SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 22, 1999
Pilgrim Capital Corporation.
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(Exact name of registrant as specified in its charter)
Delaware 0-19799 86-0670679
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
40 North Central, 12th Floor
Phoenix, Arizona 85004
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(Address of principal executive offices) (Zip Code)
(602) 417-8100
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(Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
On July 22, 1999, Pilgrim Capital Corporation entered into an Agreement and
Plan of Merger with ReliaStar Financial Corp. and its wholly owned subsidiary,
Northstar Holding, Inc., providing for the merger of Pilgrim with and into
Northstar.
Under the terms of the merger agreement, upon consummation of the merger
each outstanding share of common stock of Pilgrim will be converted into the
right to receive 0.50 shares of ReliaStar common stock and cash in the amount of
$12.50, subject to certain possible adjustments. Cash also will be paid in lieu
of the issuance of any fractional shares. The merger agreement contemplates that
the merger will be accounted for under the purchase method of accounting and
will be tax-free to the shareholders of Pilgrim as to the shares of ReliaStar
common stock that they receive. The consummation of the merger is subject to
customary conditions, including approval by the shareholders of Pilgrim.
A copy of the merger agreement has been filed as an exhibit to the Current
Report on Form 8-K filed by ReliaStar with the Securities and Exchange
Commission on July 28, 1999, and incorporated herein by this reference.
Reference is made to the merger agreement for a full statement of the terms and
conditions of the merger.
An additional discussion of the merger agreement and the merger is provided
in the joint press release of ReliaStar and Pilgrim of July 22, 1999, which is
attached as an exhibit to this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits.
2. Agreement and Plan of Merger, dated as of July 22, 1999, among
ReliaStar Financial Corp., Northstar Holding, Inc., and Pilgrim
Capital Corporation. Incorporated by reference to Exhibit 2 to the
Current Report on Form 8-K of ReliaStar Financial Corp. (File No.
0-10640), filed with the Commission on July 28, 1999.
99. Joint press release of ReliaStar and Pilgrim dated July 22, 1999.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PILGRIM CAPITAL CORPORATION
Date: July 27, 1999 By: /s/ James M. Hennessy
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James M. Hennessy,
Executive Vice President and Secretary
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EXHIBIT 99
ReliaStar Media contact: Arlene Wheaton FOR IMMEDIATE RELEASE:
(612) 372-5784 July 22, 1999
ReliaStar Investor contact: Karin E. Glasgow
(612) 342-3979
Pilgrim Capital contact: Jim Hennessy
(602) 417-8115
RELIASTAR TO ACQUIRE PILGRIM CAPITAL CORP.
RELIASTAR SUBSIDIARY NORTHSTAR AND PILGRIM CAPITAL CORP. TO BE COMBINED
MINNEAPOLIS - ReliaStar Financial Corp. (NYSE: RLR) and Pilgrim Capital Corp.
(NYSE: PFX) announced today that the two companies have signed a definitive
agreement for ReliaStar to acquire the Phoenix-based asset management and mutual
fund company in a stock-and-cash transaction valued at $258 million, which
includes ReliaStar's assumption of approximately $31 million of Pilgrim debt.
The definitive agreement provides for Pilgrim shareholders to receive .50
shares of ReliaStar common stock plus $12.50 in cash for each Pilgrim share. The
final exchange ratio and cash component will be determined at the time of
closing. (See attachment for additional details on terms of the agreement.)
Completion of the acquisition is subject to normal closing conditions,
including approval by Pilgrim's shareholders, fund trustees/directors and fund
shareholders, and various regulatory approvals. The transaction is expected to
close late in the fourth quarter of 1999.
ReliaStar said it expects the transaction to be accretive to earnings in
2000. The company said that upon closing, it expects to take a pre-tax
restructuring charge of approximately $15 million related to the integration of
ReliaStar's Northstar mutual fund operation into Pilgrim's operations.
The integration of the $4.4 billion Northstar operation into Pilgrim's $7.6
billion operation is intended to build on the significant operational elements
already in place at Pilgrim's Phoenix headquarters.
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ReliaStar said this acquisition will give the company greater economies of
scale in its mutual fund operation, resulting in lower unit costs and increased
sales and profitability.
"Clearly, this acquisition helps ReliaStar strengthen its presence in the
mutual fund marketplace by expanding our product offerings," said John G.
Turner, ReliaStar chairman and chief executive officer. "By bringing together
these two outstanding organizations, we'll have a broad array of
strong-performing funds with proven managers and track records that will help us
more effectively compete in this important market. While we will continue to
emphasize a comprehensive approach to financial planning that underscores the
value of our life insurance and annuity products, we need to increase our
emphasis on the important role that mutual funds play in supporting consumers'
accumulation goals."
Turner added that this acquisition will significantly expand the size of
the company's mutual fund operation. Currently, Northstar represents 3 percent
of the company's total business unit operating earnings. With the combination of
Northstar and Pilgrim, that proportion is expected to climb to 11 percent. The
new mutual fund organization will have a family of 32 mutual funds representing
assets under management of approximately $12 billion and combined annual sales
of $2 billion.
ReliaStar said it expects that the combined operation will be able to
reduce operating costs by 15-20 percent as a result of combining functions. The
increased size of the new organization will also make it more cost-effective for
the company to attract and retain high-quality asset management talent, which
will also contribute to the operation's ability to attract and retain assets.
"In addition to the operating efficiencies that ReliaStar will gain, this
transaction offers tremendous opportunities for top-line growth," said Robert
Salipante, ReliaStar's president and chief operating officer.
