SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1)
OR SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
CII FINANCIAL, INC.
(Name of subject companies (issuer))
CII FINANCIAL, INC., as issuer
(Names of filing persons(identifying status as
offeror, issuer or other person))
7-1/2% CONVERTIBLE SUBORDINATED DEBENTURES
DUE SEPTEMBER 15, 2001 OF CII FINANCIAL, INC.
(Title of Class of Securities)
12551LAB7
(CUSIP Number of Class of Securities)
David Sonenstein, Esq.
General Counsel
2716 North Tenaya Way
Las Vegas, NV 89128
Telephone: (702) 242-7046
(Name, address and telephone numberof person authorized to
receive notices and communications on behalf
of filing persons)
Copies to:
Stephen P. Farrell, Esq.
Howard A. Kenny, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Telephone: (212) 309-6000
CALCULATION OF FILING FEE
Transaction Valuation (1) Amount of Filing Fee
$47,059,000 $12,424
(1)Pursuant to Rule 457(f)(2) under the Securities Act of 1933, this amount is
based upon the book value of the $47,059,000 aggregate principal amount of
the 7 1/2% convertible subordinated debentures due September 15, 2001, that
may be received in the exchange offer.
[ X ] Check box if any part of the fee is offset as provided by Rule 0-11
(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
Amount Previously Paid: $12,424
Form or Registration No.: Form S-4 (File No. 333-52726)
Filing Party: CII Financial, Inc.
Date Filed: December 26, 2000
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] third party tender offer subject to Rule 14d-1.
[ X ] issuer tender offer subject to Rule 13e-4.
[ ] going private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
INTRODUCTION
This Tender Offer Statement on Schedule TO relates to the offer by CII
Financial, Inc., a California corporation ("CII Financial"), to exchange up to
$47,059,000 of the outstanding 7 1/2% convertible subordinated debentures due
September 15, 2001 ("Debentures"), of CII Financial, Inc., (or such lesser
number as are properly tendered) for new 9% senior subordinated debentures due
September 15, 2006 or cash, upon the terms and subject to the conditions set
forth in CII Financial's Registration Statement on Form S-4 (File No. 333-52726)
filed with the Securities and Exchange Commission on December 26, 2000, and as
amended on February 5, 2001 (the "Registration Statement"), and in the related
Letter of Transmittal filed as Exhibit 99.1 to the Registration Statement (the
"Letter of Transmittal").
The information in the Registration Statement and the exhibits thereto,
including the related Letter of Transmittal, are incorporated herein by
reference in this Schedule TO in answer to some of the items required in this
Schedule TO.
ITEM 3. Identity and Background of Filing Persons.
The following are the executive officers and directors of CII
Financial:
Paul H. Palmer, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Frank E. Collins, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Kathleen M. Marlon, President, Chief Executive Officer, Chairman and
Director, c/o CII Financial, Inc., 2716 North Tenaya Way, Las Vegas, Nevada
89128, telephone (702) 242-7040
John F. Okita, Chief Financial Officer, c/o CII Financial, Inc., 2716 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7040
Robert G. Riordan, Vice President, Region II, c/o CII Financial, Inc., 2716
North Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7040
Robert L. Selli, Vice President, Region I, c/o CII Financial, Inc., 2716
North Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7040
David M. Sonenstein, General Counsel and Secretary, c/o CII Financial,
Inc., 2716 North Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7040
The following is the corporate parent of CII Financial:
Sierra Health Services, Inc., a Nevada corporation ("Sierra") owns 100% of the
issued and outstanding capital stock of CII Financial. Sierra's executive
offices are located at 2724 North Tenaya Way, Las Vegas, Nevada 89128, and
Sierra's phone number at that address is (702) 242-7000.
