<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
SCHEDULE 14D-1
(AMENDMENT NO. 3)
TENDER OFFER STATEMENT
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
---------------------------
CITIZENS CORPORATION
(Name of Subject Company)
ALLMERICA FINANCIAL CORPORATION
CITIZENS ACQUISITION CORPORATION
(Bidders)
COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
01-174533 10 9
(CUSIP Number of Class of Securities)
JOHN F. KELLY, ESQ.
440 LINCOLN STREET
WORCESTER, MASSACHUSETTS 01653
(508) 855-1000
(Name of Person Authorized to Receive
Notices on Behalf of Bidders)
Copy to:
LAUREN I. NORTON, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 951-7000
CALCULATION OF FILING FEE
<TABLE>
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<S> <C>
Transaction Value* Amount of Filing Fee
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$195,938,925.00 $39,187.79
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</TABLE>
* For purposes of calculating the fee only. This amount assumes the purchase
of 5,892,900 shares of common stock, par value $.01 per share, of Citizens
Corporation at $33.25 net in cash per share, which represents all
outstanding shares at October 30, 1998 not owned directly or indirectly by
the persons filing this statement. The amount of the filing fee calculated
in accordance with Rule 0-11 equals 1/50th of 1% of the value of the shares
to be purchased.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: $39,187.79 Filing Parties: Allmerica Financial Corporation and
Citizens Acquisition Corporation
Form or Registration No.: Schedule 14D-1 and Date Filed: November 2, 1998 and November 17, 1998
Amendment No. 2 thereto
</TABLE>
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<PAGE>
INTRODUCTION
Allmerica Financial Corporation ("AFC") and Citizens Acquisition
Corporation (the "Purchaser") hereby amend and supplement their Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") originally filed on
November 2, 1998, as amended, with respect to the offer to purchase all of the
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
Citizens Corporation, a Delaware corporation ("Citizens") that AFC does not
already own. Capitalized terms used herein but not defined are used as defined
in the Schedule 14D-1.
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is amended and supplemented to add the
following exhibit:
(d)(9) Supplement dated November 17, 1998 to the Offer to Purchase.
-3-
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, each of the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Date: November 23, 1998 ALLMERICA FINANCIAL CORPORATION
By: /s/ Edward J. Parry, III
-------------------------------------
Name: Edward J. Parry, III
Title: Vice President, Treasurer and
Chief Financial Officer
CITIZENS ACQUISITION CORPORATION
By: /s/ Edward J. Parry, III
---------------------------------------
Name: Edward J. Parry, III
Title: President and Treasurer
-4-
<PAGE>
EXHIBIT INDEX
EXHIBITS
--------
(d)(9) Supplement dated November 17, 1998 to the Offer to Purchase.
<PAGE>
SUPPLEMENT TO OFFER TO PURCHASE DATED NOVEMBER 2, 1998
CITIZENS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
ALLMERICA FINANCIAL CORPORATION
HAS INCREASED ITS OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
CITIZENS CORPORATION
TO
$33.25 NET PER SHARE
- --------------------------------------------------------------------------------
THIS OFFER AND YOUR RIGHT TO WITHDRAW YOUR TENDER WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 2, 1998, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
Citizens Acquisition Corporation, a subsidiary of Allmerica Financial
Corporation, is offering to purchase all of the outstanding shares of common
stock of Citizens Corporation that Allmerica Financial Corporation or its
subsidiaries do not already own.
If you desire to tender all or any portion of your shares, you should
either:
. request your broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for you, or
. complete and sign the enclosed Letter of Transmittal, and mail or deliver
it, together with any other required documents, to the Depositary and
tender your shares to the Depositary by either:
-- delivering your share certificates with the Letter of Transmittal, or
-- arranging for your shares to be transferred by book-entry to the
Depositary's account at DTC, as described on page 22 of the Offer
to Purchase.
If your shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee (in "street name") you must contact such
person to tender your shares.
You may direct any questions and requests for assistance to the Information
Agent or the Dealer Managers at their addresses and telephone numbers shown on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
THIS OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THIS OFFER A NUMBER OF
SHARES OF COMMON STOCK OF CITIZENS CORPORATION WHICH, WHEN ADDED TO THE SHARES
ALREADY OWNED BY ALLMERICA FINANCIAL CORPORATION OR ITS SUBSIDIARIES,
CONSTITUTES AT LEAST 90% OF THE TOTAL SHARES OF COMMON STOCK OF CITIZENS
CORPORATION OUTSTANDING. SEE "THE OFFER--CONDITIONS OF THE OFFER."
