SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 16, 1998
MID OCEAN LIMITED
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(Exact Name of Registrant as Specified in its Charter)
Cayman Islands 001-14336 Not applicable
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation or
Organization)
Richmond House, 12 Par-La-Ville Road, Hamilton, Bermuda HM 08
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(Address of Principal Executive Offices) (Zip Code)
(441) 292-1358
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
Mid Ocean Limited, a Cayman Islands corporation ("Mid Ocean"), entered
into an Agreement and Schemes of Arrangement dated as of March 16, 1998 (the
"Agreement"), pursuant to which each of Mid Ocean and EXEL Limited, a Cayman
Islands corporation ("EXEL") will become subsidiaries of a newly-formed Cayman
Islands corporation (which will change its name to "EXEL Limited") ("New EXEL")
pursuant to a Scheme of Arrangement between Mid Ocean and its shareholders other
than EXEL (the "Company Arrangement") and a Scheme of Arrangement between Exel
and its shareholders (the "Parent Arrangement," and together with the Company
Arrangement, the "Arrangements").
In connection with entering into the Agreement, EXEL announced that it
plans to buy back up to $500 million of the shares of its common stock or the
stock of New EXEL, as applicable, before or after the consummation of the
Arrangements.
In accordance with the terms of the Agreement, (i) each Class A Ordinary
Share of Mid Ocean common stock, par value $0.20 per share (the "Class A
Ordinary Shares"), other than such Class A Ordinary Shares held by EXEL or any
of its subsidiaries, issued and outstanding immediately prior to the effective
time of the Company Arrangement shall, by virtue of the Company Arrangement and
without any action on the part of the holders thereof, be transferred to New
EXEL and there shall be allotted and issued to the holder thereof 1.0215
ordinary voting shares of New EXEL ("New EXEL Voting Shares") per Class A
Ordinary Share so transferred (such number being defined herein as the "Exchange
Ratio"), (ii) each Class B Ordinary Share of Mid Ocean common stock, par value
$0.20 per share (the "Class B Ordinary Shares") and Class C Ordinary Share of
Mid Ocean common stock, par value $0.20 per share ("Class C Ordinary Shares")
(the Class A Ordinary Shares, Class B Ordinary Shares, and Class C Ordinary
Shares collectively being the "Shares") issued and outstanding immediately prior
to the Company Arrangement Effective Time shall, by virtue of the Company
Arrangement and without any action on the part of the holder thereof, be
transferred to New EXEL and there shall be allotted and issued to the holder
thereof that number of Non-Voting Common Shares, par value $0.01 per share, of
New EXEL ("New EXEL Non-Voting Shares," and together with the New EXEL Voting
Shares, the "New EXEL Shares") equal to the Exchange Ratio, and (iii) each
ordinary share, par value $0.01, of EXEL ("Parent Shares") issued and
outstanding immediately prior to the Effective Time shall be, by virtue of the
Parent Arrangement and without any action on the part of the holder thereof,
transferred to New EXEL and there shall be allotted and issued to the holder
thereof one New EXEL Voting Share per Parent Share so transferred.
In addition, at the Effective Time, all rights with respect to Shares
pursuant to stock options ("Company Roll-Over Options") shall be replaced by
fully vested and exercisable options ("New EXEL Options") to acquire New EXEL
Shares; provided that to the extent the Company Roll-Over Options that were not
otherwise exercisable would become automatically exercisable upon the Effective
Time, the Board of Directors of Mid Ocean has agreed to use reasonable efforts
to obtain optionees' agreements, if required, that each such Company Roll-Over
Option shall be automatically exercisable on a pro rata basis upon the Effective
Time only with respect to 50% of the New EXEL Shares subject to the New EXEL
Options. At the Effective Time, all rights with re spect to Parent Shares
pursuant to stock options outstanding at the Effective Time ("Parent Options")
shall be canceled and replaced by rights with respect to New EXEL Voting Shares
("New EXEL Options") on the same terms as the Parent Options so canceled and
replaced.
The Arrangements are intended to constitute an exchange under Section
351(a) of the Internal Revenue Code of 1986, as amended, and Mid Ocean
understands that the Arrangements are to be accounted for as a purchase.
Consummation of the Arrangements is subject to various condi tions,
including: (i) approval of the Agreement and the Arrangements by the
shareholders of each of Mid Ocean and EXEL pursuant to the laws of the Cayman
Islands; (ii) receipt of requi site regulatory and contractual approvals,
including from the Grand Court of the Cayman Islands and the Corporation of
Lloyd's; (iii) receipt by each of EXEL and Mid Ocean of an opinion of counsel in
reasonably satisfactory form as to the tax treatment of certain aspects of the
Arrangements; (iv) the registration pursuant to the Securities Act of 1933, as
amended (the "Act"), of the New EXEL Shares to be issued in the Arrangements;
(v) listing of the New EXEL Shares on the New York Stock Exchange, and (vi)
satisfaction of certain other conditions.
Mid Ocean and EXEL have further agreed that they will (i) prepare and file
with the Securities and Exchange Commission (the "SEC") a Joint Proxy Statement
in which the substance of the Registration Statement of the New EXEL Shares
shall be included and (ii) cause New EXEL to file the Registration Statement for
the New EXEL Shares to be issued pursuant to the Arrangements with the SEC
promptly after the conclusion of the SEC's review of the Joint Proxy Statement.
After the Registration Statement is declared effective, each of EXEL and Mid
Ocean have agreed to request the Court to convene a meeting of its respective
shareholders for the purpose of approving the Agreement and the Arrangements.
In connection with the Agreement, Mid Ocean understands that EXEL and JP
Morgan Capital Corporation, a shareholder of Mid Ocean, have entered into a
Support Agreement, dated as of March 16, 1998 pursuant to which, among other
things, such shareholder has agreed to vote the Shares then owned by such
shareholder in favor of the Arrangements and the Agreement.
Each of the preceding descriptions of the Agreement and the Support
Agreement is qualified in its entirety by reference to the copies of the
Agreement and the Support Agreement included as Exhibits 2.1 and 2.2 hereto,
respectively, and which are hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit Description
2.1 Agreement and Schemes of Arrangement, dated as of March 16, 1998, by
and among EXEL Limited, EXEL Merger Co. Ltd., and Mid Ocean Limited
(previously filed with the Commission by EXEL Limited as Exhibit 2.1 to
its Form 8-K filed on March 17, 1998, and incorporated herein by
reference).
2.2 Support Agreement, dated as of March 16, 1998, by and among EXEL
Limited, EXEL Merger Co. Ltd., and JP Morgan Capital Corporation
(previously filed with the Commission by EXEL Limited as Exhibit 2.2 to
its Form 8-K filed on March 17, 1998, and incorporated herein by
reference).
99.1 Text of joint press release, dated March 16, 1998, issued by EXEL
Limited and Mid Ocean Limited (previously filed with the Commission by
EXEL Limited as Exhibit 99.1 to its Form 8-K filed on March 17, 1998,
and incorporated herein by reference).
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.
Dated: March 20, 1998
MID OCEAN LIMITED
By: /s/ Charles F. Hays
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Charles F. Hays
Senior Vice President and
Chief Financial and Administrative Officer