"This acquisition brings us complementary funds, asset management skills
and distribution," he said. "Add this to our current capabilities and the end
result is a comprehensive fund family with strong product performance,
top-flight fund managers and one of the broadest distribution networks in the
industry. These competencies, combined with the cross-selling potential that's
imbedded in this deal, make us extremely enthusiastic about the sales power of
this combined organization."
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The cross-selling opportunities through both companies' distribution
channels are numerous, Salipante said. ReliaStar will incorporate Pilgrim funds
into ReliaStar equity-based products, including variable life insurance,
variable annuities and 401(k) plans, in addition to selling the funds as
stand-alone products through its broker/dealer, in the worksite and through its
bank marketing operation. Pilgrim plans to distribute ReliaStar's fixed and
variable annuities and 401(k) plans through its distribution channels.
The cross-selling opportunities underscore the complementary nature of the
two companies' distribution capabilities. Although both companies have extensive
relationships with regional brokerage firms, Northstar products are distributed
primarily through wirehouse firms while Pilgrim's distribution network includes
financial planning firms.
"I'm delighted that we are aligning ourselves with a financial services
company of ReliaStar's stature and commitment to the asset management business,"
said Robert Stallings, Chairman and CEO of Pilgrim. "The combined fund complex
will enable us meet the entire range of investors' asset allocation needs, with
high-performing funds in the fixed income, growth, value and international
investment categories. The wide array of funds, combined with the complementary
distribution and asset management talent, make this a winning combination. In
addition, the combination of the two organizations offers tremendous
opportunities for increased efficiencies and reduced unit costs."
Northstar Investment Management Corp., a subsidiary of ReliaStar Financial
Corp., manages, markets and distributes the Northstar Funds, which are
distributed through a broad-based network of prominent national and regional
securities firms. Many of the Northstar Funds also are available through
ReliaStar subsidiary companies' variable life insurance and variable annuities
products.
Pilgrim manages, markets and distributes open- and closed-end mutual funds
and structured finance products representing $7.6 billion in assets under
management. Pilgrim began investment operations in April 1995. Pilgrim Capital
Corp. was organized as a publicly traded company to provide comprehensive
financial services through two subsidiaries--Pilgrim Investments, Inc., adviser
to its mutual funds and structured finance products, and Pilgrim Securities,
Inc., its registered broker-dealer and distributor of the company's mutual
funds.
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In addition to offering strong-performing mutual funds, Pilgrim will
continue to offer structured finance products.
Merrill Lynch & Co. acted as exclusive financial advisor to ReliaStar in
the transaction. Pilgrim was advised by Putnam, Lovell, de Guardiola & Thornton.
ReliaStar Financial Corp. is a Minneapolis-based holding company whose
subsidiaries offer individuals and institutions life insurance and annuities,
employee benefits products and services, life and health reinsurance, retirement
plans, mutual funds, bank products and personal finance education. Based on
revenues, ReliaStar Financial Corp. is the 8th largest publicly held life
insurance holding company in the United States and at March 31, 1999, had $23.2
billion in assets under management and life insurance in force of $304.7
billion.
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All statements contained in the report relative to markets for the Company's
products and trends in the Company's operations or financial results, as well as
other statements including words such as "anticipate," "believe," "expect," and
other similar expressions, constitute forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to known and unknown risks, uncertainties and other
factors that may cause actual results to be materially different from those
contemplated by the forward-looking statements. Such factors include, among
other things: general economic conditions and other factors, including
prevailing interest rate levels and stock market performance, which may affect
the Company's ability to sell its products, the market value of the Company's
investments and the lapse rate and profitability of the Company's policies; the
Company's ability to achieve anticipated levels of operating efficiencies;
mortality and morbidity; changes in federal income tax laws that may affect the
relative tax advantages of some of the Company's products; and regulatory
changes or actions, including those relating to regulation of financial services
affecting bank sales and underwriting of insurance products and regulation of
the sale, underwriting and pricing of insurance products.
For a current prospectus that contains more information on mutual fund charges,
fees and expenses, please contact your investment professional; Pilgrim
Securities, Inc., Distributor (1-800-331-1080); or Northstar (1-800-595-7827).
Please read the prospectus carefully before investing or sending money.
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TERMS OF THE TRANSACTION
TRANSACTION
ReliaStar Financial Corp. (NYSE: RLR) proposes to acquire 100 percent of the
issued and outstanding shares of Pilgrim Capital Corp. (NYSE: PFX), which amount
to 6,354,477 shares or share equivalents. In addition, ReliaStar will assume
Pilgrim Capital Corp.'s debt as defined below.
BASIS OF EXCHANGE
Subject to the adjustments noted below, each issued and outstanding share of
Pilgrim Capital will be exchanged for:
+ .50 shares of ReliaStar common stock, plus
+ A cash payment of $12.50 per share.*
TAX TREATMENT
The transaction will be treated as a tax-free reorganization with respect to the
shares of ReliaStar common stock issued in the transaction.
ACCOUNTING TREATMENT
Purchase accounting.
PILGRIM CAPITAL DEBT
The proposed purchase price includes the assumption of $31 million of Pilgrim
Capital debt.
* If ReliaStar's average stock price exceeds $42 during the pricing period prior
to closing, ReliaStar has the option to pay the incremental portion of the
higher purchase price in cash in lieu of stock. However, the incremental cash
portion will be limited to the percent of stock required to maintain tax-free
reorganization treatment.