If you desire to tender your shares but cannot before the offer expires
because:
. your certificates are not immediately available,
. you are unable to deliver all of the documents required by the Letter of
Transmittal prior to the expiration of the offer, or
. you cannot complete the procedure for book-entry transfer on a timely
basis,
then you may tender your shares by following the procedures for guaranteed
delivery as described on pages 22-23 of the Offer to Purchase.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
----------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
----------------
THE DATE OF THIS SUPPLEMENT IS NOVEMBER 17, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................................ 3
SPECIAL FACTORS............................................................. 3
Background................................................................ 3
Fairness of the Transaction............................................... 4
Certain Litigation........................................................ 6
THE AMENDED OFFER........................................................... 6
Amended Terms of the Offer................................................ 6
Procedure for Tendering Shares............................................ 7
Price Range of Shares; Dividends.......................................... 8
Selected Financial Information of AFC..................................... 8
Selected Financial Information of Citizens................................ 10
Source and Amount of Funds................................................ 11
Miscellaneous............................................................. 11
</TABLE>
2
<PAGE>
TO THE HOLDERS OF COMMON STOCK
OF CITIZENS CORPORATION:
INTRODUCTION
The following information amends and supplements the Offer to Purchase dated
November 2, 1998 (the "Offer to Purchase") of Citizens Acquisition Corporation
(the "Purchaser"), a Delaware corporation and wholly owned subsidiary of
Allmerica Financial Corporation, a Delaware corporation ("AFC"). The Purchaser
has increased the price at which it is offering to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Citizens
Corporation, a Delaware corporation (the "Company"), that AFC and its
subsidiaries do not already own, from $29.00 per Share to $33.25 per Share (as
so amended, the "Offer Price"), net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, this Supplement and in the Letter of Transmittal and the revised
Letter of Transmittal (which, together with any amendments or supplements
hereto or thereto, collectively constitute the "Offer").
Except as otherwise set forth in this Supplement or the revised Letter of
Transmittal, the terms and conditions previously set forth in the Offer to
Purchase and the related Letter of Transmittal remain applicable in all
respects to the Offer and this Supplement should be read in conjunction with
the Offer to Purchase. Capitalized terms used herein and otherwise not defined
are used as defined in the Offer to Purchase. Procedures for tendering Shares
are set forth under the headings "The Offer--Procedures for Tendering Shares"
in the Offer to Purchase and under the heading "The Amended Offer--Procedures
for Tendering Shares" in this Supplement.
The Citizens Special Committee on behalf of Citizens has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
with the Commission recommending that the Unaffiliated Stockholders accept the
Offer and tender their shares. In arriving at its recommendation, the Citizens
Special Committee indicates that it considered, among other factors, the
opinion of Merrill Lynch & Co. ("Merrill Lynch"), the independent financial
advisor to the Citizens Special Committee, to the effect that the Offer Price
of $33.25 per Share is fair to the Unaffiliated Stockholders from a financial
point of view.
SPECIAL FACTORS
BACKGROUND
Following the commencement of the Offer, the Citizens Special Committee
selected Merrill Lynch as its independent financial advisor and Cleary,
Gottlieb, Steen & Hamilton ("Cleary Gottlieb") as its legal counsel.
On November 8, 1998, a representative of Merrill Lynch contacted AFC
management to communicate the view of the Citizens Special Committee that the
original $29.00 offer price was not fair to the Unaffiliated Stockholders.
Merrill Lynch also communicated the Citizens Special Committee's request that
the Offer be conditioned on the tender of a majority of the shares held by the
Unaffiliated Stockholders. AFC indicated that in light of ongoing negotiations
with the Citizens Special Committee it was unwilling at the time to condition
the Offer on the tender of a majority of the shares held by the Unaffiliated
Stockholders.
On November 9, November 10 and November 11, 1998, representatives of Merrill
Lynch, Goldman Sachs and AFC exchanged information and reviewed and discussed
certain of their respective valuation analyses and underlying assumptions.
These discussions consisted primarily of Goldman Sachs and AFC expressing to
Merrill Lynch their view that several of the assumptions and basis underlying
certain of Merrill Lynch's valuation analyses were not appropriate in this
circumstance.
3
<PAGE>
Specifically, AFC and Goldman Sachs reviewed with Merrill Lynch the assumptions
underlying Merrill Lynch's analyses of leveraged recapitalizations, comparable
companies, acquisition premiums and discounted cash flow. In each instance,
Merrill Lynch responded by explaining the basis of such analysis and its
appropriateness in the context of the Offer. No additional reports or materials
were prepared by Goldman Sachs in connection with these discussions. On
November 11, 1998, members of AFC management and representatives of Goldman
Sachs met to review the status of negotiations and discuss how best to proceed.
AFC instructed Goldman Sachs to communicate that AFC would be willing to
consider increasing the Offer to $30.25 per Share if the Citizens Special
Committee was prepared to find that such price was fair to the Unaffiliated
Stockholders.
