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): October 29, 1999
Financial Security Assurance Holdings Ltd.
(Exact name of registrant as specified in its charter)
New York 1-12644 13-3261323
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
350 Park Avenue, New York, NY 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 826-0100
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Item 7. Financial Statements and Exhibits.
This current report on Form 8-K is being filed to incorporate by reference
the documents included as Exhibits hereto into the following Registration
Statements of Financial Security Assurance Holdings Ltd. (the "Company"):
o Registration Statement No. 333-74165 on Form S-3, effective August
18, 1999 (the "August 1999 Form S-3"), and
o Registration Statement No. 333-34181 on Form S-3, effective
September 10, 1997, as amended by the August 1999 Form S-3, which
constituted Post-Effective Amendment No. 1 thereto.
The documents included as Exhibits hereto, and incorporated by reference into
such Registration Statements, relate to sales by the Company of shares of its
Common Stock.
Exhibit Number Description
-------------- -----------
1. Purchase Agreement dated October 29, 1999 between White
Mountains Insurance Group, Ltd. and the Company.
2. Purchase Agreement dated November 2, 1999 between XL
Capital Ltd and the Company.
3. Purchase Agreement dated October 29, 1999 between The
Tokio Marine and Fire Insurance Co., Ltd. and the
Company.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,
Date: November 24, 1999 By: /s/ Bruce Stern
---------------------------------
Bruce E. Stern, Managing Director
3
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
1. Purchase Agreement dated October 29, 1999 between White
Mountains Insurance Group, Ltd. and the Company.
2. Purchase Agreement dated November 2, 1999 between XL
Capital Ltd and the Company.
3. Purchase Agreement dated October 29, 1999 between The
Tokio Marine and Fire Insurance Co., Ltd. and the
Company.
October 29, 1999 Exhibit 1
White Mountains Insurance Group Ltd
Clarendon House
2 Church Street
Hamilton, Bermuda
Attn: Mr. K. Thomas Kemp, President and Chief Executive Officer
Re: Sale of U.S.$50,000,000 of Common Stock of Financial Security
Assurance Holdings Ltd.
Ladies and Gentlemen:
Financial Security Assurance Holdings Ltd., a New York corporation
("FSA"), and White Mountains Insurance Group Ltd, a Bermuda corporation
("WMIG"), hereby agree that, upon the terms and subject to the conditions set
forth below, FSA shall sell to WMIG and WMIG shall purchase from FSA, shares of
FSA Common Stock, par value $.01 per share ("FSA Common Stock"), for
U.S.$50,000,000 (the "Aggregate Purchase Price").
1. Number of Shares. The purchase price per share (the "Per Share Price")
shall equal 97.5% of the average of the high sale price and the low sale price
of FSA common stock on the New York Stock Exchange on the date hereof, resulting
in a Per Share Price of $54.20. Accordingly, the number of shares of FSA Common
Stock to be sold by FSA to WMIG hereunder (the "Shares") shall equal the
quotient of the Aggregate Purchase Price divided by the Per Share Price, being
922,509 shares. At least 750,000 of the Shares will be registered under FSA's
current shelf registration statement and will not bear restricted legends. All
the Shares acquired by WMIG will be subject to demand registration rights under
same terms and conditions (on an aggregate basis) as the shares of FSA common
stock currently owned by WMIG and its affiliates.
2. Conditions to Parties Obligations Hereunder. The sole conditions (the
"Closing Conditions") to the performance by FSA and WMIG of their obligations
hereunder are (a) approval by the Board of Directors of WMIG of this Agreement
and the transaction contemplated hereby at its meeting to be held on November 1,
1999 or as promptly thereafter as practicable (the "WMIG Board Approval
Condition"); and (b) if applicable, (i) expiration or earlier termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder (the "HSR Act"), and (ii)
confirmation that the requirements of the New York Stock Exchange applicable to
the sale of Shares contemplated hereby will not require FSA shareholder approval
(the "NYSE Condition"). FSA and WMIG shall endeavor to (i) promptly make any
filing required under the HSR Act and use commercially reasonable efforts to
obtain expiration or earlier termination of the waiting period under the HSR Act
(the "HSR Condition") and satisfaction of the NYSE Condition, and (ii)
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October 29, 1999
Page 2
consummate, and shall use their best efforts to consummate, the closing
hereunder. In furtherance of the foregoing, WMIG agrees to schedule a Board
meeting on November 1, 1999 or as promptly thereafter as practicable at which
the Board of WMIG shall consider this Agreement and the transaction contemplated
hereby. If the WMIG Board shall not approve this Agreement and the transaction
contemplated hereby at such meeting, then this Agreement shall terminate.
