, primarily financial in nature, including
projections, concerning the business and operations of CapMAC furnished to
Salomon Brothers by CapMAC for purposes of its analysis; (v) certain other
information concerning the properties, investments, capital requirements,
business and operations of CapMAC and the impact thereon of recent
developments, particularly the credit agency downgrading to below investment
grade of the sovereign credit ratings of various Asian countries, including
various countries in which CapMAC Assurance has exposure, and of ASIA Ltd, a
bond guarantor specializing in Asian obligations in which CapMAC has an 11%
equity interest, and the corresponding downgrade in selected underlying
ratings within CapMAC Assurance's insured portfolio; (vi) statutory financial
information of CapMAC's insurance subsidiaries for the years ended December
31, 1995 and December 31, 1996 and for the three month periods ended March 31,
1997, June 30, 1997 and September 30, 1997; (vii) certain publicly available
information concerning the trading of, and the trading market for, CapMAC
Common Stock; (viii) certain publicly available information concerning MBIA,
including the Annual Reports on Form 10-K of MBIA for each of the years in the
three year period ended December 31, 1996 and the Quarterly Reports on Form
10-Q of MBIA for each of the quarters in the two year period ended September
30, 1997; (ix) certain other internal information, primarily financial in
nature, including projections, concerning the business and operations of MBIA
furnished to Salomon Brothers by MBIA for purposes of its analysis; (x)
statutory financial information of MBIA's insurance subsidiaries for the years
ended December 31, 1995 and December 31, 1996 and for the three month periods
ended March 31, 1997, June 30, 1997 and September 30, 1997; (xi) certain
publicly available information concerning the trading of, and the trading
market for, the MBIA Common Stock; (xii) certain publicly available
information with respect to certain other companies that Salomon Brothers
believed to be comparable to CapMAC and to MBIA, and the trading markets for
certain of such other companies' securities; and (xiii) certain publicly
available information concerning the nature and terms of certain other
transactions that Salomon Brothers considered relevant to its inquiry. Salomon
Brothers had also been advised that CapMAC was informed by the ratings
agencies that it was likely to have its credit ratings put on review for
possible downgrade as a result of recent developments, particularly related to
the exposure of CapMAC Assurance's insured portfolio for securities issued by
recently downgraded Asian issuers, in the absence of additional capital
support. Salomon Brothers also considered such other information, financial
studies, analyses, investigations and financial, economic and market criteria
that it deemed relevant. Salomon Brothers also met with certain officers and
employees of CapMAC and MBIA to discuss the foregoing as well as other matters
Salomon Brothers believed relevant to its inquiry.
In its review and analysis and in arriving at its opinion, Salomon Brothers
assumed and relied upon the accuracy and completeness of all of the financial
and other information provided to it or publicly available and neither
attempted independently to verify nor assumed responsibility for verifying any
of such information and further relied upon the assurances of management of
CapMAC that they are not aware of any facts that would make any of such
information inaccurate or misleading. Salomon Brothers did not conduct a
physical inspection of any of the properties or facilities of CapMAC or MBIA,
nor did it make or obtain or assume any responsibility for making or obtaining
any independent evaluations or appraisals of any of such properties or
facilities. With respect to projections, Salomon Brothers assumed that they
had been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the managements of CapMAC and MBIA, respectively,
as to the respective future financial performance of CapMAC and MBIA. Salomon
Brothers expressed no view with respect to such projections or the assumptions
on which they were based. Salomon Brothers further assumed that
9
<PAGE>
the conditions precedent to the Merger contained in the Merger Agreement will
be satisfied and the Merger will be consummated in accordance with the terms
of the Merger Agreement.
In conducting its analysis and arriving at its January 16, 1998 opinion,
Salomon Brothers considered such financial and other factors as it deemed
appropriate under the circumstances including, among others, the following:
(i) the historical and current financial position and results of operations of
CapMAC and MBIA; (ii) the business prospects of CapMAC and MBIA, including,
with respect to CapMAC Assurance, the impact of recent developments in Asia
affecting its insured portfolio exposure and capital requirements and the
likelihood that its credit ratings would be put on review for a possible
downgrade as a result thereof; (iii) the historical and current market for
CapMAC Common Stock, the MBIA Common Stock and the equity securities of
certain other companies that Salomon Brothers believed to be comparable to
CapMAC or MBIA, and the potential market performance of CapMAC Common Stock as
a result of a likely review of, and possible downgrade in, the credit ratings
of CapMAC Assurance in the absence of additional capital support; and (iv) the
nature and terms of certain other acquisition transactions that Salomon
Brothers believed to be relevant. Salomon Brothers also took into account its
assessment of general economic, market and financial conditions as well as its
experience in connection with similar transactions and securities valuation
generally. Salomon Brothers' opinion necessarily was based upon conditions as
they existed and could be evaluated on the date thereof and Salomon Brothers
assumed no responsibility to update or revise its opinion based upon
circumstances or events occurring after such date. Salomon Brothers' opinion
does not constitute an opinion or imply any conclusions as to the likely
trading range for the MBIA Common Stock following consummation of the Merger.
Salomon Brothers' opinion was for the sole benefit of the CapMAC Board in its
consideration of the Merger and the Amendment and was, in any event, limited
to the fairness, from a financial point of view, of the consideration to be
received by the holders of CapMAC Common Stock in the Merger and does not
address CapMAC's underlying business decision to effect the Merger or
constitute a recommendation to any holder of Company Common Stock as to how
such holder should vote with respect to the Merger.