On November 12, 1998, Merrill Lynch informed Goldman Sachs that the Citizens
Special Committee was of the view that if an offer of $30.25 per Share were to
be made, it would be unfair to the Unaffiliated Stockholders. On November 13,
1998, AFC management met and again reviewed the valuation information that was
previously provided by Goldman Sachs to the AFC Board on October 27, 1998, as
well as the views regarding the valuation of Citizens that Merrill Lynch had
expressed during negotiations. AFC management instructed Goldman Sachs to
indicate to Merrill Lynch that AFC would consider raising the Offer Price to
$32.00 per Share, but only if the Citizens Special Committee would be in a
position to make a determination that such price was fair to the Unaffiliated
Stockholders.
On November 14, 1998, Goldman Sachs presented AFC's proposal to Merrill
Lynch. Later on November 14, 1998, Merrill Lynch communicated to Goldman Sachs
that the Citizens Special Committee indicated that it would find a $32.00 offer
price, if offered, to be inadequate.
Throughout November 15 and November 16, 1998, the advisors for the Citizens
Special Committee and AFC continued to discuss the terms of the Offer. AFC
reviewed the substance of these discussions, including the analyses of Merrill
Lynch, with its advisors and considered the existence of the lawsuits filed by
certain of the Unaffiliated Stockholders. On November 16, 1998, these
discussions and considerations resulted in an agreement between the Citizens
Special Committee and AFC and the Purchaser pursuant to which AFC and the
Purchaser agreed to amend the Offer to increase the Offer Price to $33.25 per
Share and the Citizens Special Committee agreed to recommend acceptance of the
Offer, as so amended, to the Unaffiliated Stockholders.
Later on November 16, 1998, AFC and the Citizens Special Committe on behalf
of Citizens issued a joint press release amending the Offer and announcing the
Citizens Special Committee's agreement to recommend the Offer as so amended to
the Unaffiliated Stockholders.
FAIRNESS OF THE TRANSACTION
AFC and the Purchaser believe that the Transaction, including the Offer Price
and the Merger Price, is fair to the Unaffiliated Stockholders. In making its
determination, AFC and the Purchaser considered a number of factors. In
particular, AFC and the Purchaser considered the arms-length, good faith
negotiations between AFC and the Citizens Special Committee. The fact that
Merrill Lynch was prepared to issue a fairness opinion to the effect that the
$33.25 per Share Offer Price is fair to the Unaffiliated Stockholders from a
financial point of view, that the Citizens Special Committee indicated it would
find that the Offer is fair to and in the best interests of the Unaffiliated
Stockholders, and that the Citizens Special Committee unanimously agreed to
recommend that the Unaffiliated Stockholders accept the Offer. The other
factors considered by AFC and the Purchaser in determining that the Offer is
fair included the following:
. The current and historical trading prices of the Shares and the fact that
the $33.25 per Share price to be paid in the Offer and the Merger
represents a premium of approximately 20.6% over the closing price of the
Shares on October 26, 1998, the last trading day before the
4
<PAGE>
public announcement of the Transaction (as reported on the NYSE Composite
Tape) and a premium of 22.4% and 24.4% over the average of the closing
prices of the Shares for the 30 and 60 day periods, respectively,
immediately prior to such public announcement; the fact that while the
high closing sales prices of Citizens' common stock for the first and
second quarters of 1998 were $34 and $34 5/8, respectively, and were in
excess of the Offer Price, the average closing sales prices of Citizens'
common stock for the first and second quarters of 1998 were $30.42 and
$32.47, respectively.
. The information and analyses previously presented by Goldman Sachs, AFC's
financial advisor, to the AFC Board on October 27, 1998, including
Goldman Sachs' historical stock trading analysis, selected companies
analysis, various discounted cash flow analyses and selected transaction
analysis. See "Financial Analysis by AFC's Financial Advisor" in the
Offer to Purchase.
. That the Offer Price and the Merger Price represent a premium of
approximately 26.9% over the book value per Share of $26.21 as of June
30, 1998 and a premium of approximately 27% over the book value per Share
of $26.11 as of September 30, 1998.
. That the Offer Price and the Merger Price represent a premium of
approximately 22.9% over the most recent price paid by Citizens for its
purchase of Shares. See "Transactions Concerning the Shares" in the Offer
to Purchase.
. That the terms of the Transaction, including the structural features of
the Offer which provide for a prompt cash tender offer for all
outstanding Shares held by the Unaffiliated Stockholders to be followed,
if certain conditions are satisfied, by a merger for the same
consideration, enable the Unaffiliated Stockholders to obtain the
benefits of the Transaction in exchange for their Shares at the earliest
possible time.
