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
February 22, 1994 Commission File No. 1-7361
(Date of earliest event reported)
AMERICAN FINANCIAL CORPORATION
Incorporated under the laws of Ohio IRS Employer
Identification No. 31-0624874
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 579-2538
Former name or former address, if changed since last report - not
applicable.
AMERICAN FINANCIAL CORPORATION
FORM 8-K
Item 5. Other Events.
On February 22, 1994, American Financial Corporation
("AFC") announced that it is offering to issue $550 million
principal amount of 9-1/2% Debentures Due April 20, 2004 in
exchange for all of its outstanding debentures. There is an
aggregate of approximately $550 million principal amount of AFC's
debentures presently outstanding. See the attached News Release.
In its offering materials, AFC stated that while fourth quarter
results are not yet available, AFC anticipates that it will
report substantial earnings for that period.
On February 10, 1994, Penn Central announced that it
is considering a proposal from AFC that Penn Central purchase the
personal lines insurance businesses owned by AFC's wholly-owned
subsidiary, Great American Insurance Company ("GAI"). See the
attached News Release. If a transaction involving the personal
lines business is accomplished, it may be changed from the
transaction proposed with respect to the nature of the
transaction, price, and form of consideration paid.
A Penn Central shareholder has filed a purported
derivative action against AFC and the Penn Central board of
directors in state court in Cincinnati, Ohio. The action alleges
that the proposal from AFC, if consummated, would constitute a
waste of Penn Central's assets and seeks to enjoin the
transaction or damages if it is consummated. AFC believes that
the lawsuit is without merit.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) (i) AFC News Release
(ii) Penn Central News Release
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.
Page 2 of 3
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 thereunto duly authorized.
AMERICAN FINANCIAL CORPORATION
February 23, 1994 By: /s/
Fred J. Runk
Vice President and Treasurer
Page 3 of 3
AMERICAN FINANCIAL CORPORATION
ANNOUNCES OFFER TO ISSUE NEW
9-1/2% DEBENTURES DUE APRIL 20, 2004
IN EXCHANGE FOR ITS PRESENTLY OUTSTANDING DEBENTURES
FOR IMMEDIATE RELEASE
(CINCINNATI, OHIO -- FEBRUARY 22, 1994) -- American
Financial Corporation ("AFC") announced today that it is offering
to issue 9-1/2% Debentures due April 20, 2004 (the "New
Debentures") in exchange for all of its presently outstanding
debentures. AFC is offering to issue:
(i) $1,000 principal amount of New Debentures and $20.00
in cash
in exchange for each $1,000 principal amount tendered
of its
9-1/2% Subordinated Debentures due April 22, 1999;
(ii) $1,000 principal amount of New Debentures plus $20.00
in cash
in exchange for each $1,000 principal amount tendered
of its
10% Debentures due October 20, 1999 and 10%
Debentures due October 20, 1999, Series A;
(iii) $1,000 principal amount of New Debentures plus $35.65
in cash
in exchange for each $1,000 principal amount tendered
of its
12% Debentures due September 3, 1999, 12% Debentures
due September 3, 1999, Series A and 12% Debentures
due September 3, 1999, Series B;
(iv) $1,000 principal amount of New Debentures plus $69.48
in cash
in exchange for each $1,000 principal amount tendered
of its 12-1/4% Debentures due September 15, 2003; and
(v) $1,000 principal amount of New Debentures plus $33.57
in cash
in exchange for each $1,000 principal amount tendered
of its
13-1/2% Debentures due September 14, 2004 and 13-1/2%
Debentures due September 14, 2004, Series A.
These prices are based on current redemption prices plus
accrued interest plus a premium of 2% ($20 cash per $1,000
principal amount) of old debentures. The 12-1/4% Debentures due
2003 are redeemable at 103.75% of principal amount. All of the
other issues of old debentures are redeemable at principal
amount.
