SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 3)
Impac Commercial Holdings, Inc.
(Name of Issuer)
Common Stock $0.01 par value
(Title of Class of Securities)
44968J 10 6
(CUSIP Number)
Daniel K. Osborne
Executive Vice President, Chief Operating Officer
and Chief Financial Officer
Apex Mortgage Capital, Inc.
865 South Figueroa Street, Suite, 1800
Los Angeles, California 90017
(213) 244-0000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 18, 1999
(Date of Event Which Requires Filing
of This Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition that is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(e),
13d-1(f) or 13d-1(g), check the following box [ ]
Note. Schedules filed in paper format shall include a
signed original and five copies of the schedule, including
all exhibits. See Rule 13d-7(b) for other parties to whom
copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
<PAGE>
CUSIP No. 44968J 10 6 13 D Page 2 of 7 Pages
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Apex Mortgage Capital, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
NUMBER OF 7 SOLE VOTING POWER
0
SHARES
8 SHARED VOTING POWER
BENEFICIALLY 627,300
OWNED BY 9 SOLE DISPOSITIVE POWER
0
EACH
REPORTING PERSON
WITH 10 SHARED DISPOSITIVE POWER
627,300
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
627,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 44968J 10 6 13 D Page 3 of 7 Pages
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
The TCW Group, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
NUMBER OF 7 SOLE VOTING POWER
0
SHARES
8 SHARED VOTING POWER
BENEFICIALLY 627,300
OWNED BY 9 SOLE DISPOSITIVE POWER
0
EACH
REPORTING PERSON
10 SHARED DISPOSITIVE POWER
WITH 627,300
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
627,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
14 TYPE OF REPORTING PERSON
HC, CO
<PAGE>
CUSIP No. 44968J 10 6 13D Page 4 of 7 Pages
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Robert A. Day
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF 7 SOLE VOTING POWER
627,300
SHARES
8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY 9 SOLE DISPOSITIVE POWER
627,300
EACH
REPORTING PERSON
10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
627,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
14 TYPE OF REPORTING PERSON
IN, HC
<PAGE>
AMENDMENT NO. 3 TO SCHEDULE 13D
Reference is made to the Schedule 13D originally filed on September 7,
1999, as amended by Amendment No. 1 thereto filed on September 8, 1999
and Amendment No. 2 thereto filed on September 23, 1999, by Apex
Mortgage Capital, Inc., a Maryland corporation ("AXM"), The TCW Group,
Inc., a Nevada corporation ("TCWG"), and Robert A. Day, an individual
(collectively, the "Reporting Persons"), with respect to the Common
Stock, $.01 par value per share ("Common Stock"), of Impac Commercial
Holdings, Inc. (the "Issuer").
ITEM 4. PURPOSE OF TRANSACTIONS
On August 5, 1999, the Issuer announced an agreement to merge with and
into AMRESCO Capital Trust ("AMCT"), an externally managed Texas real
estate investment trust. In such merger, shareholders of the Issuer
would receive 0.661 of a share of AMCT for each share of Common Stock
(the "Merger Consideration").
AXM continues to believe that the Merger Consideration considerably
undervalues the Common Stock to the disadvantage of the Issuer's
shareholders. On September 7, 1999, by letter to the Board of Directors
of the Issuer, AXM made a non-binding proposal for a tax-free merger of
AXM and the Issuer in which 0.60328 shares of AXM's common stock would be
exchanged for each share of Common Stock. On September 8, 1999, by
Amendment No. 1 to the Schedule 13D originally filed on September 7, 1999,
a copy of such letter was filed as Exhibit 2 to the Schedule 13D originally
filed on September 7, 1999, and a copy of a press release disclosing the
merger proposal and the letter was filed as Exhibit 3 to the Schedule 13D
originally filed on September 7, 1999. AXM believes that the terms of its
proposal are financially superior to those reflected in the proposed
transaction with AMCT.