. That while the consummation of the Offer is not conditioned on the tender
of a majority of the Shares held by the Unaffiliated Stockholders, (i)
AFC negotiated and came to an agreement with the independent Citizens
Special Committee, (ii) the Citizens Special Committee determined that
the Offer is fair to the Unaffiliated Stockholders and (iii) the Citizens
Special Committee obtained an opinion of its independent financial
advisor, Merrill Lynch, that the Offer Price is fair to the Unaffiliated
Stockholders from a financial point of view.
. That the Transaction structure permits each Unaffiliated Stockholder to
decide whether or not to tender their Shares pursuant to the Offer; that
the Transaction structure also provided the Unaffiliated Stockholders the
opportunity to discuss their views regarding the Offer with the Citizens
Special Committee.
. That the Shares have generally had low trading volume and the Offer will
provide holders with the opportunity for liquidity, without the
transaction costs associated with open-market sales.
. AFC's knowledge of the business, assets, operating results and prospects
of Citizens, the risks involved in achieving those prospects and the
general condition, outlook and trends of the property and casualty
industry; the projections of Citizens management for the year ending
December 31, 1998, 1999 and 2000 which were utilized by Goldman Sachs in
their various analyses of the valuation of Citizens. See "Certain
Projections for Citizens" in the Offer to Purchase.
. That the Unaffiliated Stockholders would not have the opportunity to
participate in any future earnings of Citizens, but that they would
receive a fair price for their Shares.
. The fact that the plaintiffs in the shareholder litigation brought in
connection with the Offer had indicated that the payment of the increased
Offer Price of $33.25 was sufficient to settle such lawsuits. See
"Certain Litigation."
5
<PAGE>
. That AFC has no present intention of selling its Shares to a third party
and no third party has made an offer for the Shares.
. That the Unaffiliated Stockholders may exercise rights of appraisal under
the DGCL in connection with the Merger.
AFC and the Purchaser did not find it practicable to, and therefore did not,
quantify or otherwise assign relative weights to the individual factors
considered in reaching their conclusion as to fairness. Furthermore, while AFC
and the Purchaser considered the positive and negative implications of each of
the foregoing factors, on balance, AFC and the Purchaser viewed each of these
factors favorably. AFC and the Purchaser determined the liquidation value of
Citizens to be less than the Offer Price and given that AFC had no intention of
liquidating Citizens, AFC and the Purchaser did not find the liquidation value
of Citizens to be material to the determination of the Offer Price.
AFC and the Purchaser determined the initial Offer Price after considering
many factors, including the current and historical trading prices of the
Shares, the information and analyses presented by Goldman Sachs and the premium
over book value represented by the initial Offer. The initial Offer Price was
determined without negotiations with or input by Citizens or the Citizens
Special Committee. The $33.25 Offer Price was determined through extensive
arms-length negotiations between AFC and the Citizens Special Committee.
Throughout late 1997 and 1998, AFC continued to seek efficient uses of its
available capital to grow its business. In September 1988, new senior
management of AFC's property and casualty business set out a new strategic plan
which included plans to further integrate AFC's property and casualty
businesses. After reviewing the benefits to AFC acquiring the Citizens shares
that AFC does not own, AFC determined that increasing its ownership of Citizens
might be an efficient use of AFC's capital. AFC retained Goldman Sachs to
advise it in connection with the possible acquisition of the Shares. Following
discussions, AFC determined to discuss a proposal to acquire the Shares at the
AFC Board's next regularly scheduled meeting to be held on October 27, 1998.
Following approval of the Offer by the AFC Board, AFC sought to consummate the
transaction as expeditiously as possible.
In considering the procedural fairness of the transaction to the Unaffiliated
Shareholders, AFC evaluated seeking to reach an agreement with a special
committee of the Citizens Board prior to commencing the Offer. However, AFC
decided to first announce promptly its Offer, in order to allow the
Unaffiliated Stockholders to independently assess the merit of the Offer, and
then negotiate with the Special Committee on behalf of the Unaffiliated
Stockholders. AFC believed that this process would provide the Unaffiliated
Stockholders with the most information about the Offer, as well as the
opportunity to communicate their views directly to the Citizens Special
Committee, while still affording them the protection offered by negotiations
with the Citizens Special Committee. The AFC Board did not consider any
transaction structure other than a tender offer as a means of acquiring the
Shares.
Citizens has filed a Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") with the Commission recommending acceptance of AFC's
amended Offer of $33.25.