The following are the executive officers and directors of Sierra:
Anthony M. Marlon, Chief Executive Officer and Chairman of the Board, c/o
Sierra Health Services, Inc., 2724 North Tenaya Way, Las Vegas, Nevada 89128,
telephone (702) 242-7000
Albert L. Greene, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Michael E. Luce, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Thomas Y. Hartley, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
William J. Raggio, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Charles L. Ruthe, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Anthony L. Watson, Director, c/o Sierra Health Services, Inc., 2724 North
Tenaya Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Jonathon W. Bunker, Senior Vice President, HMO and Insurance Operations and
Managed Healthcare Division, c/o Sierra Health Services, Inc., 2724 North Tenaya
Way, Las Vegas, Nevada 89128, telephone (702) 242-7000
Frank E. Collins, Executive Vice President, Secretary and General Counsel,
c/o Sierra Health Services, Inc., 2724 North Tenaya Way, Las Vegas, Nevada
89128, telephone (702) 242-7000
William R. Godfrey, Executive Vice President, Administrative Services, c/o
Sierra Health Services, Inc., 2724 North Tenaya Way, Las Vegas, Nevada 89128,
telephone (702) 242-7000
Laurence S. Howard, Senior Vice President, Information Technology and
Program Office, c/o Sierra Health Services, Inc., 2724 North Tenaya Way, Las
Vegas, Nevada 89128, telephone (702) 242-7000
Michael A. Montalvo, Vice President, Customer Service Operations, c/o
Sierra Health Services, Inc., 2724 North Tenaya Way, Las Vegas, Nevada 89128,
telephone (702) 242-7000
Paul H. Palmer, Vice President, Chief Financial Officer and Treasurer, c/o
Sierra Health Services, Inc., 2724 North Tenaya Way, Las Vegas, Nevada 89128,
telephone (702) 242-7000
Marie H. Soldo, Executive Vice President, Government Affairs, Special
Projects, c/o Sierra Health Services, Inc., 2724 North Tenaya Way, Las Vegas,
Nevada 89128, telephone (702) 242-7000
ITEM 4. Terms of the Transaction.
(b) None of the securities except those owned by Sierra and described
in Item 8 of this Schedule are to be purchased from any officer,
director or affiliate of the Company. Sierra currently expects to
tender such securities in the exchange offer.
ITEM 5. Past Contracts, Transactions, Negotiations and Agreements.
None.
ITEM 6. Purposes of the Transaction and Plans or Proposals.
(c) None.
ITEM 8. Interest in Securities of the Subject Company.
Sierra owns $18,000 aggregate principal amount of the subject
securities. None of the other persons named in Item 3 beneficially owns any of
the subject securities.
ITEM 10. Financial Statements.
The required financial statements can be found (i) under the heading
"Unaudited Pro Forma Consolidated Financial Statements" beginning on page 69 and
(ii) beginning at page F-1, in CII Financial's Registration Statement
incorporated by reference herein.
ITEM 12. Materials to be filed as Exhibits.
(a)(1)* Prospectus and Exchange Offer dated December 26, 2000, incorporated
by reference to the Company's Registration Statement on Form S-4
(No. 333-52726) filed on December 26, 2000 as amended on February 5,
2001.
(a)(2) Press Release Issued by the Company on December 26, 2000.
(a)(3)* Letter of Transmittal, incorporated by reference to Exhibit 99.1 of
the Company's Registration
Statement on Form S-4 (No. 333-52726) originally filed on
December 26, 2000.
(a)(4)* Form of Notice of Guaranteed Delivery, incorporated by reference to
Exhibit 99.2 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(a)(5)* Form of Notice to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees, incorporated by reference to Exhibit
99.3 of the Company's Registration Statement on Form S-4 (No.
333-52726) originally filed on December 26, 2000.
(a)(6)* Form of Notice to Clients, incorporated by reference to Exhibit 99.4
of the Company's Registration Statement on Form S-4 (No. 333-52726)
originally filed on December 26, 2000.
(a)(7)* Form of Company Letter to Debentureholders, incorporated by
reference to Exhibit 99.5 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(a)(8)** Company Letter to Debentureholders dated December 26, 2000.
(a)(9)** Company Letter to Debentureholders dated January 5, 2001.
(a)(10)** Press Release Issued by the Company on January 19, 2001.
(a)(11)** Press Release Issued by the Company on February 13, 2001.
