-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UrtfFks1Jqinoj60FuCiyDFQFcIzCBaZ6G+LbpdeQtSZOSElfEHoUc0qjzYExHKx zYgqmaNx0DeR+bVZepRygQ== 0000950123-96-002840.txt : 19960605 0000950123-96-002840.hdr.sgml : 19960605 ACCESSION NUMBER: 0000950123-96-002840 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960604 SROS: NYSE GROUP MEMBERS: DESIGN PROFESSIONALS INSURANCE COMPANY GROUP MEMBERS: EBI INDEMNITY COMPANY GROUP MEMBERS: EMPLOYEE BENEFITS INSURANCE COMPANY GROUP MEMBERS: ORION CAPITAL CORP GROUP MEMBERS: SECURITY INSURANCE COMPANY OF HARTFORD GROUP MEMBERS: THE CONNECTICUT INDEMNITY COMPANY GROUP MEMBERS: THE CONNECTICUT SPECIALTY INSURANCE COMPANY GROUP MEMBERS: THE FIRE AND CASUALTY INSURANCE CO. OF CT SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GUARANTY NATIONAL CORP CENTRAL INDEX KEY: 0000044358 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 840445021 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43461 FILM NUMBER: 96576468 BUSINESS ADDRESS: STREET 1: 9800 SOUTH MERIDIAN BOULEVARD CITY: ENGLEWOOD STATE: CO ZIP: 80112-5901 BUSINESS PHONE: 3037548400 MAIL ADDRESS: STREET 1: 9800 SOUTH MERIDIAN BLVD CITY: ENGLEWOOD STATE: CO ZIP: 80112-5901 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ORION CAPITAL CORP CENTRAL INDEX KEY: 0000074931 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 956069054 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: 600 FIFTH AVENUE STREET 2: 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020-2302 BUSINESS PHONE: 212-332-8080 MAIL ADDRESS: STREET 1: 600 FIFTH AVENUE STREET 2: 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020-2302 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY FUNDING CORP OF AMERICA DATE OF NAME CHANGE: 19760518 FORMER COMPANY: FORMER CONFORMED NAME: TONGOR CORP OF AMERICA DATE OF NAME CHANGE: 19670330 FORMER COMPANY: FORMER CONFORMED NAME: TONGOR CORP DATE OF NAME CHANGE: 19661024 SC 14D1/A 1 SC 14D1/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 SCHEDULE 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 Guaranty National Corporation ------------------------------ (Name of Subject Company) Orion Capital Corporation The Connecticut Indemnity Company Connecticut Specialty Insurance Company Design Professionals Insurance Company EBI Indemnity Company Employee Benefits Insurance Company The Fire and Casualty Insurance Company of Connecticut Security Insurance Company of Hartford --------------------------------------- (Bidder) Common Stock, par value $1.00 per share ---------------------------------------- (Title of Class of Securities) 401192109 -------------------------------------- (CUSIP Number of Class of Securities) Michael P. Maloney, Esq. Vice President and General Counsel ORION CAPITAL CORPORATION 600 Fifth Avenue New York, New York 10020-2302 (212) 332-8080 ------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) Copy to: John J. McCann, Esq. Donovan Leisure Newton & Irvine 30 Rockefeller Plaza New York, New York 10112 (212) 632-3000 2 This Statement is filed by Orion Capital Corporation ("Orion") and the following of its wholly-owned subsidiaries: The Connecticut Indemnity Company, Connecticut Specialty Insurance Company, Design Professionals Insurance Company, EBI Indemnity Company, Employee Benefits Insurance Company, The Fire and Casualty Insurance Company of Connecticut and Security Insurance Company of Hartford (collectively with Orion, the "Purchasers") relating to the tender offer of the Purchasers to purchase up to 4,600,000 shares of common stock, par value $1.00 per share (the "Shares"), of Guaranty National Corporation, a Colorado corporation (the "Company"). This Statement further amends the Schedule 14D-1 of the Purchasers, dated May 8, 1996 previously amended by Amendment No. 1 dated May 23, 1996 (as heretofore and hereby amended, the "Schedule 14D-1"), by incorporating by reference herein the information set forth in the press release dated May 31, 1996 of Orion attached as Exhibit (a)(11) hereto. This Statement also amends Items 3, 7, 10 and 11 of the Schedule 14D-1 by adding the information set forth below. Except as otherwise indicated herein, the Schedule 14D-1 remains unchanged in all other respects. Capitalized terms not otherwise defined herein are defined as set forth in the Schedule 14D-1 or in the Offer to Purchase of the Purchasers, dated May 8, 1996 (the "Original Offer to Purchase"), as supplemented by the Supplement to the Offer Purchase dated June 4, 1996 (the - 2 - 3 "Supplement") which is attached as Exhibit (a)(10) hereto (together referred to as the "Offer to Purchase"). Item 3. Past Contacts, Transactions or Negotiations With the Subject Company The information set forth in Item 3 of the Schedule 14D-1 is hereby supplemented as follows: At the request of the Chairman of the Special Committee, Mr. Gruber met with him on May 28, 1996. The Chairman told Mr. Gruber that, while the Special Committee's financial advisor had not yet given the Committee its written opinion, it was his personal belief that the financial advisor would be willing to opine favorably if the Offer price were increased to $19 per Share. Mr. Gruber pointed out that such an increase would more than double the financial advisor's fee, which in his view was unconscionable. Mr. Gruber reiterated the intention of the Purchasers not to raise or reduce the Offer price of $17.50 per Share. He again pointed out that the retention of the Special Committee's financial advisor was structured in such