CERTAIN LITIGATION
Since the filing by AFC and the Purchaser of the Schedule 14D-1 on November
2, 1998, an additional lawsuit has been commenced by an Unaffiliated
Stockholder in the Delaware Court of Chancery; Hunter v. O'Brien, et al, Civil
Action No. 16772. On November 16, 1998, the parties to each of the Delaware
actions described in the Offer to Purchase and the parties to the action
described above (the "Actions") executed an Memorandum of Understanding (an
"MOU") memorializing an agreement-in-principle to settle such Actions. Under
the terms of the MOU, the parties to the Actions have agreed to use their best
efforts to execute and present a formal Stipulation of Settlement to the
Delaware Chancery Court as soon as practicable. In the event that
6
<PAGE>
the Delaware Chancery Court approves the proposed settlement, it is anticipated
that the Delaware Actions will be dismissed with prejudice as to the individual
plaintiffs and the class of Unaffiliated Stockholders. The consideration for
the plaintiffs' agreement to such settlement is the right of such plaintiffs to
receive, along with each other Unaffiliated Shareholder, the Offer Price (the
amount of which had been increased by AFC and the Purchaser during negotiations
with the Special Committee from the Offer Price initially proposed by AFC at
the time the Actions were instituted).
THE AMENDED OFFER
AMENDED TERMS OF THE OFFER
The price to be paid for Shares purchased pursuant to the Offer has been
increased from $29.00 to $33.25 per Share, net to the seller in cash, without
interest thereon. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), after the Expiration Date, Purchaser will
promptly accept for payment and will pay for all Shares validly tendered prior
to the Expiration Date and not properly withdrawn in accordance with the
section entitled "The Tender Offer--Withdrawal Rights" of the Offer to
Purchase. All stockholders whose Shares are tendered and purchased pursuant to
the Offer (including those Shares tendered prior to the date hereof) will
receive the increased price.
THE EXPIRATION DATE OF THE OFFER HAS NOT BEEN EXTENDED AND THE OFFER WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 2, 1998,
unless and until Purchaser extends the period of time during which the Offer is
open, in which event the term "Expiration Date" shall refer to the latest time
and date at which the Offer, as so extended by Purchaser, shall expire. Shares
tendered pursuant to the Offer may be withdrawn in the manner set forth in the
section entitled "The Tender Offer--Withdrawal Rights" of the Offer to Purchase
at any time unless theretofore accepted for payment as provided in the Offer.
In addition to the Purchaser's rights to extend and amend the Offer at any
time in its sole discretion, the Purchaser shall not be required to accept for
payment, purchase or pay for any tendered Shares, and may terminate the Offer
as to any Shares not then paid for, if at any time on or prior to the
Expiration Date, any one or more of the events described in the Offer to
Purchase under "The Offer--Conditions to Offer" shall occur.
PROCEDURE FOR TENDERING SHARES
Tendering stockholders may continue to use the original BLUE Letter of
Transmittal previously circulated with the Offer to Purchase or may use the
revised GREEN Letter of Transmittal circulated with this Supplement. Although
the BLUE Letter of Transmittal previously circulated with the Offer to Purchase
refers only to the Offer to Purchase, stockholders using such document to
tender their Shares will nevertheless receive the increased Offer price of
$33.25 per Share for each Share validly tendered (and not properly withdrawn)
and accepted for payment pursuant to the Offer, subject to the conditions of
the Offer. Tendering stockholders may continue to use the YELLOW Notice of
Guaranteed Delivery previously circulated with the Offer to Purchase.
STOCKHOLDERS WHO PREVIOUSLY TENDERED THEIR SHARES PURSUANT TO THE OFFER ARE
NOT REQUIRED TO TAKE ANY FURTHER ACTION IN ORDER TO RECEIVE THE INCREASED PRICE
OF $33.25 PER SHARE, EXCEPT AS MAY BE REQUIRED BY THE PROCEDURE FOR GUARANTEED
DELIVERY IF SUCH PROCEDURE WAS UTILIZED.
See the section entitled "The Tender Offer--Withdrawal Rights" of the Offer
to Purchase for the procedures for withdrawing Shares tendered pursuant to the
Offer.
7
<PAGE>
PRICE RANGE OF SHARES; DIVIDENDS
The common stock of Citizens is traded on the New York Stock Exchange under
the symbol "CZC." The following table sets forth, for the fiscal quarters
indicated, the high and low closing sales prices per Share as reported on the
NYSE Composite Tape and the dividends per Share declared.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
--------- --------- ---------
<S> <C> <C> <C>
1996
First Quarter................................... $20 1/8 $18 1/2 $0.05
Second Quarter.................................. $19 5/8 $18 $0.05
Third Quarter................................... $22 3/8 $18 1/2 $0.05
Fourth Quarter.................................. $22 3/4 $20 1/8 $0.05
1997
First Quarter................................... $25 1/8 $22 $0.05
Second Quarter.................................. $27 13/16 $23 7/8 $0.05
Third Quarter................................... $30 7/16 $27 13/16 $0.05
Fourth Quarter.................................. $31 1/16 $27 13/16 $0.05
1998
First Quarter................................... $34 $26 11/16 $0.05
Second Quarter.................................. $34 5/8 $30 9/16 $0.05
Third Quarter................................... $31 7/16 $23 7/8 $0.05
Fourth Quarter (through November 16)............ $31 $25 7/8 $0.05
</TABLE>
On October 26, 1998, the last full trading day preceding public announcement
of the Offer, the closing price per share of Citizens common stock on the NYSE
Composite Tape was $27 9/16. November 13, 1998, the last full trading day prior
to the announcement of the increased Offer Price, the closing price per share
of Citizens common stock on the NYSE Composite Tape was $30 3/8. November 16,
1998, the most recent practicable date prior to the printing of this
Supplement, the price per share for the last trade of Citizens common stock
before trading of Citizens common stock was halted (prior to the issuance of
the press release announcing the increased Offer Price) was $30 7/16.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES
PRIOR TO DECIDING WHETHER TO TENDER IN RESPONSE TO THE OFFER.