All regular semi-annual interest payments due in March and
April 1994 will be paid on the old issues of debentures presently
outstanding, including those tendered and accepted for exchange.
The New Debentures will accrue interest from April 20, 1994, with
interest payable in equal semi-annual installments on April 20
and October 20.
The Exchange Offer is not conditioned upon any minimum
principal amount of presently outstanding debentures being
tendered. The Exchange Offer will expire on March 25, 1994, at
5:00 p.m., Eastern Time, unless extended by AFC as to any or all
of the issues of presently outstanding debentures. AFC intends
to apply for listing of the New Debentures on the Pacific and
Cincinnati Stock Exchanges.
Following the expiration date, AFC will redeem as many of
the old debentures presently outstanding as it believes its
resources will reasonably allow. Particular issues and amounts
of presently outstanding debentures selected for redemption will
depend, among other factors, on the results of the Exchange Offer
as well as on the interest rates, sinking fund requirements,
final maturity and redemption premiums, if any, of the presently
outstanding debentures.
The Exchange Offer is being made only pursuant to offering
materials which will be mailed to holders of presently
outstanding debentures in the next several days.
AFC is a holding company engaged in property and casualty
insurance, annuity programs and portfolio investing. AFC also
owns a significant portion of the voting equity securities of
several publicly owned companies.
# # #
FOR FURTHER INFORMATION,
PLEASE CONTACT:
Sandra W. Heimann
Telephone: 513/579-2121
FOR IMMEDIATE RELEASE
FEBRUARY 10, 1994
PENN CENTRAL CONSIDERING ACQUISITION
OF PERSONAL LINES INSURANCE BUSINESSES
CINCINNATI, OHIO February 10, 1994 -- The Penn Central
Corporation announced that it is considering a proposal from
American Financial Corporation (AFC) for the purchase by Penn
Central of the personal lines insurance businesses owned by Great
American Insurance Company (GAI) for a proposed purchase price of
approximately $380 million in cash. GAI is a wholly owned
subsidiary of AFC.
GAI's personal lines businesses reported net earned premiums
of $342 million in 1993 and $322 million in 1992. Approximately
70% of these premiums came from standard private passenger
automobile insurance, 25% from multiperil homeowners' insurance
and 5% from other lines. GAI has advised PCC that separate
income statements for the personal lines businesses are not
available because these lines have been included with GAI's other
insurance lines for financial reporting purposes. However, GAI
estimates that on a stand-alone basis the personal lines
businesses had pro forma accident year statutory combined ratios
of 99.0% in 1993 and 99.1% in 1992. AFC's proposal for the sale
of the personal lines businesses to PCC would include the
transfer by GAI of an investment portfolio of securities with a
market value of approximately $450 million, consisting
principally of investment grade bonds. GAI estimates that the
GAAP net book value of the businesses that would be transferred
at closing would be approximately $200 million.
The Penn Central board of directors has at this stage
concluded that the proposed acquisition merits serious
consideration, in part because it could further Penn Central's
strategy of achieving higher returns by investing its substantial
cash resources in profitable property and casualty insurance
businesses. The board also noted that the proposed acquisition
is potentially attractive in that it could provide Penn Central
with the opportunity to become a full-service provider of private
passenger automobile insurance on a nation wide basis that can
take advantage of Penn Central's existing auto insurance
management and underwriting skills.
The Penn Central board has appointed a special committee of
its outside directors to review the proposal. The special
committee is empowered to negotiate all aspects of the proposed
transaction, including the purchase price proposed by AFC.
Completion of a transaction would be subject to certain
conditions, including approval by the special committee, receipt
by Penn
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Central of an appropriate fairness opinion from an investment
banking firm and any required regulatory approvals.
AFC owns 40.5% of Penn Central's common shares and AFC's
principal shareholder, Carl H. Lindner, is Chairman and Chief
Executive Officer of Penn Central.
Penn Central is engaged primarily in specialty property and
casualty insurance.