Salomon Brothers has advised the CapMAC Board that, based on an express
disclaimer in the Engagement Letter, Salomon Brothers does not believe that
any person (including a stockholder of CapMAC), other than CapMAC or the
CapMAC Board, has a legal right to rely upon its fairness opinion to support
any claims against Salomon Brothers arising under applicable state law and
that, should any such claims be brought against Salomon Brothers by any such
person, this assertion will be raised as a defense. In the absence of
applicable state law authority, the availability of such a defense will be
resolved by a court of competent jurisdiction. Resolution of the question of
the availability of such a defense, however, will have no effect on the rights
and responsibilities of the CapMAC Board under applicable state law. Nor would
the availability of such a state law defense to Salomon Brothers have any
effect on the rights and responsibilities of either Salomon Brothers or the
CapMAC Board under the federal securities laws.
In connection with its opinion dated January 16, 1998, Salomon Brothers
updated certain of the analyses performed in connection with its prior opinion
delivered on November 13, 1997, as described in the Proxy
Statement/Prospectus, and reviewed the assumptions on which such analyses were
based and the factors considered in connection therewith. Salomon Brothers
analyzed the impact of recent developments in Asia affecting CapMAC
Assurance's insured portfolio exposure and additional capital requirements, as
well as the potential impact on its investment in ASIA Ltd. In that
connection, based upon management's estimate of the additional capital that
could be required to be maintained by CapMAC as a result of those
developments, Salomon Brothers calculated the aggregate potential cost to
CapMAC of such additional capital. Salomon Brothers calculated an aggregate
loss in value per share of CapMAC Common Stock resulting from such recent
developments ranging from $2.86 per share to $5.33 per share. In light of this
diminution in the implied value of the shares of CapMAC Common Stock derived
from the various analyses performed by Salomon Brothers, as noted above,
Salomon Brothers confirmed its opinion, based upon and subject to the
considerations set forth in the January 16, 1998 written opinion included with
this Supplement, that the consideration to be received by the holders of
CapMAC Common Stock in the Merger was fair to such holders, from a financial
point of view, as of such date.
10
<PAGE>
PRO FORMA FINANCIAL INFORMATION UPDATE
The following table presents selected financial data of MBIA and CapMAC, on
a pro forma basis, giving effect to the revised Exchange Ratio. This section
supersedes the information provided in the Proxy Statement/Prospectus under
"SUMMARY PRO FORMA PER SHARE AND OTHER DATA" and "SELECTED PRO FORMA FINANCIAL
DATA". Pro forma data was derived by combining the historical financial
statements of MBIA with CapMAC's historical financial information, giving
effect to the Merger using the "pooling of interests" method of accounting.
Pro forma income statement-related per share amounts have been prepared as
if the Merger had occurred at the beginning of the earliest period presented.
These amounts do not include non-recurring items directly attributable to the
Merger, including change in control costs and fees for investment bankers,
accountants, and attorneys, or to MBIA's estimate of the expected annual
operating expense savings from the Merger. Pro forma book value per share
amounts have been prepared as if the Merger had occurred at the beginning of
the earliest period presented and do not include the effect of additional
shares that may be issued as a result of the exercise of CapMAC stock options.
The information set forth below should be read in conjunction with the
respective audited and unaudited consolidated financial statements and notes
thereto of MBIA and CapMAC, which are incorporated herein by reference. Pro
forma balance sheets and income statement are not presented herein since
CapMAC does not fall within the definition of a "significant business" as
defined in Rule 11-01(b) of Regulation S-X.
The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred if the Merger had been consummated on the date indicated,
nor is it necessarily indicative of future operating results or financial
position.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Insurance:
Gross premiums
written.............. $ 386.3 $ 504.2 $ 405.5 $ 406.0 $ 533.5 $ 385.5 $ 439.8
Net premiums written.. 349.5 453.1 345.2 344.9 463.5 338.7 376.7
Premiums earned....... 175.1 248.8 241.4 244.3 292.3 215.9 256.5
Advisory fees and
other income......... 1.1 4.9 11.3 17.0 27.1 21.3 17.9
Net investment
income............... 160.5 189.1 204.2 232.7 265.5 196.0 221.4
Net realized gains.... 10.0 11.2 10.2 12.7 9.9 9.8 11.8
Income before income
taxes and minority
interest.............. 254.4 342.0 354.3 379.7 456.0 342.9 385.1
Net income............. 196.6 271.5 277.3 294.9 355.8 267.2 300.6
PER SHARE DATA(1):
Earnings(2)............ $ 2.24 $ 2.98 $ 3.06 $ 3.25 $ 3.75 $ 2.82 $ 3.11
Dividends declared..... 0.38 0.47 0.57 0.66 0.73 0.54 0.58
Book value(2).......... 17.24 19.96 21.27 27.54 29.68 28.42 33.42
BALANCE SHEET DATA:
Investments............ $ 2,701.2 $ 3,734.7 $ 5,069.4 $ 6,937.1 $ 8,008.0 $ 7,549.4 $ 8,578.6
Total assets........... 3,233.9 4,319.3 5,700.8 7,658.8 9,019.2 8,382.4 9,897.7
Deferred premium
revenue............... 1,202.2 1,412.9 1,538.1 1,662.1 1,854.2 1,795.3 1,989.6
Loss and loss
adjustment expense
reserve............... 28.4 37.5 45.3 49.0 70.3 61.2 88.6
Long-term debt......... 313.6 313.7 313.8 388.9 389.0 389.0 488.8
Shareholders' equity... 1,536.8 1,767.8 1,885.4 2,510.8 2,790.1 2,660.8 3,248.4
SELECTED FINANCIAL
RATIOS:
GAAP Basis(3)(5):
Loss ratio............ 3.7% 3.5 % 3.9% 5.6% 6.9% 6.4% 6.8 %
Expense ratio......... 36.5% 31.2 % 32.8% 34.4% 32.1% 32.6% 30.5 %
Combined ratio........ 40.2% 34.7 % 36.7% 40.0% 39.0% 39.0% 37.3 %
SAP Basis(4)(5):
Loss ratio............ 2.2% (3.3)% 8.7% 0.4% 1.7% 1.9% (0.2)%
Expense ratio......... 23.0% 22.0 % 28.3% 27.2% 22.6% 23.0% 22.1 %
Combined ratio........ 25.2% 18.7 % 37.0% 27.6% 24.3% 24.9% 21.9 %
OTHER FINANCIAL DATA--
NET INSURANCE IN FORCE:
Net par amount
outstanding........... $116,134.0 $146,992.8 $173,714.9 $201,263.9 $252,899.1 $235.085.4 $291,002.4
Net debt service
outstanding........... 227,989.1 273,630.3 315,339.6 359,175.2 434,417.1 408,352.4 493,643.4
</TABLE>
- -------
(1) Per share amounts have been restated to reflect MBIA's 2-for-1 stock split
in October 1997.