SELECTED FINANCIAL INFORMATION OF AFC
Set forth below is certain consolidated financial information with respect to
AFC and its subsidiaries excerpted from the information contained in the AFC
Annual Report on Form 10-K (the "AFC 10-K") and the AFC Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998 (the "AFC 10-Q"). More
comprehensive financial information is included in the AFC 10-K and such AFC
10-Q and other documents filed by AFC with the Commission, and the following
summary is qualified in its entirety by reference to such information. The AFC
10-K and the AFC 10-Q and such other documents are available for inspection and
copies thereof should be obtainable in the manner set forth below under "--
Available Information." Certain prior year amounts have been reclassified to
conform to the current year presentation.
8
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
OF ALLMERICA FINANCIAL CORPORATION
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED AT OR FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- -----------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues.................... $ 2,564.2 $ 2,543.1 $ 3,395.6 $ 3,285.1 $ 3,263.9
--------- --------- --------- --------- ---------
Income before extraordinary
item....................... $ 135.3 $ 114.3 $ 209.2 $ 181.9 $ 146.0
Extraordinary item-
demutualization
expenses(1)................ -- -- -- -- (12.1)
--------- --------- --------- --------- ---------
Net income.................. $ 135.3 $ 114.3 $ 209.2 $ 181.9 $ 133.9
========= ========= ========= ========= =========
Net income per share
(basic)(2)................. $ 2.26 $ 2.16 $ 3.83 $ 3.63 $ 2.61
========= ========= ========= ========= =========
Net income per share
(diluted)(2)............... $ 2.24 $ 2.16 $ 3.82 $ 3.63 $ 2.61
========= ========= ========= ========= =========
Adjusted Net Income(3)...... $ 149.3 $ 125.3 $ 181.0 $ 137.9 $ 116.4
========= ========= ========= ========= =========
BALANCE SHEET DATA (AT
PERIOD END):
Total assets................ $25,244.6 $21,967.2 $22,549.0 $18,970.3 $17,757.7
Long-term debt.............. 199.5 202.1 202.1 202.2 202.3
Total liabilities........... 22,310.6 19,257.6 19,714.8 16,461.6 15,425.0
Minority interest:
Mandatorily redeemable pre-
ferred securities of a
subsidiary trust holding
solely junior subordinated
debentures of AFC(4)...... 300.0 300.0 300.0 -- --
Common stock(5)............ 153.7 146.2 152.9 784.0 758.5
--------- --------- --------- --------- ---------
453.7 446.2 452.9 784.0 758.5
Equity...................... 2,480.3 2,263.4 2,381.3 1,724.7 1,574.2
</TABLE>
- --------
(1) Demutualization expenses relate to costs associated with conversion from a
mutual life insurance company to a stock life insurance company. The
demutualization resulted in the issuance of 37.5 million shares of AFC
common stock. Concurrent with the demutualization was an initial public
offering which resulted in issuance of an additional 12.6 million shares
of AFC common stock. The demutualization and initial public offering
occurred during the quarter ended December 31, 1995.
(2) Net income per share for the nine months ended September 30, 1998 and
1997, and for the years ended December 31, 1997 and 1996 are based on a
weighted average of the number of shares outstanding for each period
presented. The net income per share for the year ended December 31, 1995
is unaudited and is pro forma based on a weighted average of the number of
shares that would have been outstanding for the year had the
demutualization transaction and the initial public offering of AFC Common
Stock occurred as of January 1, 1995, and does not represent a projection
or forecast of AFC's consolidated results of operations for any future
period.
All earnings per share amounts for all periods presented have been prepared
in conformity with Statement of Financial Accounting Standards No. 128,
Earnings Per Share. The adoption of the aforementioned standard did not
have a material effect on previously reported earnings per share. The
diluted weighted average shares outstanding applicable to AFC Common Stock
were 60.5 million and 53.0 million for the nine months ended September 30,
1998 and 1997, respectively, and 54.8 million, 50.1 million and 50.1
million for the years ended December 31, 1997, 1996 and 1995, respectively.