a way as to create an inevitable conflict of interest on the part of the financial advisor and, in the Purchasers' opinion, called into question the credibility of the Special Committee's evaluation process. The Chairman of the Special Committee informed Mr. Gruber that a meeting of the Special Committee was scheduled for 8:00 p.m., Denver time, on May 29, 1996. - 3 - 4 Following Mr. Gruber's meeting with the Chairman of the Special Committee on May 28, the Purchasers confirmed to legal counsel for the Company and the Special Committee on May 29 that, if at least 4,600,000 Shares are validly tendered and accepted for payment and paid for, then: 1. The Purchasers will not purchase, prior to the third anniversary of the Expiration Date, additional Shares (if after giving effect to such purchase they would own more than 81% of the outstanding Shares) other than pursuant to an offer made to all holders of Shares and which is conditioned on the acceptance of such offer by holders owning at least a majority of the Shares then outstanding which are not held by the Purchasers and their affiliates. 2. If an offer is made to holders of Shares, as described in paragraph 1 above, prior to the third anniversary of the Expiration Date, the Purchasers will offer a purchase price involving cash consideration equal to at least $17.50 per Share. 3. The Purchasers will support adoption of a policy by the Board of Directors that any repurchase of Shares by the Company prior to the third anniversary of the Expiration Date should be approved by a majority of those members of the Board of Directors who are independent of and not employed by any of the Purchasers. - 4 - 5 4. If, at any time during the five years following the Expiration Date, the Purchasers should wish to sell as a block all the Shares owned by them, or propose a merger or consolidation involving the Company, they will not do so unless (a) in the case of a sale of all Purchasers' Shares, the purchaser of such Shares undertakes to offer to purchase all other Shares outstanding for consideration of equivalent value to that offered to the Purchasers or (b) in the case of a merger or consolidation, all Shares are exchanged for substantially equivalent value. On the morning of May 30, 1996, the Special Committee reported through its counsel that it had determined to request an opinion from its financial advisor with respect to the fairness of the Offer. Later that same morning, Mr. Gruber called the Chairman of the Special Committee. During that conversation Mr. Gruber confirmed again the undertakings of the Purchasers as set forth above and again expressed his reservations concerning the fairness and objectivity of the evaluation process. On June 1, 1996, the Special Committee decided to recommend to the Company's stockholders as follows: . . . [i]n light of all the relevant circumstances, [that] the Offer is inadequate because of the Offer price and the fact that the Offer is for less than 100% of the publicly-held Shares, but nonetheless - 5 - 6 it is making no recommendation at this time to the Company's shareholders. The Special Committee urges all shareholders to make their own determination as to whether to tender . . . . The Special Committee also decided to request its financial advisor to solicit third party interest in acquiring all or any part of the Company. Item 7. Contracts, Arrangements, Understandings or Relationships with Respect to the Subject Company's Securities The information set forth in Item 7 of the Schedule 14D-1 is hereby supplemented by incorporating the information set forth in Item 3 above. Item 10. Additional Information. The information set forth in Item 10 of the Schedule 14D-1 is hereby supplemented by incorporating by reference the information set forth in the Supplement, a copy of which is attached as Exhibit (a)(10) hereto. Item 11. Material to be Filed as Exhibits (a) (10) Supplement to the Offer to Purchase dated June 4, 1996 (a) (11) Press Release dated June 4, 1996 of Orion Capital Corporation - 6 - 7 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 4, 1996 ORION CAPITAL CORPORATION By /s/ Michael P. Maloney -------------------------- Vice President, General Counsel and Secretary THE CONNECTICUT INDEMNITY COMPANY CONNECTICUT SPECIALTY INSURANCE COMPANY DESIGN PROFESSIONALS INSURANCE COMPANY EBI INDEMNITY COMPANY EMPLOYEE BENEFITS INSURANCE COMPANY THE FIRE AND CASUALTY INSURANCE COMPANY OF CONNECTICUT SECURITY INSURANCE COMPANY OF HARTFORD By /s/ Michael P. Maloney --------------------------- Senior Vice President - 7 - 8 EXHIBIT INDEX Exhibit Description - ------- ------------ (a)(10) Supplement to the Offer to Purchase dated June 4, 1996 (a)(11) Press Release dated June 4, 1996 of Orion Capital Corporation - 8 - EX-99.10A 2 SUPPLEMENT 1 SUPPLEMENT TO OFFER TO PURCHASE DATED MAY 8, 1996 UP TO 4,600,000 SHARES OF COMMON STOCK OF GUARANTY NATIONAL CORPORATION AT $17.50 NET PER SHARE IN CASH BY ORION CAPITAL CORPORATION AND CERTAIN WHOLLY-OWNED SUBSIDIARIES NAMED HEREIN THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS, AS HEREBY EXTENDED, WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 12, 1996, UNLESS THE OFFER IS FURTHER EXTENDED. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. HOWEVER, THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE RECEIPT OF ALL REQUIRED STATE INSURANCE DEPARTMENT REGULATORY APPROVALS ON TERMS AND CONDITIONS SATISFACTORY TO THE PURCHASERS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE "THE OFFER" -- SECTION 10. IF MORE THAN 4,600,000 SHARES ARE PROPERLY TENDERED AND NOT WITHDRAWN, THEN, SUBJECT TO THE TERMS AND CONDITIONS OF THE OFFER, SUCH SHARES WILL BE ACCEPTED ON A PRO RATA BASIS. SEE "THE OFFER" -- SECTION 2. ------------------------------ IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's shares of common stock, par value $1.00 per share, of Guaranty National Corporation should either (i) complete and sign the original Letter of Transmittal previously circulated with the Offer to Purchase, dated May 8, 1996, or a facsimile thereof in accordance with the instructions in such Letter Of Transmittal and deliver the Letter of Transmittal with the Shares and all other required documents to the Depositary, or follow the procedure for book-entry transfer set forth in THE OFFER -- Section 3 of the Offer to Purchase, dated May 8, 1996, or (ii) request his broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. A stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if he desires to tender his Shares. Any stockholder who desires to tender Shares and cannot deliver such Shares and all other required documents to the Depositary by the expiration of the Offer must tender such Shares pursuant to the guaranteed delivery procedure set forth in THE OFFER - Section 3 of the Offer to Purchase, dated May 8, 1996. Questions and requests for assistance or additional copies of this Supplement, the Letter of Transmittal, the Offer to Purchase, dated May 8, 1996, and other tender offer materials may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Supplement to the Offer to Purchase. THIS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE OFFER TO PURCHASE, DATED MAY 8, 1996, AND THE RELATED LETTER OF TRANSMITTAL, COPIES OF WHICH MAY BE OBTAINED AT THE PURCHASERS' EXPENSE IN THE MANNER SET FORTH ON THE BACK COVER OF THIS SUPPLEMENT. THE OFFER TO PURCHASE, DATED MAY 8, 1996, THIS SUPPLEMENT AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 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 Manager for the Offer is: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION June 4, 1996 2 To the Holders of Common Stock of GUARANTY NATIONAL CORPORATION: This Supplement, dated June 4, 1996, to the Offer To Purchase (this "Supplement") supplements the Offer to Purchase, dated May 8, 1996 (the "Original Offer to Purchase"). Together, the Original Offer to Purchase and this Supplement are referred to herein as the "Offer to Purchase." Except as otherwise stated herein, the terms and conditions set forth in the Original Offer to Purchase and the Letter of Transmittal remain applicable in all respects to the Offer (as defined below). This Supplement contains important information which should be read carefully before any decision is made with respect to the Offer. This Supplement is being delivered for the purpose of extending the time period of the Offer as well as supplementing certain terms of the Offer. Capitalized terms used in this Supplement that are not defined herein shall have the meanings ascribed to such terms in the Original Offer to Purchase. SHARES TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) AND, UNLESS THERETOFORE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, ALSO MAY BE WITHDRAWN AT ANY TIME AFTER JULY 6, 1996. SEE THE OFFER -- SECTION 4 OF THE ORIGINAL OFFER TO PURCHASE FOR THE PROCEDURES FOR WITHDRAWING SHARES TENDERED PURSUANT TO THE OFFER. STOCKHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN THEIR SHARES PURSUANT TO THE OFFER ARE NOT REQUIRED TO TAKE ANY FURTHER ACTION, EXCEPT AS MAY BE REQUIRED BY THE PROCEDURE FOR GUARANTEED DELIVERY IF SUCH PROCEDURE WAS UTILIZED. INTRODUCTION Orion Capital Corporation, a Delaware corporation ("Orion"), and certain of its wholly-owned subsidiaries named below (collectively referred to herein with Orion as the "Purchasers") hereby offer to purchase up to 4,600,000 of the outstanding shares of Common Stock, par value $1.00 per share, of Guaranty National Corporation, a Colorado corporation (the "Company"), at $17.50 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). Each outstanding share of Common Stock of the Company is referred to herein as a "Share." The name of each Purchaser and the percentage of Shares to be severally purchased by it pursuant to the Offer are as follows: Orion (17.4%), The Connecticut Indemnity Company (15.0%), Connecticut Specialty Insurance Company (2.5%), Design Professionals Insurance Company (3.5%), EBI Indemnity Company (2.9%), Employee Benefits Insurance Company (2.9%), The Fire and Casualty Insurance Company of Connecticut (5.2%) and Security Insurance Company of Hartford (50.6%). Each Purchaser reserves the right to purchase any Shares not purchased by the other Purchasers. The Purchasers also reserve the right to amend the Offer to reduce the number of Shares which will be purchased pursuant to the Offer, including as a result of the Insurance Regulatory Condition (as defined below). THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. HOWEVER, THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE INSURANCE REGULATORY CONDITION. SUCH CONDITION AND THE OTHER CONDITIONS TO THE OFFER ARE SET FORTH IN THE OFFER -- SECTION 10. IF MORE THAN 4,600,000 SHARES ARE PROPERLY TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN, THEN, SUBJECT TO THE TERMS AND CONDITIONS OF THE OFFER, TENDERED SHARES WILL BE ACCEPTED ON A PRO RATA BASIS (WITH APPROPRIATE ADJUSTMENTS TO AVOID PURCHASES OF FRACTIONAL