(2) Assumes an MBIA Common Stock Price of $67 1/16, the closing price on
January 16, 1998, and an Exchange Ratio of .4623.
(3) The GAAP loss ratio is the provision for losses and loss adjustment
expenses divided by net premiums earned, and the GAAP expense ratio is
underwriting expenses (adjusted for deferred policy acquisition costs) and
operating expenses (excluding interest expense) divided by net premiums
earned, in each case calculated in accordance with generally accepted
accounting principles. The combined ratio is the total of the loss and
expense ratios (see Note 2 to the Consolidated Financial Statements of
MBIA Inc. and Subsidiaries included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (the "1996 Form 10-K") which is
incorporated herein by reference).
(4) The SAP loss ratio is the provision for losses and loss adjustment
expenses divided by net premiums earned, and the SAP expense ratio is
underwriting expenses divided by net premiums written, in each case
calculated in accordance with statutory accounting practices. The combined
ratio is the total of the loss and expense ratios.
(5) For a discussion of the principal differences between GAAP and SAP
accounting, see Note 3 to the Consolidated Financial Statements of MBIA
Inc. and Subsidiaries included in the 1996 Form 10-K.
11
<PAGE>
FILINGS AND APPROVAL BY INSURANCE REGULATORS UPDATE
Before the Merger can be effected, the prior approval of the New York
Insurance Department and the Commission de Controle des Assurances de France
("Commission des Assurances") must be obtained. MBIA has made the necessary
filings with the aforementioned insurance regulatory authorities to obtain
such approvals and is prepared to make any additional filings where necessary.
While the parties are still awaiting notification of approval from the New
York Insurance Department and the Commission des Assurance, the responses of
such agencies are expected to be received shortly after the Special Meeting.
12
<PAGE>
ANNEX A
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1, dated January 16, 1998, to AGREEMENT AND PLAN OF MERGER,
dated as of November 13, 1997 (the "Original Agreement", and as so amended,
the "Agreement"), among MBIA INC., a Connecticut corporation ("Parent"), CMA
ACQUISITION CORPORATION, a Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and CAPMAC HOLDINGS INC., a Delaware corporation (the
"Company").
WHEREAS, the Company, Parent and Sub have entered into the Original
Agreement;
WHEREAS, the Company, Parent and Sub now wish to amend the Original
Agreement as hereinafter provided;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
1. The preamble to the Original Agreement is hereby amended to read in
its entirety as follows:
AGREEMENT AND PLAN OF MERGER, dated as of November 13, 1997, as
amended by Amendment No. 1 thereto, dated January 16, 1998 (as so
amended, the "Agreement"), among MBIA INC., a Connecticut corporation
("Parent"), CMA ACQUISITION CORPORATION, a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and CAPMAC HOLDINGS INC., a
Delaware corporation (the "Company").
2. The second sentence of Section 1.6(a) of the Original Agreement is
hereby amended to read in its entirety as follows:
For purposes of this Agreement, "Exchange Ratio" means $31.00 divided
by the Parent Common Stock Price (as defined below), rounded to the
nearest 1/10,000.
3. The second paragraph of Section 2.1 of the Original Agreement is
hereby amended to read in its entirety as follows:
As used in this Agreement, "Material Adverse Effect" means any
adverse change or effect that is materially adverse to the financial
condition, results of operations, assets, liabilities or business of a
person or on the ability of such person to perform its obligations
hereunder, but shall exclude any change or effect resulting from any
occurrence or condition generally affecting the industry in which such
person and its subsidiaries operate (including without limitation any
change or proposed change in insurance laws or regulations in any
jurisdiction or official interpretations thereof), any occurrence or
condition relating to developments in Asia and any occurrence or
condition arising out of the transactions contemplated by this
Agreement or the public announcement thereof.
4. The second sentence of Section 5.4(b) of the Original Agreement shall
be amended to read in its entirety as follows:
Notwithstanding the foregoing, the Company may, at any time after
March 15, 1998, directly or indirectly, furnish information and access,
in each case only in response to a written request for such information
or access made after the date hereof by any person which was not
encouraged, solicited or initiated by the Company or any of its
officers, directors, employees, representatives or agents after the
date hereof, and participate in discussions and negotiate with such
person concerning any Acquisition Proposal, if, and only to the extent
that (i) such person has submitted a bona fide definitive written
Acquisition Proposal to the Board of Directors of the Company, (ii) the
Board, after consultation with
A-1
<PAGE>
its independent financial advisors, determines that (x) the person
making such Acquisition Proposal is reasonably capable of completing
such Acquisition Proposal, taking into account the legal, financial,
regulatory and other aspects of such Acquisition Proposal and the
person making such Acquisition Proposal and (y) such Acquisition
Proposal involves consideration to the Company's stockholders and other
terms and conditions that, taken as a whole, are superior to the Merger
(a proposal described in this clause (ii), a "Superior Proposal"), and
(iii) the Board determines in good faith, based upon the advice of
outside counsel to the Company, that taking any such action is
necessary for the Board to comply with its fiduciary duty to
stockholders under applicable law.