3. Closing Date. The closing hereunder shall occur on a date (the "Closing
Date") determined by FSA on which commercial banks are open for business in New
York following the date on which the Closing Conditions shall have been
satisfied. FSA shall provide WMIG at least 5 business days' notice of the
Closing Date.
4. Anti-Dilution Protection. Until the earlier of May 13, 2004 and the
date at which WMIG shall cease to own all the outstanding shares of White
Mountain Services Corporation, FSA agrees that, immediately prior to any
issuance of shares by FSA that would otherwise dilute WMIG's ownership from more
than 25% to less than 25% of the outstanding common stock of FSA, FSA will offer
WMIG the ability (on at least 5 business days notice) to retain WMIG's fully
diluted ownership in the common stock of FSA at a level equal to or greater than
25% by selling FSA common stock to WMIG for a purchase price per share equal to
the price per share of the diluting event as determined in good faith by FSA
(e.g. the price to public in the case of a public offering and the closing price
per share on the NYSE in the case of any shares issued in connection with any
FSA benefit plan); provided, however, that (a) any such purchase by WMIG shall
comply with law and any requirements or constraints applicable to FSA, including
the requirements of (i) any securities rating agency rating FSA or any FSA
subsidiary and (ii) any securities exchange on which shares of FSA are listed
and (b) FSA shall not be required to delay consummation of the diluting event in
order to close close the purchase by WMIG if such delay would be adverse to the
interests of FSA as determined in good faith by FSA.
5. Delivery of and Payment for Shares. At the closing hereunder, FSA will
deliver, or cause to be delivered to WMIG, the Shares, registered in the name of
WMIG or its nominee, and WMIG shall simultaneously deliver to FSA immediately
available funds in an amount equal to the Aggregate Purchase Price
6. Representations and Warranties of FSA. FSA hereby represents and
warrants that (a) FSA is a corporation duly organized and validly existing under
the laws of the State of New York, (b) FSA has the full corporate power and
authority to execute, deliver and perform its obligations hereunder, and (c) on
the date of consummation of the transaction contemplated hereby, FSA shall
transfer the Shares to WMIG, free and clear of any lien, charge, encumbrance or
restriction on transfer.
7. Representations and Warranties of WMIG. WMIG hereby represents and
warrants that it is acquiring the Shares hereunder for investment only and not
with a view toward distribution.
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October 29, 1999
Page 3
8. Fees and Expenses. Each of FSA and WMIG shall pay its own respective
fees and expenses (including, without limitation, the fees of any attorneys,
accountants, or other representatives) incurred in connection with this letter
agreement and the transactions contemplated hereby, whether or not such
transactions are consummated, it being agreed that fees of Cravath, Swaine &
Moore incurred to date in connection with a possible sale of White Mountains
Services Corporation shall be for the account of WMIG. Each of FSA and WMIG
represents that no broker, finder or investment banker has been retained or
engaged on its behalf or is entitled to any brokerage, finder's or other fee,
commission or compensation in connection with the transactions contemplated
hereby.
9. Communications. All notices and other communications provided for in
this letter agreement shall be in writing and shall be deemed effective upon
receipt at the party's address and facsimile number (a), in the case of WMIG, by
telephonic communication with Raymond Barrette at 603-640-2211, with a facsimile
to his attention at telecopy number 603-643-4562, and (b) in the case of FSA, by
telephonic communication with Bruce Stern at (212) 339-3482, with a facsimile to
his attention at telecopy number (212) 339-0849.
10. Assignment. The rights and obligations of FSA and WMIG hereunder may
not be assigned without the prior written consent of the other party.