SHARES) ACCORDING TO THE NUMBER OF SHARES PROPERLY TENDERED BY EACH STOCKHOLDER AT OR PRIOR TO THE EXPIRATION DATE AND NOT WITHDRAWN. If, upon consummation of the Offer, Orion and its subsidiaries together own less than 80% of the outstanding Shares, Orion and/or one or more of its subsidiaries may purchase additional Shares in order to acquire an 80% ownership interest in the Company, subject to the availability of funds and other investment opportunities. Such purchases may be made through open market or privately negotiated purchases or another tender offer (which may be for less than all the Shares), subject to market conditions, at prices which may be 3 greater or less than the Offer price for the Shares. There can be no assurance that Orion and its subsidiaries will acquire such additional Shares or over what period of time such additional Shares, if any, might be acquired. Once Orion and its subsidiaries have acquired 80% of the outstanding Shares, Orion intends to purchase additional Shares, directly or indirectly through its wholly-owned subsidiaries, from time to time in order to offset any dilution caused by future issuances of securities by the Company whether as a result of grants under employee benefit plans or otherwise. Except as set forth above, the Purchasers intend, in connection with certain future purchases of Shares by them, to observe certain undertakings made by them in this Supplement. See SPECIAL FACTORS -- Background of the Transaction. 2 4 SPECIAL FACTORS BACKGROUND OF THE TRANSACTION On May 21, 1996, Messrs. Gruber, Sanborn and Shepherd participated by conference telephone in a meeting of the Board of Directors of the Company called to consider a report from the Special Committee of the Board which had been established and authorized to evaluate the Offer. The Chairman of the Special Committee reported that a financial advisor had been retained to evaluate the Offer and outlined the financial advisor's fee arrangement. Mr. Gruber pointed out that the incentive fees which are part of the financial advisor's arrangement raised serious questions about the objectivity and fairness of the evaluation process. Based on public filings by the Company, the Purchasers understand that pursuant to a letter agreement dated May 16, 1996, the Special Committee engaged the financial advisor to act as its exclusive financial advisor with respect to the Offer. The Company has agreed to pay the financial advisor a fee of $100,000 for such services, and a fee of $450,000 if the Special Committee requests a fairness opinion, due upon the completion of the work necessary to render such an opinion (against which amount the financial advisor would credit $50,000 of the $100,000 initially paid to it). Additionally, if the Purchasers acquire Shares (whether in the Offer or as part of a merger transaction or otherwise) at a price greater than $17.50 per Share, an additional fee equal to 10% of the product of (x) the difference between the per Share consideration offered to be paid and $17.50 and (y) 4,600,000 Shares will be payable to the financial advisor. If the Purchasers seek to acquire in excess of 4,600,000 Shares, an additional fee equal to 1% of the product of (x) the per Share price offered by the Purchasers and (y) the number of Shares sought to be purchased by the Purchasers in excess of 4,600,000 will be payable to the financial advisor. If the Company consummates a transaction with a third party, an additional fee equal to .75% of the aggregate consideration paid in connection with such other transaction will be payable to the financial advisor. The Company has also agreed to reimburse all of the financial advisor's reasonable out-of-pocket expenses, including fees and disbursements of counsel, incurred in connection with its engagement, and to indemnify the financial advisor against certain losses, claims, damages or liabilities arising in connection with its engagement, including liabilities under federal or state securities laws, or otherwise relating to the engagement. At the meeting on May 21, 1996 and at the request of the Chairman of the Special Committee, Mr. Gruber responded to questions concerning the Offer. Mr. Gruber affirmed in his responses to the Special Committee several matters which had previously been set forth in the Original Offer to Purchase, including the Purchasers' continued belief that the Offer price of $17.50 per Share is fair and adequate and that the Purchasers had no intention to increase or reduce that price. At the request of the Special Committee, following the meeting of the Board of Directors, Mr. Gruber and the Purchasers' legal and financial advisors met at Orion's New York offices with the Special Committee's financial advisor and legal counsel to the advisor. Members of the Special Committee participated by telephone. The Special Committee's advisors asked Mr. Gruber substantially the same questions as had previously been answered for the Board of Directors. Mr. Gruber and his advisors were then asked to leave the meeting so that the Special Committee could consult with its advisors. When Mr. Gruber was invited to return, he was informed that the Company would make a filing on Schedule 14D-9 in which it would decline to make any recommendation to the Company's stockholders with respect to the Offer. On May 23, 1996, the Purchasers amended their filings on Schedule 14D-1 and Schedule 13E-3 to reflect their having informed the Special Committee and its financial advisor