5. Section 7.1(b) of the Original Agreement is hereby amended by deleting
the word "or" where it appears at the end of clause (ii) thereof, replacing
the period at the end of clause (iii) thereof with "; or", and by adding a
new clause (iv) thereto reading as follows:
(iv) if the Company Stockholder Approval shall not have been obtained
on or before March 15, 1998.
6. Section 7.1(d) of the Original Agreement is hereby amended to read in
its entirety as follows:
(d) By the Company in accordance with Section 5.4; provided that such
termination under this clause (d) shall not be effective until the
Company has made payment of the Termination Fee and the Facility Fee
required by Section 7.3.
7. Section 7.3(a) of the Original Agreement is hereby amended to read in
its entirety as follows:
(a) The Company shall pay, or cause to be paid, in same day funds to
Parent $19.4 million (the "Termination Fee") and $8 million (the
"Facility Fee") under the circumstances and at the times set forth as
follows:
(i) if Parent terminates this Agreement pursuant to Section 7.1(c)
hereof, the Company shall pay the Termination Fee and the Facility
Fee upon demand;
(ii) if the Company terminates this Agreement pursuant to Section
7.1(d) hereof, the Company shall pay the Termination Fee and the
Facility Fee concurrently therewith;
(iii) if (1) Parent terminates this Agreement pursuant to Section
7.1(b)(iii), 7.1(b)(iv) or 7.1(e) and (2) prior to such termination
an Acquisition Proposal shall have been publicly announced (other
than an Acquisition Proposal made prior to the date hereof) and (3)
within six months thereafter, (A) the Company enters into a
definitive agreement with respect to an Acquisition Proposal or an
Acquisition Proposal is consummated involving any party (x) with
whom the Company had any discussions with respect to an Acquisition
Proposal, (y) to whom the Company furnished information with respect
to or with a view to an Acquisition Proposal or (z) who had
submitted a proposal or expressed any interest publicly in an
Acquisition Proposal, in the case of each of clauses (x), (y) and
(z), prior to such termination, or (B) the Company enters into a
definitive agreement with respect to a Superior Proposal, or a
Superior Proposal is consummated, then, in the case of either (A) or
(B) above, the Company shall pay the Termination Fee and the
Facility Fee upon the earlier of the execution of such agreement or
upon consummation of such Acquisition Proposal or Superior Proposal.
8. This Amendment shall be governed by the laws of the State of Delaware
(regardless of the laws that might otherwise govern under applicable
principles of conflicts of law) as to all matters, including, but not
limited to, matters of validity, construction, effect, performance and
remedies.
9. Except as expressly provided in this Amendment, the Original Agreement
shall continue in full force and effect in accordance with the provisions
thereof.
10. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
A-2
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first above written.
MBIA INC.
By: /s/ David H. Elliott
----------------------------------
Name: David H. Elliott
Title: Chairman
CMA ACQUISITION CORPORATION
By: /s/ David H. Elliott
----------------------------------
Name: David H. Elliott
Title: President
CAPMAC HOLDINGS INC.
By: /s/ Ram D. Wertheim
----------------------------------
Name: Ram D. Wertheim
Title: Managing Director and
General Counsel
A-3
<PAGE>
SALOMON BROTHERS INC ANNEX B
Seven World Trade Center
New York, New York 10048
212-783-7000
-----------------
SALOMON BROTHERS
---------------------
- --------------------------------------------------------------------------------
SALOMON BROTHERS INC & WORLDWIDE AFFILIATES
- --------------------------------------------------------------------------------
Atlanta . Bangkok . Beijing . Boston . Chicago . Frankfurt . Hong Kong . London
. Los Angeles . Madrid . Melbourne . Mexico . Milan . Moscow . New Delhi . New
York . Osaka . Paris . San Francisco . Seoul . Singapore . Sydney . Taipei .
Tokyo . Toronto . Zug . Zurich
January 16, 1998
Board of Directors
CapMAC Holdings Inc.
885 Third Avenue
New York, New York 10022
Members of the Board:
You have requested our opinion as investment bankers as to the fairness, from
a financial point of view, to the holders of shares of common stock, par value
$.01 per share (the "Company Common Stock"), of CapMAC Holdings Inc. (the
"Company") of the consideration to be received by such stockholders in the
revised proposed merger (the "Proposed Merger") of the Company with MBIA Inc.
("MBIA") pursuant to the Agreement and Plan of Merger (the "Agreement"), dated
as of November 13, 1997, among MBIA, CMA Acquisition Corporation ("Acquisition
Sub") and the Company, as amended by Amendment No. 1 (the "Amendment"), dated
January 16, 1998, to the Agreement, among MBIA, Acquisition Sub and the Company
(as so amended, the "Amended Agreement").
As more specifically set forth in the Amended Agreement, in the Proposed
Merger Acquisition Sub will be merged into the Company and each issued and
outstanding share of the Company Common Stock will be converted into the right
to receive shares of common stock, $1 par value, of MBIA ("MBIA Common Stock")
valued at $31.00, based on the Average Closing Price (as defined below) of MBIA
Common Stock. As used herein, the Average Closing Price shall mean the average
of the closing sale prices of MBIA Common Stock on the New York Stock Exchange
Composite Transactions Tape as reported by The Wall Street Journal on each of
the 15 consecutive trading days immediately preceding the third trading day
prior to the effective time of the Proposed Merger.