Item 4 is amended to add the following:
The Issuer and AXM have exchanged further correspondence. By letter from
the Issuer to AXM dated September 30, 1999, a copy of which is filed
herewith as Exhibit 7, the Issuer has advised AXM that the Board of
Directors of the Issuer has engaged Bear Stearns & Co. Inc. to assist it
in analyzing AXM's proposal. By letter from AXM to the Issuer dated
October 13, 1999, a copy of which is filed herewith as Exhibit 8, AXM
has reiterated its request that the Issuer form a special committee of
independent directors to objectively examine AXM's proposal and has
requested a meeting with such special committee to discuss a number of
issues regarding certain transactions both completed and proposed
involving the Issuer, Fortress Investment Group and their affiliates
and regarding certain other matters. By letter from the Issuer to AXM
dated October 14, 1999, a copy of which is filed herewith as Exhibit 9, the
Issuer has denied AXM's request for a meeting with a special committee of
independent directors and indicated that pursuant to the terms of the
Agreement and Plan of Merger, dated as of August 4, 1999, by and between
the Issuer and AMCT, the Issuer or any of its representatives are
prohibited from participating in or encouraging any discussions or
negotiations regarding AXM's proposal. By letter from AXM to the
Issuer dated October 18, 1999, a copy of which is filed herewith
as Exhibit 10, AXM has responded by raising a number of issues
regarding certain transactions both completed
<PAGE>
and proposed involving the Issuer, Fortress Investment Group and Impac
Mortgage Holdings, Inc. and regarding certain other matters.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 is amended to add the following additional Exhibits:
Exhibit 7 Letter dated September 30, 1999 from the Issuer to AXM
Exhibit 8 Letter dated October 13, 1999 from AXM to the Issuer
Exhibit 9 Letter dated October 14, 1999 from the Issuer to AXM
Exhibit 10 Letter dated October 18, 1999 from AXM to the Issuer
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of its knowledge
and belief, each of the undersigned certifies that the information
set forth in this Statement is true, complete and correct.
October 18, 1999
APEX MORTGAGE CAPITAL, INC.
By: __/s/___Daniel K. Osborne____
Name: Daniel K. Osborne
Title: Executive Vice President, Chief
Operating Officer and Chief
Financial Officer
THE TCW GROUP, INC.
By: /s/___Michael E. Cahill_______
Name: Michael E. Cahill
Title: Managing Director, General
Counsel & Secretary
ROBERT A. DAY
By: ____/s/ Michael E. Cahill_____
Name: Michael E. Cahill
Title: Authorized Signatory
<PAGE>
[Impac Commercial Holdings, Inc. letterhead]
September 30, 1999 Via Facsimile
213/488-3366
Philip A. Barach
President and Chief Executive Officer
Apex Mortgage Capital, Inc.
865 South Figueroa Street, Suite 1800
Los Angeles, California 90017
Daniel K. Osborne
Executive Vice President and Chief Operating Officer
Apex Mortgage Capital, Inc.
865 South Figueroa Street, Suite 1800
Los Angeles, California 90017
Gentlemen:
The Board of Directors of Impac Commercial Holdings, Inc. ("ICH")
has received your letter of September 17, 1999 addressed to the
"Special Committee of the Board of Directors of Impac Commercial
Holdings, Inc.", with attachments, and your letter dated September 20,
1999 addressed to me, in each case in response to my letter to you
dated September 10, 1999. As I mentioned in a previous telephone
call to Mr. Osborne, the full Board of Directors of ICH, not a
special committee thereof, is considering your proposal.
The Board has engaged Bear, Stearns & Co. Inc. to assist it in
analyzing your proposal. Bear Stearns has indicated that it expects
to present its findings to the Board within the next two weeks and,
accordingly, you should expect a response from the Board soon
thereafter.
Finally, we note that you have included our correspondence in your
most recent Schedule 13D filing. Pending completion of the Board's
review of your proposal, we do not intend to comment on your claims
about "superior value", "superior track records" or "obvious
conflicts of interest", among other things. We do, however,
think it inappropriate for you to continue to publicly disseminate
your self-serving letters.
Sincerely,
___/s/ Wesley R. Edens______
Wesley R. Edens
Chairman of the Board
Chief Executive Officer
<PAGE>
October 13, 1999
Mr. Wesley R. Edens
Chairman of the Board and Chief Executive Officer
Impac Commercial Holdings, Inc.