(b)+ Form of Promissory Note to be issued to Sierra or an affiliate of
Sierra.
(d)(1)* Intercompany Services Agreement dated January 1, 1999, by and
between Sierra and California Indemnity Insurance Company,
incorporated by reference to Exhibit 10.6 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(2)* Tax Allocation Agreement dated May 30, 1997, among Sierra, Health
Plan of Nevada, the Company, Sierra Health and Life Insurance
Company, California Indemnity Insurance Company, Commercial Casualty
Insurance Company and CII Insurance Company, incorporated by
reference to Exhibit 10.7 of the Company's Registration Statement on
Form S-4 (No. 333-52726) originally filed on December 26, 2000.
(d)(3)* HCO Contract with Claims Administrator and Supplement dated January
19, 2001 among California Indemnity Insurance Company, and each of
its insurer subsidiaries, and Sierra Health and Life Insurance
Company, incorporated by reference to Exhibit 10.8 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(4)* Guaranty, dated as of August 23, 2000, among the Company, among
others, as guarantors, in favor of Bank of America National Trust
and Savings Association as Administrative Agent and the other
financial institutions party thereto, incorporated by reference to
Sierra's Quarterly Report on Form 10-Q filed for the quarter ended
September 30, 2000.
(d)(5)* Limited Partnership Agreement of the 2716 N. Tenaya Way Limited
Partnership dated December 3, 1998, among California Indemnity
Insurance Company, Commercial Casualty Insurance Company and Sierra,
incorporated by reference to Exhibit 10.15 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(6)* Sublease of 2716 North Tenaya Way, Las Vegas, Nevada, dated January
25, 2001, among Sierra and California Indemnity Insurance Company,
incorporated by reference to Exhibit 10.16 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(7)* Investment Services Agreement dated January 1, 1999, between Sierra
and California Indemnity Insurance Company, incorporated by
reference to Exhibit 10.18 of the Company's Registration Statement
on Form S-4 (No. 333-52726) originally filed on December 26, 2000.
(d)(8)* Investment Services Agreement dated January 1, 1999, between Sierra
and Commercial Casualty Insurance Company, incorporated by reference
to Exhibit 10.19 of the Company's Registration Statement on Form S-4
(No. 333-52726) originally filed on December 26, 2000.
(d)(9)* Investment Services Agreement dated January 1, 1999, between Sierra
and CII Insurance Company, incorporated by reference to Exhibit
10.20 of the Company's Registration Statement on Form S-4 (No.
333-52726) originally filed on December 26, 2000.
(d)(10)* Investment Services Agreement dated January 1, 1999, between Sierra
and Sierra Insurance Company of Texas, incorporated by reference to
Exhibit 10.21 of the Company's Registration Statement on Form S-4
(No. 333-52726) originally filed on December 26, 2000.
(g) None.
(h)* Form of Opinion of Morgan, Lewis & Bockius LLP, Special United
States tax counsel to the Company, to be filed as an exhibit to the
Company's Registration Statement on Form S-4 (No. 333-52726)
originally filed on December 26, 2000 and incorporated by reference
herein.
* Incorporated by reference.
** Previously filed with the Securities and Exchange Commission.
+ To be filed by amendment.
ITEM 13. Information Required by Schedule 13E-3.
Not Applicable.
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.
Date: February 23, 2001
CII FINANCIAL, INC.
By: ________________________________
Name: Kathleen M. Marlon
Title: President, Chief Executive Officer
and Chairman
INDEX TO EXHIBITS
Exhibit Exhibit
Number
(a)(1)* Prospectus and Exchange Offer dated December 26, 2000, incorporated
by reference to the Company's Registration Statement on Form S-4
(No. 333-52726) filed on December 26, 2000 as amended on February 5,
2001.
(a)(2) Press Release Issued by the Company on December 26, 2000.
(a)(3)* Letter of Transmittal, incorporated by reference to Exhibit 99.1 of
the Company's Registration
Statement on Form S-4 (No. 333-52726) originally filed on
December 26, 2000.