As you are aware, Salomon Brothers Inc has acted as financial advisor to the
Company in connection with the Proposed Merger and will receive a fee for our
services, a substantial portion of which is contingent upon consummation of the
Proposed Merger. Additionally, Salomon Brothers Inc has previously rendered
certain investment banking and financial services to the Company and MBIA, for
which we received customary compensation. In addition, in the ordinary course
of our business, we actively trade the debt and equity securities of both the
Company and MBIA for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) the Agreement, including the Exhibits
and Schedules thereto; (ii) the Amendment; (iii) certain publicly available
information concerning the Company, including the Annual Reports on Form 10-K
of the Company for each of the years in the two year period ended December 31,
1996 and the Quarterly Reports on Form 10-Q of the Company for each of the
quarters from March 31, 1996 through September 30, 1997; (iv) certain other
internal information, primarily financial in nature, including projections,
concerning the business and operations of the Company furnished to us by the
Company for purposes of our analysis; (v) certain other information concerning
the properties, investments, capital requirements, business and operations of
the
<PAGE>
Company and the impact thereon of recent developments, particularly the credit
agency downgrading to below investment grade of the sovereign credit ratings
of various Asian countries, including various countries in which the Company
has exposure, and of Asian Securitization and Infrastructure Assurance (pte)
Ltd, a bond guarantor specializing in Asian obligations in which the Company
has an 11% equity interest, and the corresponding downgrade in selected
underlying ratings within the Company's insured portfolio; (vi) statutory
financial information of the Company's insurance subsidiaries for the years
ended December 31, 1995 and December 31, 1996 and for the three month periods
ended March 31, 1997, June 30, 1997 and September 30, 1997; (vii) certain
publicly available information concerning the trading of, and the trading
market for, the Company Common Stock; (viii) certain publicly available
information concerning MBIA, including the Annual Reports on Form10-K of MBIA
for each of the years in the three year period ended December 31, 1996 and the
Quarterly Reports on Form 10-Q of MBIA for each of the quarters in the two
year period ended September 30, 1997; (ix) certain other internal information,
primarily financial in nature, including projections, concerning the business
and operations of MBIA furnished to us by MBIA for purposes of our analysis;
(x) statutory financial information of MBIA's insurance subsidiaries for the
years ended December 31, 1995 and December 31, 1996 and for the three month
periods ended March 31, 1997, June 30, 1997 and September 30, 1997; (xi)
certain publicly available information concerning the trading of, and the
trading market for, the MBIA Common Stock; (xii) certain publicly available
information with respect to certain other companies that we believe to be
comparable to the Company and to MBIA, and the trading markets for certain of
such other companies' securities; and (xiii) certain publicly available
information concerning the nature and terms of certain other transactions that
we consider relevant to our inquiry. We have also been advised that the
Company was informed by the rating agencies that it was likely to have its
credit ratings put on review for possible downgrade as a result of recent
developments, particularly related to the exposure of the Company's insured
portfolio for securities issued by recently downgraded Asian issuers, in the
absence of additional capital support. We have also considered such other
information, financial studies, analyses, investigations and financial,
economic and market criteria that we deemed relevant. We have also met with
certain officers and employees of the Company and MBIA to discuss the
foregoing as well as other matters we believe relevant to our inquiry.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and
other information provided us or publicly available and have neither attempted
independently to verify nor assumed responsibility for verifying any of such
information and have further relied upon the assurances of management of the
Company that they are not aware of any facts that would make any of such
information inaccurate or misleading. We have not conducted a physical
inspection of any of the properties or facilities of the Company or MBIA, nor
have we made or obtained or assumed any responsibility for making or obtaining
any independent evaluations or appraisals of any of such properties or
facilities. With respect to projections, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of the Company and MBIA as to the respective
future financial performance of the Company and MBIA and we express no view
with respect to such projections or the assumptions on which they were based.
We further have assumed that the conditions precedent to the Proposed Merger
contained in the Amended Agreement will be satisfied and the Proposed Merger
will be consummated in accordance with the terms of the Amended Agreement.
In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following:
(i) the historical and current financial position and results of operations of
the Company and MBIA; (ii) the business prospects of the Company and MBIA,
including, with respect to the Company, as a result of the impact of recent
developments in Asia affecting its insured portfolio exposure and capital
requirements and the likelihood that its credit ratings would be put on review
for a possible downgrade as a result thereof; (iii) the historical and current
market for the Company Common Stock, the MBIA Common Stock and the equity
securities of certain other companies that we believe to be comparable to the
Company or MBIA, and the potential market performance of the Company Common
Stock as a result of a likely review of, and possible downgrade in, the credit
ratings of the Company in the absence of additional capital support; and (iv)
the nature and terms of certain other acquisition transactions that we believe
to be relevant. We have also taken into account
B-2
<PAGE>
our assessment of general economic, market and financial conditions as well as
our experience in connection with similar transactions and securities
valuation generally. Our opinion necessarily is based upon conditions as they
exist and can be evaluated on the date hereof and we assume no responsibility
to update or revise our opinion based upon circumstances or events occurring
after the date hereof. Our opinion as expressed below does not constitute an
opinion or imply any conclusions as to the likely trading range for the MBIA
Common Stock following consummation of the Proposed Merger. Our opinion is, in
any event, limited to the fairness, from a financial point of view, of the
consideration to be received by the holders of the Company Common Stock in the
Proposed Merger and does not address the Company's underlying business
decision to effect the Proposed Merger or constitute a recommendation to any
holder of Company Common Stock as to how such holder should vote with respect
to the Proposed Merger.
This opinion is intended solely for the benefit of the Board of Directors of
the Company in considering the transaction to which it relates and may not be
used for any other purpose or reproduced, disseminated, quoted or referred to
at any time, in any manner or for any purpose, without the prior written
consent of Salomon Brothers Inc, except that this opinion may be reproduced in
full in, and references to the opinion and to Salomon Brothers Inc and its
relationship with the Company (in each case in such form as Salomon Brothers
Inc shall approve) may be included in, the proxy statement the Company
distributes to holders of Company Common Stock in connection with the Proposed
Merger and in the registration statement on Form S-4 filed by MBIA of which
such proxy statement forms a part.
Based upon and subject to the foregoing, we are of the opinion as investment
bankers that, as of the date hereof, the consideration to be received by the
holders of the Company Common Stock in the Proposed Merger is fair, from a
financial point of view, to such holders.
Very truly yours,
Salomon Brothers Inc
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
MBIA was incorporated under the laws of the State of Connecticut in 1986.