1401 Dove Street
Newport Beach, California 92660
Dear Mr. Edens:
We received your letter dated September 30, 1999. While we were
pleased to learn that the Impac Commercial Holdings, Inc. ("ICH")
Board of Directors has retained a financial advisor to evaluate
our offer, we are disappointed that a special committee of independent
directors has not been formed in light of the obvious conflicts of interest
between Fortress Investment Group and its affiliates ("Fortress") and ICH
shareholders.
Our offer presents ICH shareholders with the opportunity to receive a 28%
premium over the existing proposal from Amresco Capital Trust ("AMCT")
based on closing market prices on October 12, 1999. We urge all ICH
Directors to consider their fiduciary responsibility in evaluating our
offer and reiterate our request that ICH form a special committee of
independent directors to objectively manage this process.
In preparation for making our offer, we have performed a great deal
of analysis on ICH from publicly available information. This review
has raised questions regarding several transactions both completed and
proposed involving ICH, Fortress, and their affiliates. We are in the
process of developing a list of these questions that we intend to ask
the ICH Board of Directors. We believe the best forum to ask these
questions is in a face to face meeting. Therefore, we request a meeting
with the special committee of independent directors to ask these
questions and to present the merits of our offer. We also request a
meeting with ICH's financial advisor prior to the issuance of their
report on our offer.
Prompt attention to these requests is extremely important given the
delays already experienced since we made our offer on September 7, 1999.
Therefore, we request written confirmation that (1) a special
committee of independent directors has been formed to objectively
evaluate our offer, (2) a meeting with ICH's financial advisor will
be granted prior to the issuance of their report and (3) a face to
face meeting with the special committee of independent directors will
be granted prior to the final evaluation of our offer. If we do
not receive written confirmation that grants these requests by the
close of business on October 14, 1999, we will be forced to ask the
questions referred to above by formal written correspondence.
We wish to re-emphasize our conviction that the transaction
that we have proposed offers demonstrably superior immediate value,
as well as greater long-term value, to ICH's shareholders as compared
to the AMCT offer. Furthermore, it is possible that the results
of our due diligence review may afford us the opportunity to increase
our offer (if an increase is justified by the information made
available to us). We may also be willing to offer other
forms of consideration to ICH's shareholders that include
preferred stock in Apex Mortgage Capital, Inc. or cash. We urge
you to help us realize for your shareholders the superior value we
are offering. We continue to be excited by the prospect of
moving forward with you on our proposed transaction.
Very truly yours,
Apex Mortgage Capital, Inc.
By:__/s/ Philip A. Barach____ By: __/s/ Daniel K. Osborne_____
Philip A. Barach Daniel K. Osborne
President and Executive Vice President and
Chief Executive Officer Chief Operating Officer
CC: Christopher W. Mahowald
Frank P. Philips
Joseph R. Tomkinson
<PAGE>
[Impac Commercial Holdings, Inc. letterhead]
October 14, 1999 Via Facsimile
213/488-3366
Philip A. Barach
President and Chief Executive Officer
Apex Mortgage Capital, Inc.
865 South Figueroa Street, Suite 1800
Los Angeles, California 90017
Daniel K. Osborne
Executive Vice President and Chief Operating Officer
Apex Mortgage Capital, Inc.
865 South Figueroa Street, Suite 1800
Los Angeles, California 90017
Gentlemen:
We call your attention to Section 6.8 of the Agreement and Plan
of Merger (the "Merger Agreement") dated as of August 4, 1999 by
and between Impac Commercial Holdings, Inc. ("ICH") and AMRESCO
Capital Trust, which prohibits ICH or any of its representatives
from, among other things, participating in or encouraging any
discussion or negotiations regarding an Acquisition Proposal
prior to the time the ICH Board has concluded in good faith that
such proposal constitutes a Superior Proposal. As we have
previously advised you, the entire Board (a majority of which has
no affiliation with Fortress) is considering your proposal and
has retained Bear Stearns & Co. Inc. to assist it in evaluating
your proposal.
As we informed you by telephone, Bear Stearns has not yet
completed its analysis of your proposal. To complete its
findings, Bear Stearns is prepared to receive, without comment or
discussion (that is, in accordance with the obligations of the
Board under the Merger Agreement), any clarifications you may
wish to make with respect to your proposal. As you well know, we
are otherwise obligated, under the terms of the Merger Agreement,
not to engage in discussions with you regarding your proposal.
Accordingly, you should treat this as a denial at this time of
your request for additional meetings.