(a)(4)* Form of Notice of Guaranteed Delivery, incorporated by reference to
Exhibit 99.2 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(a)(5)* Form of Notice to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees, incorporated by reference to Exhibit
99.3 of the Company's Registration Statement on Form S-4 (No.
333-52726) originally filed on December 26, 2000.
(a)(6)* Form of Notice to Clients, incorporated by reference to Exhibit 99.4
of the Company's Registration Statement on Form S-4 (No. 333-52726)
originally filed on December 26, 2000.
(a)(7)* Form of Company Letter to Debentureholders, incorporated by
reference to Exhibit 99.5 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(a)(8)** Company Letter to Debentureholders dated December 26, 2000.
(a)(9)** Company Letter to Debentureholders dated January 5, 2001.
(a)(10)** Press Release Issued by the Company on January 19, 2001.
(a)(11)** Press Release Issued by the Company on February 13, 2001.
(b)+ Form of Promissory Note to be issued to Sierra or an affiliate of Sierra.
(d)(1)* Intercompany Services Agreement dated January 1, 1999, by and
between Sierra and California Indemnity Insurance Company,
incorporated by reference to Exhibit 10.6 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(2)* Tax Allocation Agreement dated May 30, 1997, among Sierra, Health
Plan of Nevada, the Company, Sierra Health and Life Insurance
Company, California Indemnity Insurance Company, Commercial Casualty
Insurance Company and CII Insurance Company, incorporated by
reference to Exhibit 10.7 of the Company's Registration Statement on
Form S-4 (No. 333-52726) originally filed on December 26, 2000.
(d)(3)* HCO Contract with Claims Administrator and Supplement dated January
19, 2001 among California Indemnity Insurance Company, and each of
its insurer subsidiaries, and Sierra Health and Life Insurance
Company, incorporated by reference to Exhibit 10.8 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(4)* Guaranty, dated as of August 23, 2000, among the Company, among
others, as guarantors, in favor of Bank of America National Trust
and Savings Association as Administrative Agent and the other
financial institutions party thereto, incorporated by reference to
Sierra's Quarterly Report on Form 10-Q filed for the quarter ended
September 30, 2000.
(d)(5)* Limited Partnership Agreement of the 2716 N. Tenaya Way Limited
Partnership dated December 3, 1998, among California Indemnity
Insurance Company, Commercial Casualty Insurance Company and Sierra,
incorporated by reference to Exhibit 10.15 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(6)* Sublease of 2716 North Tenaya Way, Las Vegas, Nevada, dated January
25, 2001, among Sierra and California Indemnity Insurance Company,
incorporated by reference to Exhibit 10.16 of the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed
on December 26, 2000.
(d)(7)* Investment Services Agreement dated January 1, 1999, between Sierra
and California Indemnity Insurance Company, incorporated by
reference to Exhibit 10.18 of the Company's Registration Statement
on Form S-4 (No. 333-52726) originally filed on December 26, 2000.
(d)(8)* Investment Services Agreement dated January 1, 1999, between Sierra
and Commercial Casualty Insurance Company, incorporated by reference
to Exhibit 10.19 of the Company's Registration Statement on Form S-4
(No. 333-52726) originally filed on December 26, 2000.
(d)(9)* Investment Services Agreement dated January 1, 1999, between Sierra
and CII Insurance Company, incorporated by reference to Exhibit
10.20 of the Company's Registration Statement on Form S-4 (No.
333-52726) originally filed on December 26, 2000.
(d)(10)* Investment Services Agreement dated January 1, 1999, between Sierra
and Sierra Insurance Company of Texas, incorporated by reference to
Exhibit 10.21 of the Company's Registration Statement on Form S-4
(No. 333-52726) originally filed on December 26, 2000.
(g) None.
(h)* Form of Opinion of Morgan, Lewis & Bockius LLP, Special United States
tax counsel to the Company, to be filed as an exhibit to the Company's
Registration Statement on Form S-4 (No. 333-52726) originally filed on
December 26, 2000 and incorporated by reference herein.
* Incorporated by reference.
** Previously filed with the Securities and Exchange Commission.
+ To be filed by amendment.