Section 33-771 of the Connecticut Business Corporation Act (the "CBCA") states
that, unless its certificate of incorporation otherwise provides, a
Corporation formed under Connecticut law prior to January 1, 1997 shall
indemnify under Sections 33-770 to 33-778, inclusive, as amended, a director
to the same extent the corporation is permitted to provide the same to a
director pursuant to Section 33-771(a)(1), (b), (c) and (d). The obligation to
indemnify is subject to certain limitations set forth in Section 33-775 of the
CBCA, which require a determination in each case, in the manner set forth in
Section 33-775, that indemnification of the director is permissible and
authorized. Under Section 33-774 of the CBCA, a director may also apply to a
court of competent jurisdiction for indemnification. Section 33-776(d) of the
CBCA provides that a corporation incorporated under Connecticut law prior to
January 1, 1997 shall also indemnify each of its officers who is not a
director to the same extent as the corporation is permitted to provide the
same to a director under Section 33-771(a)(1), (b), (c) and (d), as limited by
Section 33-775. The general counsel or other officers specified by the Board
of Directors may make the determination required by Section 33-775, in
addition to the persons specified in that Section.
In general, Section 33-771 provides that a corporation may indemnify an
individual made a party to a proceeding because he is a director against
liability incurred in the proceeding if: (1) (A) he conducted himself in good
faith; (B) he reasonably believed (i) in the case of conduct in his official
capacity, that his conduct was in the best interests of the corporation and
(ii) in all other cases, that his conduct was at least not opposed to the best
interests of the corporation; and (C) in the case of any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful; or (2) he
engaged in conduct for which broader indemnification has been made permissible
or obligatory under a provision of the certificate of incorporation as
authorized by Section 33-636(b)(5) of the CBCA. Sections 33-772 and 33-773 of
the CBCA require or permit a corporation, in certain circumstances and subject
to certain limitations set forth therein, to also indemnify a director against
reasonable expenses incurred in such a proceeding.
Section 33-771(d) provides that, unless ordered by a court, a corporation
may not indemnify a director (1) in connection with a proceeding by or in the
right of the corporation except for reasonable expenses incurred in connection
with the proceeding if it is determined that the director has met the relevant
standard of conduct under 33-771(a); or (2) in connection with any proceeding
with respect to conduct for which he was adjudged liable on the basis that he
received a financial benefit to which he was not entitled whether or not
involving action in his official capacity.
MBIA has purchased insurance providing officers and directors of MBIA (and
their heirs and other legal representatives) coverage against certain
liabilities arising from any negligent act, error, omission or breach of duty
claimed against them solely by reason of their being such officers and
directors, and providing coverage for MBIA against its obligation to provide
indemnification as required by the above-described statutes and the Amended
and Restated Certificate of Incorporation. The insurance policy has a $50
million aggregate policy limit for any loss or losses during the policy year.
The Amended and Restated Shareholders' Agreement among MBIA and its Founding
Shareholders provides for indemnification of the shareholders that are parties
thereto under certain circumstances (filed as Exhibit 10.30 to MBIA's
Registration Statement on Form S-1 (Registration No. 33-14474)).
II-1
<PAGE>
ITEM 21. EXHIBITS
2.01 Agreement and Plan of Merger, dated as of November 13, 1997, among
CapMAC Holdings, Inc., MBIA Inc. and CMA Acquisition Corporation
(included as Annex A to the Proxy Statement/Prospectus).
2.02 Amendment No. 1, dated January 16, 1998, to the Agreement and Plan of
Merger, dated as of November 13, 1997, among CapMAC Holdings Inc.,
MBIA Inc. and CMA Acquisition Corporation (included as Annex A to the
Supplement).
4.01 Specimen stock certificates representing shares of Common Stock,
incorporated by reference to Exhibit 4.1 to the Registration Statement
on Form S-1, filed with the Commission on May 21, 1987 (Registration
No. 33-14474).
4.02 Rights Agreement, dated as of December 12, 1991, between MBIA Inc. and
Mellon Bank, N.A., as Rights Agent, incorporated by reference to
Exhibit 1 to the Form 8-A and the Current Report on Form 8-K, filed
with the Commission December 31, 1991, as amended by Amendment No. 1
to the Rights Agreement, incorporated by reference to Exhibit 1 to the
Form 8-A and the Current Report on Form 8-K, filed with the Commission
on October 27, 1994.
5.01 Opinion of Day, Berry & Howard.
8.01 Opinion of Debevoise & Plimpton as to tax matters.
8.02 Opinion of Simpson Thacher & Bartlett as to tax matters.
23.01 Consent of Coopers & Lybrand L.L.P.
23.02 Consent of KPMG Peat Marwick LLP.
23.03 Consent of Day, Berry & Howard (contained in Exhibit 5.01).
23.04 Consent of Debevoise & Plimpton (contained in Exhibit 8.01).
23.05 Consent of Simpson Thacher & Bartlett (contained in Exhibit 8.02).
23.06 Consent of Salomon Brothers Inc (contained in Exhibit 99.05).
24.01 Powers of Attorney.
99.01 Opinion of Salomon Brothers Inc dated December 29, 1997 (included as
Annex B to the Proxy Statement/Prospectus).
99.02 Form of proxy card accompanying the Proxy Statement/Prospectus.
99.03 Chairman's letter to stockholders of CapMAC accompanying the Proxy
Statement/Prospectus.
99.04 Notice of Special Meeting of stockholders of CapMAC.
99.05 Opinion of Salomon Brothers Inc dated January 16, 1998 (included as
Annex B to the Supplement).
99.06 Form of proxy card accompanying the Supplement.
99.07 Chairman's letter to stockholders of CapMAC accompanying the
Supplement.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (iii) to include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement related to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(6) That every prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415 will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrants pursuant to the foregoing provisions or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrants of expenses incurred or paid by
a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrants will, unless in the opinion of their
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
(8) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first-class mail or equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
THE CITY OF ARMONK, STATE OF NEW YORK, ON JANUARY 21, 1998.