The basic weighted average shares outstanding for the nine months ended
September 30, 1998 and 1997 were 60.0 million and 52.9 million,
respectively, and 54.7 million, 50.1 million, and 50.1 million for the
years ended December 31, 1997, 1996 and 1995, respectively.
(3) Adjusted net income represents net income adjusted to eliminate certain
items which management believes are not indicative of overall operating
trends, including net realized gains and losses on the sales of
investments, net gains and losses on disposals of businesses,
extraordinary items, differential earnings tax and certain other items.
While these items may be significant components in understanding and
assessing AFC's financial performance, management believes adjusted net
income enhances an investor's understanding of AFC's results of operations
by highlighting net income attributable to the normal, recurring
operations of the business. However, adjusted net income should not be
construed as a substitute for net income determined in accordance with
generally accepted accounting principles.
9
<PAGE>
(4) In February 1997, AFC Capital Trust (the "Trust"), a subsidiary business
trust of AFC, issued $300.0 million Series A Capital Securities, which pay
cumulative dividends at a rate of 8.207% semiannually. The Trust exists for
the sole purpose of issuing the Capital Securities and investing the
proceeds thereof in an equivalent amount of 8.207% Junior Subordinated
Deferrable Interest Debentures due 2027 of AFC. Through certain guarantees,
the Subordinated Debentures and the terms of related agreements, AFC has
irrevocably and unconditionally guaranteed the obligations of the Trust
under the Capital Securities.
(5) AFC's interest in APY, through its wholly owned subsidiary SMA Financial
Corp., was represented by ownership of 59.5% and 58.3% at December 31, 1996
and December 31, 1995, respectively. Subsequent to the merger of AFC and
APY on July 16, 1997, minority interest reflects AFC's interest in Citizens
Corporation of 82.5% at September 30, 1997 and December 31, 1997, and 83.2%
at September 30, 1998.
SELECTED FINANCIAL INFORMATION OF CITIZENS
Set forth below is certain selected consolidated financial information with
respect to Citizens and its subsidiaries excerpted from the information
contained in the Citizens' Annual Report on Form 10-K (the "Citizens 10-K") and
Citizens' Quarterly Report on Form 10-Q for the quarter ended September 30,
1998. More comprehensive financial information is included in the Citizens' 10-
K and the Citizens' 10-Q and other documents filed by Citizens with the
Commission, and the following summary is qualified in its entirety by reference
to such information. The Citizens' 10-K and the Citizens' 10-Q and such other
documents are available for inspection and copies thereof should be obtainable
in the manner set forth below under "--Available Information."
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
OF CITIZENS CORPORATION
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED AT OR FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Revenues................ $ 769.5 $ 741.5 $ 992.4 $ 945.6 $ 906.5
=========== =========== =========== =========== ===========
Net income.............. $ 65.0 $ 62.3 $ 94.2 $ 84.1 $ 74.9
Dividends on Series A
preferred stock....... -- -- -- -- (2.0)
----------- ----------- ----------- ----------- -----------
Net income available to
common shareholders.... $ 65.0 $ 62.3 $ 94.2 $ 84.1 $ 72.9
=========== =========== =========== =========== ===========
Per common share data
(basic and diluted)
Net income available to
common
shareholders(1)....... $ 1.85 $ 1.77 $ 2.67 $ 2.37 $ 2.02
=========== =========== =========== =========== ===========
Adjusted Net Income(2).. $ 43.6 $ 45.7 $ 76.9 $ 75.1 $ 72.5
=========== =========== =========== =========== ===========
BALANCE SHEET DATA (AT
PERIOD END):
Total assets............ $ 2,633.3 $ 2,601.5 $ 2,605.3 $ 2,503.0 $ 2,470.8
Total liabilities....... 1,719.7 1,766.9 1,732.4 1,748.5 1,788.0
Equity.................. 913.6 834.6 872.9 754.5 682.8
ADDITIONAL DATA:
Book value per
share(1)............... $ 26.11 $ 23.64 $ 24.75 $ 21.39 $ 19.04
Ratio of earnings to
fixed charges(3)....... 80.2x 77.9x 63.5x 56.5x 25.3x
Statutory combined
ratios(4)
Citizens............... 103.5 103.5 101.1 100.4 98.6
Property and casualty
industry.............. -- 101.1 101.8 105.8 106.5
Cash dividends declared
per share.............. $ 0.15 $ 0.15 $ 0.20 $ 0.20 $ 0.20
</TABLE>
- --------
(1) All earnings per share amounts for all periods presented have been prepared
in conformity with Statement of Financial Accounting Standards No. 128,
Earnings Per Share. The adoption of the aforementioned standard had no
effect on previously reported earnings per share. The weighted average
shares outstanding applicable to Citizens Common Stock
10
<PAGE>
were 35.2 million and 35.3 million for the nine months ended September 30,
1998 and 1997, respectively. The weighted average shares outstanding
applicable to Citizens Common Stock were 35.3 million, 35.5 million and
36.1 million for the years ended December 31, 1997, 1996 and 1995,
respectively.