11. Amendment. The terms and provisions of this letter agreement may not
be amended, modified or waived except by written instrument signed by both FSA
and WMIG.
12. Counterparts. This letter agreement may be executed in counterparts,
each of which when so executed and delivered shall be an original, but such
counterparts together shall constitute but one instrument.
13. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with WMIG understanding of our
agreement, please sign and return to us the enclosed copy of this Agreement,
whereupon it shall become a binding agreement between us.
<PAGE>
October 29, 1999
Page 4
Very truly yours,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,
By: /s/ Bruce Stern
--------------------------------------------
Name: Bruce E. Stern
Title: Managing Director and General Counsel
Agreed and Accepted by:
WHITE MOUNTAINS INSURANCE GROUP LTD,
By: /s/ K. Thomas Kemp
--------------------------------------------
Name: K. Thomas Kemp
Title: President and Chief Executive Officer
October 29, 1999 Exhibit 2
The Tokio Marine and Fire Insurance Co., Ltd.
Otemachi First Square WEST
5-1, Otemachi 1-Chome,
Chiyoda-ku, Tokyo 100-0004 JAPAN
Attn: Mr. Fudeji Hama, General Manager, Financial Services Department
Re: Purchase of 700,000 Shares of Common Stock of Financial Security
Assurance Holdings Ltd.
Ladies and Gentlemen:
Financial Security Assurance Holdings Ltd., a New York corporation
("FSA"), and Tokio Marine and Fire Insurance Co., Ltd, a Japanese corporation
("Tokio Marine"), hereby agree that, upon the terms and subject to the
conditions set forth below, FSA shall sell to Tokio Marine or its designee and
Tokio Marine or its designee shall purchase from FSA, 700,000 shares (the
"Shares") of FSA Common Stock, par value $.01 per share ("FSA Common Stock"),
for U.S.$54.20 per share (the "Per Share Price"), for an aggregate purchase
price of U.S.$37,940,000 (the "Aggregate Purchase Price").
1. The Shares. The purchase price per share (the "Per Share Price") equals
97.5% of the average of the high sale price and the low sale price of FSA common
stock on the New York Stock Exchange on the date hereof. The Per Share Price is
the same price per share to be paid by White Mountains Insurance Group Ltd
("White Mountains") pursuant to which White Mountains has agreed to purchase
U.S.$50 million of FSA common shares. The Shares issued hereunder shall be
subject to the provisions of the Stockholders Agreement dated December 27, 1990,
as amended, among Tokio Marine, FSA and U S WEST Capital Corporation. All the
Shares acquired by Tokio Marine will be subject to demand registration rights
under same terms and conditions (on an aggregate basis) as the shares of FSA
common stock currently owned by Tokio Marine.
2. Conditions to Parties Obligations Hereunder. The sole condition (the
"Closing Conditions") to the performance by Tokio Marine of its obligations
hereunder is approval by the Board of Directors of Tokio Marine of this
Agreement and the transaction contemplated hereby at its meeting to be held on
November 16, 1999 or as promptly thereafter as practicable. FSA and Tokio Marine
shall endeavor to use their best efforts to consummate the closing hereunder.
3. Closing Date. The closing hereunder shall occur on the date (the
"Closing Date") specified by FSA on 5 business days notice to Tokio Marine, and
shall be a day on
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October 29, 1999
Page 2
which commercial banks are open for business in New York following the date on
which the Closing Condition shall have been satisfied.
4. Delivery of and Payment for Shares. At the closing hereunder, FSA will
deliver, or cause to be delivered to Tokio Marine, the Shares, registered in the
name of Tokio Marine or its designee, and Tokio Marine shall simultaneously
deliver to FSA immediately available funds in an amount equal to the Aggregate
Purchase Price.
5. Representations and Warranties of FSA. FSA hereby represents and
warrants that (a) FSA is a corporation duly organized and validly existing under
the laws of the State of New York, (b) FSA has the full corporate power and
authority to execute, deliver and perform its obligations hereunder, and (c) on
the date of consummation of the transaction contemplated hereby, FSA shall
transfer the Shares to Tokio Marine, free and clear of any lien, charge or
encumbrance.
