AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION March 17, 1998
================================================================================
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): March 10, 1998
CHANDLER INSURANCE COMPANY, LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands
(State or jurisdiction of incorporation)
0-15286 N/A
(Commission File Number) (IRS Employer Identification No.)
5th Floor Anderson Square
Grand Cayman, Cayman Islands, B.W.I. N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (345) 949-8177
================================================================================
Page 2
ITEM 5. OTHER EVENTS
------------
In the Company's quarterly report on Form 10-Q for the period ended
September 30, 1997, it reported under Part I - Item 2. "CenTra
Litigation-Oklahoma" that a United States District Court sitting in
Oklahoma (Oklahoma Federal Court) had certain post-trial motions
under advisement at that time.
On March 10, 1998 United States District Court Judge Vicki Miles-
LaGrange issued an order disposing of all pending post-trial motions
in that litigation. The litigation involved Chandler Insurance
Company, Ltd. (Chandler or the Company) and its affiliates and
CenTra, Inc. (CenTra) and certain of its affiliates (the CenTra
Group).
The Judge's ruling:
* Let stand a $5,099,133 judgment in favor of CenTra and against
Chandler conditioned upon CenTra's return of 517,500 shares of
Chandler common stock and denied CenTra's motion for prejudgment
interest.
* At Chandler's request, modified the judgment entered in April
1997 against Chandler and its wholly owned subsidiary, Chandler
Insurance (Barbados), Ltd., in the amount of $6,882,500 so as to
require CenTra and certain affiliates to deliver 1,142,625 shares
of common stock to Chandler on payment of the judgment and denied
CenTra's request for prejudgment interest.
* Affirmed a judgment in favor of Chandler and against CenTra and
its affiliates determining that neither CenTra nor its affiliates
may vote any shares of Chandler.
* Affirmed judgments on three derivative claims totaling $736,629
against various Chandler officers and directors and in favor of
Chandler (U.S.A.), Inc. (Chandler USA), a wholly owned subsidiary
of Chandler, and let stand seven judgments on derivative claims
in favor of various officers and directors of Chandler USA.
* Let stand judgments totaling $1 each against certain Chandler
officers and directors and in favor of CenTra arising from an
alleged failure to include a statement in certain securities
documents indicating that ownership of Chandler shares may be
subject to regulation by the Nebraska Insurance Department under
a provision of Nebraska law regulating Nebraska domiciled
insurance companies.
* Let stand judgments against various Chandler officers and
directors for $1 each based upon breach of fiduciary duties.
* Affirmed judgments in favor of directors of Chandler who are
affiliated with CenTra on Chandler's counterclaim based upon
alleged breaches of fiduciary duty to Chandler, violations of
securities laws, and breach of a stock purchase agreement with
Chandler.
* Affirmed a judgment for $788,625 in favor of National American
Insurance Company (NAICO), a wholly owned subsidiary of Chandler,
and related entities and against CenTra for its failure to pay
insurance premiums. The Oklahoma Federal Court denied NAICO's
request for prejudgment interest.
In October 1997, CenTra had filed a request for costs and attorneys'
fees on the judgments in the approximate amount of $4.7 million. The
Oklahoma Federal Court struck that motion in an order entered March
9, 1998 but stated that all parties could file motions to tax costs
and attorneys' fees following entry of the Oklahoma Federal Court
order on March 10, 1998. Chandler disputes CenTra's right to costs
and attorneys' fees but based upon applicable accounting standards,
Chandler had already recorded a liability for such costs and expenses
of approximately $4.6 million during the first quarter of 1997.
Page 3
In its September 30, 1997 report on Form 10-Q under Part I - Item 2.
"CenTra Litigation-Nebraska", the Company reported that the CenTra
Group had been ordered to deliver all of its Chandler shares into the
registry of the United States District Court for the District of
Nebraska ("Nebraska Federal Court"). Following an unsuccessful
request for a stay of that order, the CenTra Group deposited, on
February 9, 1998, 1,691,750 shares in addition to the 1,441,700
shares
which it had previously deposited into the registry of the Nebraska
Federal Court. Therefore, the stock which CenTra and certain
affiliates must return to Chandler upon payment of the judgments in
the Oklahoma Federal Court is currently held in the registry of the
Nebraska Federal Court. As previously reported, Judge Urbom of that
court entered an order requiring CenTra to divest itself of its
shares
and directing the parties to that litigation to submit divestiture
plans. CenTra appealed the order of divestiture to the Eighth
Circuit
United States Court of Appeals and such appeal is currently pending
with oral arguments scheduled for April 1998. Because of the
uncertainty of the outcome of CenTra's appeal, and until final
divestiture plan proposals are submitted and accepted, the Company is
unable to predict the effect of the divestiture order on the rights,
limitations, or other regulation on ownership of the stock of any
existing or prospective holders of the Company's stock or the effect
on the market price of the Company's stock. It is unclear what
impact
the Nebraska Federal Court's possession of the shares will have upon
Chandler's obligation to pay the judgments.
CenTra has not indicated whether or not it will request the Nebraska
Federal Court to release the 1,660,125 shares which are the subject
of the Oklahoma Federal Court decision or whether or not it intends
to
appeal the decision of the Oklahoma Federal Court.
Chandler has not decided whether or not it will appeal any or all of
the orders of the Oklahoma Federal Court. All implications of the
Oklahoma Federal Court's ruling have not been fully evaluated by the
Company. These issues are being studied by the Company's management
and by a special litigation committee composed of independent
directors who are not parties to the litigation. In the event the
Company decides to appeal, it may be required to post a supersedeas
bond or bonds to suspend execution of any judgments against it.
The Company believes that if it elects to pay the judgments, the
shares owned by CenTra or its affiliates which are the subject of the
judgment must be returned to the Company unless CenTra appeals and
takes appropriate action to supercede the judgments or the Nebraska
Federal Court does not release the shares. The Company believes that
adequate financial resources are available to post a supersedeas bond
or to pay the judgments.
Chandler USA is the judgment creditor in connection with derivative
claim judgments against certain Chandler officers and directors.
Chandler USA's Special Litigation Committee is considering the course
of action Chandler USA should take with regard to collection of those
judgments.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(a) Not applicable.
(b) Not applicable.
(c) The following exhibit is furnished in accordance with the
provisions of Item 601 of Regulation S-K:
99.1 Order Resolving Post-Trial Motions filed March 10, 1998
in the United States District Court for the Western
District of Oklahoma
Page 4
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.
CHANDLER INSURANCE COMPANY, LTD.
Date: March 17, 1998 By: /s/ W. Brent LaGere
- -------------------------------------
W. Brent LaGere
Chairman of the Board of Directors,
Chief Executive Officer and
President (Principal Executive
Officer)