(2) Adjusted net income represents net income adjusted to eliminate certain
items which management believes are not indicative of overall operating
trends, including net realized gains and losses on the sales of
investments. While these items may be significant components in
understanding and assessing Citizens' financial performance, management
believes adjusted net income enhances an investor's understanding of
Citizens' results of operations by highlighting net income attributable to
the normal, recurring operations of the business. However, adjusted net
income should not be construed as a substitute for net income determined
in accordance with generally accepted accounting principles.
(3) For purposes of determining the historical ratios of earnings to fixed
charges, earnings consist of earnings before federal income taxes plus
fixed charges. Fixed charges consist of the portion of operating lease
rentals representative of the interest factor. In addition, fixed charges
in 1995 include dividends on preferred stock.
(4) The amounts presented reflect ratios after policyholder dividends.
Industry averages are from A.M. Best. Industry combined ratios after
policyholder dividends are not yet published for the nine months ended
September 30, 1998.
SOURCE AND AMOUNT OF FUNDS
If all outstanding Shares (other than shares owned by the Purchaser and
Shares subject to Options) are purchased pursuant to the Offer, the maximum
amount required by the Purchaser to purchase such Shares will be approximately
$195.9 million. In addition, the Purchaser and AFC expect to incur expenses of
approximately $2 million in connection with the Transaction.
AFC, the Purchaser and The Chase Manhattan Bank ("Chase") have entered into
a commitment letter which provides for a $200 million revolving line of credit
that expires in June 1999. Borrowings under the line of credit will be
unsecured and will bear interest at a rate per annum equal to, at AFC's
option, Chase's base rate or the eurodollar rate plus an applicable margin.
The commitment letter provides that the loan documentation relating to the
revolving line of credit will require AFC to provide Chase certain period
financial reports and comply with certain financial ratios. AFC expects to
enter into definitive documentation with respect to the revolving line of
credit on or prior to December 1, 1998. AFC expects to repay these borrowings
with cash from operations. AFC and the Purchaser intend to pay the purchase
price for the Shares and any related fees and expenses from borrowings under
the Chase line of credit, its working capital and other cash on hand. The
Offer is not conditioned upon the closing of the Chase credit facility or upon
AFC obtaining any other arrangements for the financing of the Offer.
MISCELLANEOUS
The Offer is being made to all holders of Shares, but is not being made in
any jurisdiction where the making of such would not be in compliance with
applicable law. If the Purchaser becomes aware of any state where the making
of the Offer is prohibited by applicable law, the Purchaser will make a good
faith effort to comply with any such law. If, after the good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) holders of Shares in such
jurisdiction. In those jurisdictions where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of the Purchaser by Goldman Sachs or one or
more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR AFC NOT CONTAINED HEREIN OR IN
THE OFFER TO PURCHASE AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
11
<PAGE>
Pursuant to Rules 13e-3 and 14d-1 of the General Rules and Regulations under
the Exchange Act, the Purchaser has filed a Schedule 13E-3 and a Schedule 14D-
1, together with exhibits in each case, furnishing additional information with
respect to the Offer and Merger. Such Schedule 13E-3, Schedule 14D-1 and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth with respect to
information concerning Citizens in "Available Information" in the Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).
Citizens Acquisition Corporation
November 17, 1998
12
<PAGE>
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of Citizens or his
broker, dealer, commercial bank or other nominee to the Depositary at one of
its addresses set forth below.
The Depository is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand: By Overnight Courier: By Mail:
First Chicago Trust First Chicago Trust Company First Chicago Trust
Company of of New York Company
New York Tenders & Exchanges of New York
Tenders & Exchanges Suite 4680-CIT Tenders & Exchanges
c/o Securities Transfer 14 Wall Street, 8th Floor Suite 4660-CIT
and New York, NY 10005 P.O. Box 2569
Reporting Services Inc. Jersey City, NJ 07303-
100 William Street, 2569
Galleria
New York, NY 10038
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent at its telephone numbers and location
listed below. You may also contact your broker, dealer, commercial bank or
trust company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road . Carlstadt, New Jersey 07072-2586
Banks and Brokers call (800) 346-7885
All others call Toll Free (888) 296-3503
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000 (Call Collect)
(800) 323-5678 (Toll Free)