MBIA INC.
(Registrant)
/s/ David H. Elliott
By: _________________________________
DAVID H. ELLIOTT CHAIRMAN, CHIEF
EXECUTIVE OFFICER AND DIRECTOR
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST-
EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE
/s/ David H. Elliott Chairman, Chief January 21,
- ------------------------------------- Executive Officer 1998
DAVID H. ELLIOTT and Director
(principal
executive officer)
/s/ Richard L. Weill President and January 21,
- ------------------------------------- Director 1998
RICHARD L. WEILL
/s/ Julliette S. Tehrani Executive Vice January 21,
- ------------------------------------- President, Chief 1998
JULLIETTE S. TEHRANI Financial Officer
and Treasurer
(principal
financial officer)
/s/ Elizabeth B. Sullivan Vice President and January 21,
- ------------------------------------- Controller 1998
ELIZABETH B. SULLIVAN (principal
accounting officer)
* Director January 21,
- ------------------------------------- 1998
JOSEPH W. BROWN, JR.
* Director January 21,
- ------------------------------------- 1998
DAVID C. CLAPP
II-4
<PAGE>
SIGNATURE TITLE DATE
* Director January 21,
- ------------------------------------- 1998
CLAIRE L. GAUDIANI
* Director January 21,
- ------------------------------------- 1998
WILLIAM H. GRAY, III
* Director January 21,
- ------------------------------------- 1998
FREDA S. JOHNSON
* Director January 21,
- ------------------------------------- 1998
DANIEL P. KEARNEY
* Director January 21,
- ------------------------------------- 1998
JAMES A. LEBENTHAL
* Director January 21,
- ------------------------------------- 1998
PIERRE-HENRI RICHARD
* Director January 21,
- ------------------------------------- 1998
JOHN A. ROLLS
/s/ Louis G. Lenzi
*By: ________________________________
LOUIS G. LENZI ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
*2.01 Agreement and Plan of Merger, dated as of November 13, 1997, among
CapMAC Holdings, Inc., MBIA Inc. and CMA Acquisition Corporation
(included as Annex A to the Proxy Statement/Prospectus).
**2.02 Amendment No. 1, dated January 16, 1998, to the Agreement and Plan of
Merger, dated as of November 13, 1997, among CapMAC Holdings Inc.,
MBIA Inc. and CMA Acquisition Corporation (included as Annex A to the
Supplement).
*4.01 Specimen stock certificates representing shares of Common Stock,
incorporated by reference to Exhibit 4.1 to the Registration Statement
on Form S-1, filed with the Commission on May 21, 1987 (Registration
No. 33-14474).
*4.02 Rights Agreement, dated as of December 12, 1991, between MBIA Inc. and
Mellon Bank, N.A., as Rights Agent, incorporated by reference to
Exhibit 1 to the Form 8-A and the Current Report on Form 8-K, filed
with the Commission December 31, 1991, as amended by Amendment No. 1
to the Rights Agreement, incorporated by reference to Exhibit 1 to the
Form 8-A and the Current Report on Form 8-K, filed with the Commission
on October 27, 1994.
*5.01 Opinion of Day, Berry & Howard.
*8.01 Opinion of Debevoise & Plimpton as to tax matters.
*8.02 Opinion of Simpson Thacher & Bartlett as to tax matters.
**23.01 Consent of Coopers & Lybrand L.L.P.
**23.02 Consent of KPMG Peat Marwick LLP.
*23.03 Consent of Day, Berry & Howard (contained in Exhibit 5.01).
*23.04 Consent of Debevoise & Plimpton (contained in Exhibit 8.01).
*23.05 Consent of Simpson Thacher & Bartlett (contained in Exhibit 8.02).
**23.06 Consent of Salomon Brothers Inc (contained in Exhibit 99.05).
*24.01 Powers of Attorney.
*99.01 Opinion of Salomon Brothers Inc dated December 29, 1997 (included as
Annex B to the Proxy Statement/Prospectus).
*99.02 Form of proxy card accompanying the Proxy Statement/Prospectus.
*99.03 Chairman's letter to stockholders of CapMAC accompanying the Proxy
Statement/Prospectus.
*99.04 Notice of Special Meeting of stockholders of CapMAC.
**99.05 Opinion of Salomon Brothers Inc dated January 16, 1998 (included as
Annex B to the Supplement).
**99.06 Form of proxy card accompanying the Supplement.
**99.07 Chairman's letter to stockholders of CapMAC accompanying the
Supplement.
</TABLE>
- --------
*Previously filed
**Filed herewith
II-6
<PAGE>
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of MBIA, Inc. (the "Company") on Form S-4 of:
1. Our report dated February 3, 1997, on our audits of the consolidated
financial statements of MBIA, Inc. and Subsidiaries as of December 31,
1996 and 1995, and for the years ended December 31, 1996, 1995, and
1994, which report is incorporated by reference in the Company's Annual
Report on Form 10-K;
2. Our report dated February 3, 1997 on our audits of the financial
statement schedules of MBIA, Inc. and Subsidiaries which report is
included in the Company's Annual Report on Form 10-K.
We also consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
New York, New York
December 29, 1997
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
CapMAC Holdings Inc.:
We consent to the use of our reports on the consolidated financial statements
and related financial statement schedules of CapMAC Holdings Inc. as of
December 31, 1996 and 1995 and for each of the years in the three-year period
ended December 31, 1996, which appear in the CapMAC Holdings Inc. Annual
Report on Form 10-K which has been incorporated by reference in the Proxy
Statement of CapMAC Holdings Inc. which is referred to and made a part of the
MBIA Inc. Prospectus and Registration Statement on Form S-4 and to the
reference to our firm under the heading "Experts" therein.