of the following: (a) The Purchasers intend to increase their aggregate holdings to approximately 80% of the outstanding Shares of the Company, not more. (b) The Purchasers believe that the Offer, pursuant to which the Purchasers have agreed to accept and pay for all Shares tendered (subject to possible proration), is more fair to stockholders of the 3 5 Company than to require that a minimum number of Shares be tendered before any Shares will be accepted (as was suggested by the Special Committees's advisors). (c) The Purchasers do not expect that either delisting or deregistration of the Company's Shares will occur as a result of the completion of the Offer. (d) The Purchasers have no present intention to seek a merger or other business combination with the Company. (e) The Purchasers expect that the Company will continue to have a Board of Directors whose members include persons who are independent of and not employed by or affiliated with Orion or the Company. The Purchasers expect that any future service, insurance or other contractual arrangements between the Company and Orion (or subsidiaries of either) should, and will, continue to be subject to review by the entire Board of Directors of the Company and, where required, by insurance regulatory authorities. At the request of the Chairman of the Special Committee, Mr. Gruber met with him on May 28, 1996. The Chairman told Mr. Gruber that, while the Special Committee's financial advisor had not yet given the Committee its written opinion, it was his personal belief that the financial advisor would be willing to opine favorably if the Offer price were increased to $19 per Share. Mr. Gruber pointed out that such an increase would more than double the financial advisor's fee, which in his view was unconscionable. Mr. Gruber reiterated the intention of the Purchasers not to raise or reduce the Offer price of $17.50 per Share. He again pointed out that the retention of the Special Committee's financial advisor was structured in such a way as to create an inevitable conflict of interest on the part of the financial advisor and, in the Purchasers' opinion, called into question the credibility of the Special Committee's evaluation process. The Chairman of the Special Committee informed Mr. Gruber that a meeting of the Special Committee was scheduled for 8:00 p.m., Denver time, on May 29, 1996. Following Mr. Gruber's meeting with the Chairman of the Special Committee on May 28, the Purchasers confirmed to legal counsel for the Company and the Special Committee on May 29 that, if at least 4,600,000 Shares are validly tendered and accepted for payment and paid for, then: 1. The Purchasers will not purchase, prior to the third anniversary of the Expiration Date, additional Shares (if after giving effect to such purchase they would own more than 81% of the outstanding Shares) other than pursuant to an offer made to all holders of Shares which is conditioned on the acceptance of such offer by holders owning at least a majority of the Shares then outstanding which are not held by the Purchasers and their affiliates. 2. If an offer is made to holders of Shares, as described in paragraph 1 above, prior to the third anniversary of the Expiration Date, the Purchasers will offer a purchase price involving consideration equal to at least $17.50 per Share. 3. The Purchasers will support adoption of a policy by the Board of Directors of the Company that any repurchase of Shares by the Company prior to the third anniversary of the Expiration Date should be approved by a majority of those members of the Board of Directors who are independent of and not employed by any of the Purchasers. 4. If, at any time during the five years following the Expiration Date, the Purchasers should wish to sell as a block all the Shares owned by them, or propose a merger or consolidation involving the Company, they will not do so unless (a) in the case of a sale of all Purchasers' Shares, the purchaser of such Shares undertakes to offer to purchase all other Shares outstanding for consideration of equivalent value to that offered to the Purchasers or (b) in the case of a merger or consolidation, all Shares are exchanged for substantially equivalent value. On the morning of May 30, 1996, the Special Committee reported through its counsel that it had determined to request an opinion from its financial advisor with respect to the fairness of the Offer. Later that same morning, Mr. Gruber called the Chairman of the Special Committee. During that conversation, 4 6 Mr. Gruber confirmed again the undertakings of the Purchasers as set forth above and again expressed his reservations concerning the fairness and objectivity of the evaluation process. FAIRNESS OF THE OFFER On June 1, 1996, the Special Committee decided to recommend to the Company's stockholders as follows: . . . [i]n light of all the relevant circumstances, [that] the Offer is inadequate because of the Offer price and the fact that the Offer is for less than 100% of the publicly-held Shares, but nonetheless it is making no recommendation at this time to the Company's shareholders. The Special Committee urges all shareholders to make their own determination as to whether to tender . . . . The Special Committee also decided to request its financial advisor to solicit third party interest in acquiring all or any part of the Company. The Purchasers have not negotiated the Offer price with the Company and do not intend to do so. In determining the Offer price, the