<PAGE>
Finally, your letter indicates that you had "questions regarding
several transactions both completed and proposed involving ICH,
Fortress and their affiliates." As with any other inquiries,
please feel free to raise these questions in writing addressed to
the Board, taking into account any concern you may have for your
own liability for unfounded allegations of impropriety.
Sincerely,
__/S/ Wesley R. Edens____
Wesley R. Edens
Chairman of the Board and
Chief Executive Officer
<PAGE>
October 18, 1999
Mr. Wesley R. Edens
Chairman of the Board and Chief Executive Officer
Impac Commercial Holdings, Inc.
1401 Dove Street
Newport Beach, California 92660
Dear Mr. Edens:
We received your letter dated September 30, 1999. While we were
pleased to learn that the Impac Commercial Holdings, Inc. ("ICH")
Board of Directors has retained a financial advisor to evaluate our
offer, we are disappointed that a special committee of independent
directors has not been formed in light of the obvious conflicts
of interest between Fortress Investment Group and its affiliates
("Fortress") and ICH shareholders. Accordingly, we sent you a letter,
dated October 13, 1999, that requested a meeting with the ICH Board
of Directors, requested a meeting with your financial advisor and
reiterated our request that a special committee of independent
directors be formed. All of these requests were made in a good faith
effort to move forward toward negotiating a transaction that is in
the best interest of ICH shareholders.
We then received your letter dated October 14, 1999 denying a meeting
with the ICH Board of Directors and reiterating that ICH had not
formed a special committee. In that letter, we acknowledge that
we were given a chance to meet with your financial advisor. We
accepted that invitation and held a conference call with your
financial advisor, your legal counsel and the financial advisor's
legal counsel on October 15, 1999. This meeting was not at all
productive as the financial advisor refused to provide us with
any information as to what they had been engaged to do, how our
offer would be analyzed, what information had been provided to
them regarding the Amresco Capital Trust ("AMCT") offer or any
other information that would have leveled the playing field
between the AMCT offer and our offer.
Because of your refusal to form a special committee, the
overall lack of cooperation and the delays experienced since we
made our offer on September 7, 1999, we are concerned that the
ICH Board of Directors has not considered our offer in good faith.
Our offer presents ICH shareholders with the opportunity to receive
a 22% premium over the existing AMCT proposal based on closing market
prices on October 15, 1999. We urge all ICH Directors to consider
their fiduciary responsibility in evaluating our offer and request
that we be allowed to commence our due diligence review in a timely
manner so that we may move forward with our proposal to deliver the
highest value to ICH shareholders.
In preparation for making our offer, we have performed a great deal
of analysis on ICH from publicly available information. This review
has raised questions regarding several transactions
<PAGE>
both completed and proposed involving ICH, Fortress, and Impac
Mortgage Holdings, Inc. ("IMH"). As one of the largest holders
of ICH stock, we would like answers to the following questions.
Transactions Completed on May 5, 1999
We noted in the ICH Form 8-K dated May 5, 1999 that ICH issued Fortress
shares of preferred stock convertible into common stock at a conversion
price of $7.13. That conversion price was substantially below the
$12.19 book value of ICH at the time of issuance. This transaction,
including all related costs, diluted existing ICH shareholders by
$7.5 million or $0.89 per common share. There was no fairness opinion
issued despite the fact that Nationsbanc Montgomery Securities LLC,
now doing business as Bank of America Securities LLC ("Bank of America
Securities LLC"), was paid a $500,000 fee in connection with
the transaction.
- -- Why did the ICH Board of Directors approve a transaction that
diluted existing shareholders by $7.5 million?
- -- Why was there no fairness opinion issued by Bank of America
Securities LLC?
We noted in the ICH Form 8-K dated May 5, 1999 that Fortress
purchased the management contract for ICH from RAI Advisors LLC
("RAI"). We noted in the proxy statement dated June 15, 1998
that the executive officers of ICH, who are also executive
officers of Impac Mortgage Holdings, Inc. ("IMH"), owned RAI. We
noted in your letter dated September 10, 1999 that Fortress paid
$6 million for the management contract. Based on this information,
it appears the executive officers of ICH and IMH, not the
ICH shareholders, received the benefit of the $6 million payment
for the contract.