6. Representations and Warranties of Tokio Marine. Tokio Marine hereby
represents and warrants that it is acquiring the Shares hereunder for investment
only and not with a view towards distribution.
7. Fees and Expenses. Each of FSA and Tokio Marine shall pay its own
respective fees and expenses (including, without limitation, the fees of any
attorneys, accountants, or other representatives) incurred in connection with
this letter agreement and the transactions contemplated hereby, whether or not
such transactions are consummated. Each of FSA and Tokio Marine represents that
no broker, finder or investment banker has been retained or engaged on its
behalf or is entitled to any brokerage, finder's or other fee, commission or
compensation in connection with the transactions contemplated hereby.
8. Communications. All notices and other communications provided for in
this letter agreement shall be in writing and shall be deemed effective upon
receipt at the party's address and facsimile number (a), in the case of Tokio
Marine, by telephonic communication with Mr. Fudeji Hama at (03) 5223-3506, with
a facsimile to his attention at telecopy number (03) 5223-3534, and (b) in the
case of FSA, by telephonic communication with Mr. Bruce E. Stern at (212)
339-3482, with a facsimile to his attention at telecopy number (212) 339-0849.
9. Assignment. The rights and obligations of FSA and Tokio Marine
hereunder may not be assigned without the prior written consent of the other
party.
10. Amendment. The terms and provisions of this letter agreement may not
be amended, modified or waived except by written instrument signed by both FSA
and Tokio Marine.
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October 29, 1999
Page 3
11. Counterparts. This letter agreement may be executed in counterparts,
each of which when so executed and delivered shall be an original, but such
counterparts together shall constitute but one instrument.
12. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with Tokio Marine's understanding of our
agreement, please sign and return to us the enclosed copy of this Agreement,
whereupon it shall become a binding agreement between us.
Very truly yours,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,
By: /s/ Bruce Stern
-----------------------------------------------------
Name: Bruce E. Stern
Title: Managing Director and General Counsel
Agreed and Accepted by:
THE TOKIO MARINE AND FIRE INSURANCE CO., LTD.,
By: /s/ Fudeji Hama
-----------------------------------------------------
Name: Fudeji Hama
Title: General Manager, Financial Services Department
November 2, 1999 Exhibit 3
XL Capital Ltd
Cumberland House
One Victoria Street
Hamilton, Bermuda
Attn: Mr. Robert Lusardi, Chief Financial Officer
Re: Sale of U.S.$25,000,000 of Common Stock of Financial Security
Assurance Holdings Ltd.
Ladies and Gentlemen:
Financial Security Assurance Holdings Ltd., a New York corporation
("FSA"), and XL Capital Ltd, a Cayman Islands corporation ("XL"), hereby agree
that, upon the terms and subject to the conditions set forth below, FSA shall
issue and sell to XL or its designee and XL or its designee shall purchase from
FSA, shares of FSA Common Stock, par value $.01 per share ("FSA Common Stock"),
for U.S.$25,000,000 (the "Aggregate Purchase Price").
1. Number of Shares. The purchase price per share (the "Per Share Price")
shall equal 97.5% of the average of the high sale price and the low sale price
of FSA common stock on the New York Stock Exchange on October 29, 1999.
Accordingly, the Per Share Price is U.S.$54.20. Accordingly, the number of
shares of FSA Common Stock to be sold by FSA to XL hereunder (the "Shares")
shall equal the quotient of the Aggregate Purchase Price divided by the Per
Share Price, or 461,255 (rounded to the nearest whole share). The Shares shall
be registered by FSA under its shelf registration statement at or before
closing.
2. Conditions to Parties Obligations Hereunder. The conditions (the
"Closing Conditions") to the performance by FSA and XL of their obligations
hereunder are (a) the representations and warranties of FSA and XL,
respectively, shall be true and correct as of the date hereof and as of the
Closing and (b) all regulatory consents and approvals, if any, required in
connection with the issuance, sale and purchase of the Shares shall have been
duly obtained, made or given and shall be in full force and effect as of the
Closing. FSA and XL shall endeavor to use their best efforts to consummate the
closing hereunder; provided, however, that neither FSA nor XL shall be required
to take any action that may have a material adverse effect on its assets,
business or future prospects.