Purchasers did not prepare an analysis of the liquidation value of the Shares. The Shares are publicly traded and have a readily ascertainable fair market value. On the other hand, a liquidation analysis would require a number of assumptions concerning projected loss development, the availability of reinsurance and the likely cost thereof, among other matters. An analysis so dependent on assumptions, some of which would be largely speculative, would not in the Purchasers' judgment be meaningful in the circumstances. To the extent the Special Committee has determined to leave to each holder of Shares the decision whether or not to tender Shares pursuant to the Offer, the Purchasers believe the Special Committee has taken an appropriate step. However, the statement that the financial advisor has been requested to solicit interest in the sale -- including a piecemeal sale -- of the Company ignores the potentially harmful effects of such a process on the employees and agents of the Company. To embark on such a course of action based, apparently, on little more than the speculative hopes of a financial advisor which stands to gain from the process does not appear to be in the interest of stockholders, whether or not they tender their Shares. If the Board of Directors should implement actions of the sort suggested by the Special Committee, the Purchasers will have to evaluate what future action is appropriate; actions could include extending the Expiration Date, accepting Shares validly tendered by the Expiration Date or terminating the Offer if it appears that the course of conduct being followed by the Board of Directors will expose the holders of Shares, including the Purchasers, to potentially materially adverse results. PURPOSE AND STRUCTURE OF THE TRANSACTION; PLANS FOR THE COMPANY AFTER THE OFFER. After completion or termination of the Offer and regardless of the number of Shares purchased in the Offer (except as referred to in the next paragraph), Orion reserves the right to purchase directly or through its subsidiaries additional Shares in the open market, in privately negotiated transactions, in another tender or exchange offer or otherwise. Any acquisition of Shares by Orion or its subsidiaries would have to be made in accordance with applicable legal requirements, including those under the Exchange Act. After completion or termination of the Offer, Orion also reserves the right, but has no present intention, (i) to sell Shares in open market or negotiated transactions, (ii) to propose a merger or other similar business combination of the Company involving consideration consisting of cash or securities or a combination of cash and securities or (iii) to propose such a transaction involving consideration having a value more or less than the amount to be paid per Share pursuant to the Offer. See THE OFFER -- Section 11. If, however, at least 4,600,000 Shares are validly tendered and accepted for payment and paid for, the Purchasers intend to observe certain undertakings made by them in this Supplement. See SPECIAL FACTORS -- Background of the Transaction. 5 7 INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION; SECURITIES OWNERSHIP; RELATED TRANSACTIONS None of Orion's wholly-owned subsidiaries will tender Shares in the Offer. Orion has been advised that each of Messrs. Becker, Cohn, Schuyler, Shepherd and Thorne intends to tender his Shares, but that Mr. Sanborn does not intend to tender his Shares. None of the Purchasers or any of their directors or executive officers, in his capacity as such, makes any recommendation to the stockholders of the Company regarding the Offer. To the best of the Purchasers' knowledge, based on public filings by the Company, the following of the Company's executive officers, directors, affiliates and subsidiaries (other than those who are directors of a Purchaser), presently intend to tender Shares to the Purchasers pursuant to the Offer: (i) Fred T. Roberts, the President of the Company's Commercial Lines Unit, intends to tender 4,315 Shares; (ii) Jacqueline L. Melton, the Company's Senior Vice President -- Human Resources, intends to tender 7,586 Shares; (iii) James R. Pouliot, President of the Company's Viking Division, intends to tender 13,000 Shares; (iv) Michael L. Pautler, the Company's Senior Vice President -- Finance and Treasurer, intends to tender 18,586 Shares; and (v) Arthur J. Mastera, President of the Company's Personal Lines Division, intends to tender 19,232 Shares. The Purchasers understand that the tender of Shares by Messrs. Pouliot and Pautler will result (as to 1,000 Shares in the case of Mr. Pouliot and 600 Shares in the case of Mr. Pautler) in liability under Section 16 of the Exchange Act. Messrs. Pautler and Pouliot intend to pay to the Company, pursuant to the rules and regulations promulgated under Section 16, the profits earned by them in connection with the tender of those Shares. According to public filings made by the Company, the Company believes that: Mr. Ware, the Company's Chief Executive Officer and a member of the Board of Directors of both the Company and Orion, Shelly J. Hengsteler, the Company's Controller, and the members of the Special Committee, Dennis Lacey, Carroll Speckman, M. Ann Padilla, Tucker Hart Adams and Richard R. Thomas, do not intend to tender any Shares in the Offer. The above officers and directors may change the number of Shares indicated, or change their determination as to whether or not they intend to tender Shares in the