- -- How was the $6 million value for the management contract calculated?
- -- Why wasn't this payment publicly disclosed?
- -- Was there an independent appraisal of the transaction?
- -- How did the ICH Board of Directors address the conflict of interest
between the executive officers of ICH who were receiving the
benefit of the payment and the interests of ICH shareholders?
- -- Was the $6 million paid by Fortress for the management contract
related to the $7.5 million dilution suffered by ICH common
shareholders in connection with Fortress's preferred stock investment?
We noted in the ICH Form 8-K dated May 5, 1999 and in other ICH and IMH
SEC filings that there have been numerous related party transactions
between ICH, IMH, its affiliates and employees including loans, asset
sales, stock repurchases and other transactions.
- -- How did the ICH Board of Directors address the conflicts of
interests inherent in these related party transactions?
- -- Were all transactions between ICH, IMH and their affiliates on
arms' length terms?
<PAGE>
- -- Were loans to related parties and employees adequately collateralized?
- -- Have all related party transactions been adequately disclosed to
the public?
Proposed AMCT/ICH Transaction
We noted in the Preliminary Proxy Statement filed on September 10,
1999 ("AMCT/ICH Proxy") that an acquisition of ICH by AMCT will
value each ICH share at $6.07 based on closing market prices on
October 15, 1999. Based on the information in the ICH Form 10-Q for
the quarter ended June 30, 1999, the acquisition of ICH by AMCT will
result in ICH shareholders receiving $44.7 million or $5.31 per share
less than the company's reported book value.
- -- Do the financial statements as presented by ICH management overstate
the value of the company's assets?
- -- If so, how long and to what extent have the ICH financial statements
overstated asset values?
- -- If not, why should ICH shareholders accept a price that is $44.7 million
(or 39%) less than the value indicated by the company's own financial
statements?
We noted in the AMCT/ICH Proxy that ICH is required to have $75 million
in cash and agreed upon assets as a condition of the acquisition agreement.
This indicates a value of at least $75 million or $7.42 per diluted
share, which is $13.7 million or $1.35 per share more than what is being
offered in the AMCT/ICH acquisition.
- -- Why should ICH shareholders accept a price that is $13.7 million (or 18%)
less than the minimum current value of ICH's assets as indicated in the
AMCT/ICH Proxy?
We noted in the AMCT/ICH Proxy a specific disclosure indicating that
the directors, officers and affiliates of ICH may have interests in the
merger that are different from or in addition to the interests of other ICH
shareholders. We also noted in that document the same disclosure regarding
a conflict of interest between the AMCT trust managers, officers and their
affiliates. However, AMCT appears to have addressed many of these conflicts
of interest by evaluating all of the strategic alternatives for AMCT
shareholders and forming a special committee of independent trust managers,
together with its own financial advisor, to evaluate the offer that was
finally accepted. This included a complete auction process with six
preliminary candidates, four of which expressed an indication of interest
and a detailed discussion of the objective process followed to obtain
the best value for AMCT shareholders. The procedures performed by AMCT
stand in contrast to the vastly limited procedures performed by ICH.
The AMCT/ICH Proxy disclosed that Bank of America Securities LLC, ICH's
financial advisor, was not allowed to solicit other offers for ICH.
Further, there is no mention in the fairness opinion issued to the ICH
Board of Directors of a liquidation analysis to determine if that would
have provided ICH shareholders with the greatest value for their investment.
- -- How has the ICH Board of Directors addressed the conflicts of
interest that were acknowledged in the AMCT/ICH Proxy?
- -- Why were no other bidders allowed to submit proposals to acquire ICH?
- -- Why wasn't liquidation considered as one of the alternatives?
- -- Is the current value of the proposed transaction with AMCT lower
than the liquidation value of ICH's assets?
- -- Why didn't the ICH Board of Directors form a special committee of
independent directors?
- -- Why wasn't an investment banking firm engaged to represent such
a committee?
- -- What objective procedures did the ICH Board of Directors follow
to ensure that shareholders received the highest value for
their investment?
We noted in the AMCT/ICH Proxy that the combined company will engage
Fortress pursuant to a new management contract.
- -- How were the fees to be paid to Fortress under the new contract
determined?
- -- Was there an independent valuation of the terms of the contract
to ensure fairness to the shareholders?