3. Closing Date. The closing (the "Closing") hereunder shall occur on the
date (the "Closing Date") specified by FSA on 3 business days notice to XL, and
shall be a day on which commercial banks are open for business in New York and
Bermuda following the date on which the Closing Conditions shall have been
satisfied.
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November 2, 1999
Page 2
4. Delivery of and Payment for Shares. At the Closing, FSA will deliver,
or cause to be delivered to XL, the Shares, registered in the name of XL or its
designee, and XL shall simultaneously deliver to FSA immediately available funds
in an amount equal to the Aggregate Purchase Price.
5. Representations and Warranties of FSA. FSA hereby makes to XL the
representations and warranties contained in Section 3 of the Share Purchase
Agreement, dated as of November 3, 1998 (the "Share Purchase Agreement"),
between FSA and XL, as amended by the First Amendment thereto; provided,
however, that references in said Section 3 to "the Agreement" or to "Transaction
Document[s]" shall refer to this letter agreement, except that (a) the number of
shares of FSA Common Stock currently outstanding is substantially as set forth
in FSA's most recent quarterly report on Form 10-Q, (b) White Mountains
Insurance Group Ltd has certain anti-dilution rights in respect of future
issuances of FSA Common Stock and (c) per its press release of November 1, 1999,
FSA intends to issue approximately $140 million of Common Stock at $54.20 per
share (including the Shares sold to XL hereunder). In addition, FSA represents,
warrants and agrees that a registration statement in respect of the Shares has
been filed with the Securities and Exchange Commission (the "SEC"), such
registration statement and any post-effective amendment thereto have been or
will have been declared effective by the SEC at or prior to Closing and no stop
order suspending the effectiveness of such registration statement has been or
shall have been issued and no proceeding for that purpose has been or shall have
been initiated or threatened by the SEC.
6. Representations and Warranties of XL. XL hereby represents and warrants
that it is acquiring the Shares hereunder for investment only and not with a
view towards distribution; it being understood that XL shall have the right to
sell or otherwise dispose of any Shares pursuant to registration or an exemption
therefrom.
7. Fees and Expenses. Each of FSA and XL shall pay its own respective fees
and expenses (including, without limitation, the fees of any attorneys,
accountants, or other representatives) incurred in connection with this letter
agreement and the transactions contemplated hereby, whether or not such
transactions are consummated. The Shares shall be subject to the Registration
Rights Agreement, dated November 3, 1998, between FSA and XL, and nothing
hereunder shall limit, amend or modify the rights or obligations of any party
thereunder. Each of FSA and XL represents that no broker, finder or investment
banker has been retained or engaged on its behalf or is entitled to any
brokerage, finder's or other fee, commission or compensation in connection with
the transactions contemplated hereby.
8. Communications. All notices and other communications provided for in
this letter agreement shall be in writing and shall be deemed effective upon
receipt at the party's address and facsimile number (a), in the case of XL, by
telephonic communication with Paul Giordano at 441- 294-7162, with a facsimile
to his attention at telecopy number
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November 2, 1999
Page 3
441-292-8618, and (b) in the case of FSA, by telephonic communication with Bruce
Stern at (212) 339-3482, with a facsimile to his attention at telecopy number
(212) 339-0849.
9. Assignment. The rights and obligations of FSA and XL hereunder may not
be assigned without the prior written consent of the other party.
10. Amendment. The terms and provisions of this letter agreement may not
be amended, modified or waived except by written instrument signed by both FSA
and XL.
11. Counterparts. This letter agreement may be executed in counterparts,
each of which when so executed and delivered shall be an original, but such
counterparts together shall constitute but one instrument.
12. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with XL understanding of our agreement,
please sign and return to us the enclosed copy of this Agreement, whereupon it
shall become a binding agreement between us.
Very truly yours,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,
By: /s/ Bruce Stern
--------------------------------------------
Name: Bruce E. Stern
Title: Managing Director and General Counsel
Agreed and Accepted by:
XL CAPITAL LTD,
By: /s/ Robert Lusardi
--------------------------------------------
Name: Robert Lusardi
Title: Chief Financial Officer