/s/ KPMG Peat Marwick llp
New York, New York
January 21, 1998
<PAGE>
EXHIBIT 99.06
CAPMAC HOLDINGS INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
SPECIAL MEETING OF STOCKHOLDERS ON FEBRUARY 10, 1998
The undersigned hereby revokes all prior proxies and appoints Ram D.
Wertheim and Paul V. Palmer, and each of any of them, as attorneys and agents
of the undersigned with full power of substitution, to represent the
undersigned and to vote as Proxy all shares of the Common Stock of CapMAC
Holdings Inc. ("CapMAC"), which the undersigned is entitled to vote, at the
Special Meeting of the Stockholders of CapMAC to be held on February 10, 1998,
at 10:00 a.m., local time, at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York and at any adjournments thereof, upon the
proposal listed on the reverse side hereof and in their discretion, upon other
matters incident to the conduct of the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on other side)
<PAGE>
This proxy will be voted and will be voted as specified by the stockholder.
If no choice is specified, it will be voted FOR the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL
1. Proposal to approve and adopt the Agreement and Plan of Merger dated as of
November 13, 1997 (the "Original Agreement"), as amended by Amendment No. 1
thereto, dated January 16, 1998 (the "Amendment") among MBIA Inc., CMA
Acquisition Corporation and CapMAC. A copy of the Merger Agreement is
attached as Annex A to the Proxy Statement/Prospectus and a copy of the
Amendment is attached as Annex A to the Supplement relating to the Special
Meeting.
[_] FO_____________[_] AGAINS______________[_] ABSTAINTR
2. In accordance with their discretion on any matters incident to the conduct
of the meeting.
SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature should conform exactly to name
shown on this proxy. Joint owners must
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
it appears on this proxy. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Date ______________________________ ------------------------------------------
Signature
Date ______________________________ ------------------------------------------
Signature
<PAGE>
EXHIBIT 99.07
LOGO
January , 1998
Dear Stockholder:
In connection with the forthcoming Special Meeting of the Stockholders of
CapMAC Holdings Inc., we are enclosing a supplement (the "Supplement") to the
Proxy Statement/Prospectus which was mailed to you on December 29, 1997 (the
"Proxy Statement/Prospectus"). Because of the important information contained
in the Supplement, the Special Meeting is being postponed and will now be held
at 10:00 a.m., local time, on February 10, 1998 at the offices of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York.
As indicated in the Supplement, the terms of the Agreement and Plan of
Merger, dated as of November 13, 1997 (the "Original Agreement"), among MBIA
Inc., a wholly-owned subsidiary of MBIA, and CapMAC, have been revised to
reduce the exchange ratio for determining the number of shares of MBIA Common
Stock to be received by holders of CapMAC in the merger between MBIA and
CapMAC (the "Merger"). In accordance with an amendment, dated as of January
16, 1998 (the "Amendment"), to the Original Agreement, each share of CapMAC
Common Stock will be converted into the right to receive the number of shares
of MBIA Common Stock obtained by dividing $31.00 (rather than $35.00 as
provided in the Original Agreement) by the average of the closing sales prices
of MBIA Common Stock as reported on the New York Stock Exchange Composite
Transactions Tape on each of the fifteen consecutive trading days immediately
preceding the third trading day prior to the effective time of the Merger,
rounded to the nearest 1/10,000th. In contrast to the original terms of the
Merger, such exchange ratio will not be subject to any "collars" in the event
of a significant change in the price of MBIA Common Stock.
The provisions of the Amendment are described in more detail in the "CERTAIN
RECENT DEVELOPMENTS--Amendment to Merger Agreement" section of the Supplement.
The circumstances which led to the revision of the Original Agreement are
explained in the "--Background of the Merger Update" section of the
Supplement.
Your Board of Directors has carefully reviewed and considered the terms and
conditions of the Amendment in relation to the Original Agreement and has
received the opinion of Salomon Brothers Inc, CapMAC's financial advisor,
that, as of January 16, 1998 and based on and subject to certain matters
stated therein, the revised consideration to be received by CapMAC
stockholders in the proposed Merger was fair, from a financial point of view,
to such holders. A copy of that opinion is attached as Annex B to the
accompanying Supplement and additional information about the opinion appears
in the "--Opinion of CapMAC's Financial Advisor" section of the Supplement.
THE BOARD OF DIRECTORS OF CAPMAC HAS DETERMINED THAT THE MERGER IS FAIR TO AND
IN THE BEST INTERESTS OF CAPMAC STOCKHOLDERS. ACCORDINGLY, THE BOARD OF
DIRECTORS HAS APPROVED THE ORIGINAL AGREEMENT, AS AMENDED BY THE AMENDMENT,
AND RECOMMENDS THAT YOU VOTE IN FAVOR OF THE APPROVAL AND ADOPTION OF THE
ORIGINAL AGREEMENT, AS AMENDED BY THE AMENDMENT.
You should read carefully the accompanying Supplement for details of the
Amendment to the Original Agreement and additional related information. You
also should read carefully the Proxy Statement/Prospectus for extensive
additional information with respect to the Merger.
We hope that you will be able to attend the Special Meeting, but if you
cannot attend, it is important that your shares be represented. ACCORDINGLY,
WE URGE YOU TO MARK, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN
THE ENVELOPE PROVIDED.
PROXY CARDS MAILED TO YOU WITH THE PROXY STATEMENT/PROSPECTUS ON DECEMBER
29, 1997 WILL NOT BE USED AT THE SPECIAL MEETING. THEREFORE, WE MUST ASK THAT
YOU FILL OUT AND SEND IN THE ENCLOSED PROXY CARD EVEN IF YOU HAVE PREVIOUSLY
SENT IN A PROXY CARD.
Thank you very much.
Very truly yours,
/S/ John B. Caouette
John B. Caouette
Chairman of the Board,
President and Chief Executive
Officer
LOGO