Offer, at any time prior to the expiration date of the Offer. The Purchasers understand that Tucker Hart Adams does not, in fact, own any Shares. THE OFFER 1. TERMS OF THE OFFER; EXPIRATION DATE. The Expiration Date of the Offer has been extended from 12:00 Midnight, New York City time, on Wednesday, June 5, 1996 to 12:00 Midnight, New York City time, on Wednesday, June 12, 1996. Upon the terms and subject to the conditions of the Offer (including, if the Offer is further extended or amended, the terms and conditions of any further extension or amendment), the Purchasers will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not theretofore withdrawn in accordance with THE OFFER -- Section 4 of the Offer to Purchase. The term "Expiration Date" now means 12:00 Midnight, New York City time, on Wednesday, June 12, 1996, unless the Purchasers shall have further extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchasers, shall expire. Tendering stockholders may continue to use the original Letter of Transmittal and the original Notice of Guaranteed Delivery previously circulated with the Original Offer to Purchase. Although the Letter of 6 8 Transmittal previously circulated with the Offer to Purchase refers only to the Original Offer to Purchase, and to the original Expiration Date of Wednesday, June 5, 1996, stockholders using such document to tender their Shares will nevertheless have until 12:00 Midnight, New York City time, on Wednesday, June 12, 1996 to tender their Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES; PRORATION. Upon the terms and subject to the conditions of the Offer, including the provisions thereof relating to proration, the Purchasers shall accept for payment (and thereby purchase), and the Purchasers will pay for, up to 4,600,000 Shares validly tendered and not properly withdrawn in accordance with THE OFFER -- Section 4 (including Shares validly tendered and not withdrawn during any extension of the Offer, if the Offer is extended, upon the terms and subject to the conditions of such extension), as promptly as practicable after the Expiration Date. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. The Purchasers expressly reserve the right to delay acceptance for payment of or payment for Shares in order to comply in whole or in part with any applicable law or regulation (including the Insurance Regulatory Condition) but intend either to extend the Expiration Date, or to terminate the Offer if it should appear that an Insurance Regulatory Condition (or any such law or regulation) will delay for more than five (5) days the payment for Shares accepted for payment. See THE OFFER -- Sections 10 and 11. The reservation by the Purchasers of the right to delay acceptance for payment or payment for Shares is subject to the provisions of applicable law under Rule 14e-1 promulgated under the Exchange Act, which require that the Purchasers pay the consideration offered or return the Shares deposited by or on behalf of stockholders promptly after termination or withdrawal of the Offer. 10. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, and in addition to (and not in limitation of) the Purchasers' rights to amend the Offer at any time in their sole discretion, the Purchasers will not be required to accept for payment, or pay for, any Shares tendered, and may terminate, extend or amend the Offer, or, subject to the provisions of applicable law which require that the Purchasers pay the consideration offered or return the Shares deposited by or on behalf of stockholders promptly after termination or withdrawal of the Offer, may delay the acceptance for payment or the payment for Shares tendered, if, at any time on or after May 8, 1996, and at or prior to the time of payment for any such Shares (whether or not any Shares have theretofore been accepted for payment or paid for pursuant to the Offer), there shall occur any of the events set forth in THE OFFER -- Section 10 of the Original Offer to Purchase, which in the exercise of Orion's reasonable good-faith judgment on behalf of the Purchasers, in any case and regardless of the circumstances giving rise to any such condition (including any action or inaction by Orion or any of its subsidiaries or affiliates other than the Company) makes it inadvisable to proceed with the Offer or with acceptance for payment or payment for Shares. 11. CERTAIN LEGAL MATTERS. (a) State Insurance Approvals. The Purchasers have advised the insurance regulatory authorities of California, Colorado, Connecticut, Oklahoma, Texas and Wisconsin of their intention to commence the Offer. Form A filings were made in California and Wisconsin, a Form E filing was made in Texas and a Form D filing was made in Connecticut, all seeking approval of the acquisition of the Shares by the Purchasers. If the purchase of Shares is effected pursuant to the Offer, the Company's Oklahoma insurance subsidiary will, following the Expiration Date, amend its Oklahoma Form B filing to reflect the acquisition of Shares by the Purchasers. Texas approved the acquisition of Shares on May 21, 1996 and Wisconsin approved the acquisition of Shares on May 30, 1996. Colorado has advised that the acquisition of Shares is exempt from Colorado's change of control filing requirements. Connecticut and California have orally indicated that approval is forthcoming. If the Purchasers are delayed in receiving the formal approval of the California or Connecticut Insurance Department, or are required to receive