- -- Who is representing the shareholders in all management contract
issues?
We noted in the AMCT/ICH Proxy that if either AMCT or ICH terminate
the merger agreement, the terminating party would be obligated to pay
the other party break up fees and expenses totaling $5.25 million.
This amount represents approximately 9% of the transaction value at
current market prices. Similar merger agreements usually contain
break up fees and expenses of 2% to 4% of the proposed transaction
value. Based on these percentages, one could argue that the break
up fees and expenses proposed in the AMCT/ICH merger exceed
customary amounts by $3 million to $4 million. We also noted in the
AMCT/ICH Proxy that Fortress has agreed to become the manager of
AMCT in connection with this transaction and is already the manager
of ICH. Based on this information, it appears that Fortress will
likely benefit from an AMCT/ICH merger regardless of the consideration
paid to ICH shareholders as they stand to receive the management
fees proposed for the new combined company.
- -- How were the breakup fees and expenses calculated?
- -- Have the break up fees and expenses been set above customary levels
to deter other competing offers that may provide greater
shareholder value?
- -- If not, for what other reason?
- -- How did the ICH Board of Directors address the conflict between
Fortress' interest in receiving higher management fees on a
larger combined company and the interest of ICH shareholders
in receiving a higher competing offer when approving the break
up fees and expenses?
<PAGE>
We noted in the AMCT/ICH Proxy that Bank of America Securities LLC
was engaged to advise the ICH Board of Directors. We also noted that
Bank of America Securities LLC disclosed in their fairness opinion
that they hold an equity interest in and have made loans to Fortress.
- -- How can Bank of America Securities LLC effectively represent
ICH shareholders when they hold an interest in Fortress?
- -- Was this relationship publicly disclosed when Bank of America
Securities LLC provided services to ICH in connection with the
buyout of the management contract and the issuance of preferred
to stock to Fortress on May 5, 1999?
- -- How was this conflict of interest addressed when engaging Bank of
America Securities LLC to advise ICH?
- -- Are there any other financial relationships between Fortress and
Bank of America Securities LLC, its directors, executive officers
and affiliates?
Stock Transactions in Violation of ICH's Charter and Shareholder Rights
Plan
We noted in a Form 13G filing on September 16, 1999 that an individual
investor had acquired a 10.7% interest in ICH. This is in violation
of ICH's charter that restricts ownership of any party to 9.8%
without prior consent from the Board of Directors. This ownership
level should also have triggered the ICH Shareholders Rights Plan as
it is in excess of the 10% threshold defined in the plan.
- -- Did the Board of Directors provide this investor with a waiver of
the 9.8% limitation?
- -- Was the Shareholder Rights Plan triggered by this investor's
ownership position?
- -- When were the shares acquired in relation to the announcement of the
AMCT/ICH merger agreement?
- -- Are there any financial relationships, other relationships or
understandings between this investor and ICH or Fortress or
their directors, executive officers and affiliates?
We look forward to receiving answers to these questions.
We wish to re-emphasize our conviction that the transaction that
we have proposed offers demonstrably superior immediate value, as
well as greater long-term value, to ICH's shareholders as compared
to the AMCT offer. Furthermore, it is possible that the results of
our due diligence review may afford us the opportunity to increase
our offer (if an increase is justified by the information made
available to us). We may also be willing to offer other forms
of consideration to ICH's shareholders that include preferred
stock in Apex Mortgage Capital, Inc. or cash. We urge you to help
us realize for your shareholders the superior value we are offering.
We are filing all of our material correspondence regarding ICH with the
Securities and Exchange Commission as amendments to our filing on
Form 13D in order to fulfill our disclosure obligations under
applicable law. We do not understand your desire to keep
this information secret from your shareholders.
<PAGE>
We continue to be excited by the prospect of moving forward with you
on our proposed transaction. Please contact one of us as soon
as possible so that we may begin the process in earnest.
Very truly yours,
Apex Mortgage Capital, Inc.
By:__/s/ Philip A. Barach____ y: __/s/ Daniel K. Osborne____
Philip A. Barach Daniel K. Osborne
President and Executive Vice President and
Chief Executive Officer Chief Operating Officer
CC: Christopher W. Mahowald
Frank P. Philips
Joseph R. Tomkinson