approvals from any other state authorities, the Purchasers might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in accepting Shares for payment, or paying for Shares pursuant to the Offer. In such case, one or more Purchasers may not be obligated to accept for payment or pay for Shares. In addition, the Purchasers may terminate the Offer if a Purchaser becomes subject to an order preventing it from purchasing Shares or limiting its ability to exercise control of the Company or any of its subsidiaries or affiliates or, if in the good faith, reasonable judgment of 7 9 Orion, exercised on behalf of the Purchasers, necessary approvals have not been obtained. See THE OFFER -- Section 3. (c) Antitrust. On May 23, 1996, the 15-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), relating to the purchase of Shares pursuant to the Offer expired without any request for additional information. Accordingly, the condition to the Purchasers' obligation not to proceed with the Offer until the expiration or termination of the applicable waiting period under the HSR Act has been satisfied. MISCELLANEOUS Orion has been served with a complaint in an action entitled Eugenia Gladstone Vogel v. Guaranty National Corporation, et al. which has been filed in the Supreme Court for the State and County of New York. The complaint seeks damages and other relief allegedly arising out of the Offer. In Orion's opinion, the claims made in the complaint are without merit and Orion intends vigorously to defend the litigation. Orion understands that two other actions have been filed in the state courts in Colorado alleging similar claims and seeking similar relief. Orion has not been served in either of those actions. ------------------------ No person has been authorized to give any information or make any representation on behalf of the Purchasers not contained in the Offer to Purchase or the Letter of Transmittal, and, if given or made, such information or representation must not be relied upon as having been authorized. ORION CAPITAL CORPORATION and THE CONNECTICUT INDEMNITY COMPANY CONNECTICUT SPECIALTY INSURANCE COMPANY DESIGN PROFESSIONALS INSURANCE COMPANY EBI INDEMNITY COMPANY EMPLOYEE BENEFITS INSURANCE COMPANY THE FIRE AND CASUALTY INSURANCE COMPANY OF CONNECTICUT SECURITY INSURANCE COMPANY OF HARTFORD June 4, 1996 8 10 Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: STATE STREET BANK AND TRUST COMPANY By Mail: By Courier: By Hand: State Street Bank State Street Bank Bank of Boston and Trust Company and Trust Company c/o Boston Equiserve Corporate Reorganization Corporate Reorganization Corporate Reorganization P.O. Box 9061 2 Heritage Drive 55 Broadway Boston, MA 02205-8686 North Quincy, MA 02171 3rd Floor New York, New York 10006
By Facsimile: (617) 774-4519 Confirm by telephone (617) 774-4511 Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers specified below. Additional copies of the Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent. A stockholder may also contact his broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (212) 269-5550 (Call Collect) or Call Toll Free (800) 829-6551. The Dealer Manager for the Offer is: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION 277 Park Avenue New York, New York 10172 (212) 892-7700 (Call Collect) 9 EX-99.11A 3 PRESS RELEASE 1 From: Vincent T. Papa Dawn Dover (212) 332-8080 Robert Siegfried Jeanne Hotchkiss Kekst and Company (860) 674-6754 (212) 593-2655 FOR IMMEDIATE RELEASE ORION CAPITAL EXTENDS CASH TENDER OFFER FOR GUARANTY NATIONAL SHARES AT $17.50 PER SHARE; ANNOUNCES REGULATORY APPROVALS New York, NY, June 4, 1996 -- Orion Capital Corporation (NYSE: OC) today announced the extension to June 12, 1996 of the Offer to Purchase by Orion and certain of its subsidiaries of up to 4,600,000 shares of Guaranty National Corporation common stock (NYSE: GNC) for cash of $17.50 per share. Subject to the terms and conditions of the Offer, any and all shares validly tendered will be accepted, subject to proration if more than 4,600,000 shares of common stock are validly tendered. Orion reported that the applicable waiting period under the Hart-Scott-Rodino Act has expired. Orion also reported that approval of the acquisition of Guaranty National shares by Orion has been obtained in writing from the insurance regulatory authorities of the States of Wisconsin and Texas and that the authorities of the States of California and Connecticut have orally advised that such approvals are forthcoming. The Insurance Department of the State of Colorado declared the transaction exempt. Orion also announced that, in light of the decision of a Special Committee of Guaranty National's Board to make no recommendation to stockholders with respect to tendering their shares, Orion presently intends to proceed with the Offer and, if at least 4,600,000 shares are validly tendered and accepted, to give to Guaranty National certain undertakings with respect to future share purchases. As of the close of business on June 3, 1996, 1,544,990 shares of Guaranty National common stock have been tendered pursuant to the Offer to Purchase. Orion Capital Corporation is engaged in the specialty property and casualty insurance business through wholly-owned subsidiaries which include EBI Companies, DPIC Companies, Connecticut Specialty Insurance Group, SecurityRe Companies and Wm. H. McGee & Co. Inc., as well as through its 49.5% ownership interest in Guaranty National Corporation. -----END PRIVACY-ENHANCED MESSAGE-----