Filed by CII Financial, Inc.
Pursuant to Rule 425
under the Securities Act of 1933
For: CII Financial, Inc.
Commission File No.: 333-52726
[GRAPHIC OMITTED][GRAPHIC OMITTED]
CII FINANCIAL, INC.
California Indemnity Insurance Company
Commercial Casualty Insurance Company
subsidiaries of Sierra Health Services, Inc.
P.O.Box 15645, Las Vegas, Nevada 89114-5645
PRESS RELEASE
FOR IMMEDIATE RELEASE
CONTACTS:
John Okita Andrew C. Karp
Chief Financial Officer Managing Director
(702) 242-7531 Banc of America Securities LLC
High Yield Special Products
(704) 388-4813 or (888) 292-0070
CII FINANCIAL ANNOUNCES AGREEMENT REGARDING EXCHANGE OFFER
FOR CONVERTIBLE SUBORDINATED DEBENTURES
Las Vegas, April 13, 2001 - CII Financial, Inc. today announced that it
has reached an agreement in principal with an unofficial committee representing
certain holders of approximately $20 million principal amount of its 7 1/2%
convertible subordinated debentures due September 15, 2001 (CUSIP No. 12551LAB7)
in connection with its pending exchange offer for all $47,059,000 outstanding
principal amount of the debentures. The Company said that, in order to implement
the agreement, it has extended the expiration date of the exchange offer and
would amend the terms of the offer.
The Company said the terms of the amended exchange offer would be as
follows:
- - The cash purchase price will be increased from $700 per $1,000 principal
amount to $739.12 per $1,000 principal amount, plus accrued interest. The
cash offer will be for up to a total of $27,059,000 principal amount of old
7 1/2% subordinated debentures.
- - The Company will offer to exchange the remaining $20,000,000 principal
amount of old 7 1/2% subordinated debentures for new 9 1/2% senior
debentures.
- - The maturity of the new senior debentures will be shortened from March 31,
2005 to September 15, 2004.
- - The covenants applicable to the new debentures will be expanded to include
limitations on indebtedness, liens, restricted payments, sales of capital
stock of subsidiaries and transactions with affiliates. The covenants will
also include an excess cash flow offer, asset sale offer and change of
control offer.
- - In the event of a change of control of CII Financial, holders of the new 9
1/2% senior debentures will have the right to require the Company to
repurchase their new debentures at 100% of the principal amount, plus a
specified premium declining over time. The repurchase premium will
initially be 10%.
CII Financial's Chief Executive Officer, Kathleen Marlon, commented,
"We are pleased that we have been able to reach a consensual agreement with our
principal bondholders and now expect to complete the exchange offer in the
near future."
Holders who elect cash will receive $739.12 in cash for each $1,000
principal amount of their old 7 1/2% subordinated debentures accepted under the
cash option, plus accrued and unpaid interest in cash. If holders of more than
$27,059,000 total principal amount of old 7 1/2% subordinated debentures elect
to tender their debentures for cash, the Company will purchase a total of
$27,059,000 principal amount of old 7 1/2% subordinated debentures for cash and
the Company will exchange the balance of the tendered debentures for new 9 1/2%
senior debentures. All holders who elect to receive cash will be treated equally
in this process. It will be a condition of the offer that at least $27,059,000
principal amount of old 7 1/2% subordinated debentures will be tendered for
cash.
Holders who elect new 9 1/2% senior debentures will receive $1,000
principal amount of new 9 1/2% senior debentures for each $1,000 principal
amount of their old 7 1/2% subordinated debentures, plus accrued and unpaid
interest in cash. It will be a condition of the offer that the Company will
exchange no more than $20.0 million total principal amount of old 7 1/2%
subordinated debentures for new 9 1/2% senior debentures.
The Company expects to file an amended Registration Statement with the
Securities and Exchange Commission reflecting the amended exchange offer on or
about April 17, 2001.
The expiration date for the exchange offer has been extended from 11:59
p.m., New York City time, on April 12, 2001, to 11:59 p.m., New York City time,
on April 30, 2001. The Company said that, as of 11:59 p.m., New York City time,
on April 12, 2001, it had received tenders from holders of $27,153,000 in
aggregate principal amount of old 7 1/2% subordinated debentures. It is a
condition of the offer that the Company receives valid tenders of at least 90%
of the aggregate outstanding principal amount of the old 7 1/2% subordinated
debentures and approval from a majority of the banks on the Sierra Health
Services, Inc. credit facility.
Banc of America Securities LLC is the exclusive dealer manager for the
offer. D.F. King & Co., Inc. is the information agent and Wells Fargo Corporate
Trust is the depositary. Copies of the Preliminary Prospectus and Exchange Offer
may be obtained by calling D.F. King at (800) 735-3591. Additional information
concerning the terms and conditions of the offer may be obtained by contacting
Banc of America Securities LLC at (888) 292-0070.
CII Financial is a holding company primarily engaged in writing workers'
compensation insurance in nine western and mid-western states through its wholly
owned subsidiaries, California Indemnity Insurance Company, Commercial Casualty
Insurance Company, Sierra Insurance Company of Texas and CII Insurance Company.
CII Financial is a wholly owned subsidiary of Sierra Health Services, Inc.
(NYSE:SIE), a diversified health care services company based in Las Vegas.
Statements in this news release that are not historical facts are
forward-looking and based on management's projections, assumptions and
estimates; actual results may vary materially. Forward-looking statements are
subject to certain risks and uncertainties, some of which may be found in the
Preliminary Prospectus and Exchange Offer and other documents filed with the
Securities and Exchange Commission and which are incorporated herein by
reference.
Additional Information and Where to Find It:
CII Financial, Inc. has filed a Registration Statement with the Securities
and Exchange Commission on Form S-4 registering the new debentures to be issued
in the exchange offer. The Registration Statement and the preliminary prospectus
contained therein contain important information about CII Financial, the
exchange offer and related matters. Security holders are urged to read the
Registration Statement and the preliminary prospectus contained therein, CII
Financial's Schedule TO and any other relevant documents filed by CII Financial
with the SEC.
The Registration Statement has not yet become effective. The new debentures
may not be sold and, although you may tender your old debentures, tenders may
not be accepted prior to the time the Registration Statement becomes effective.
This shall not constitute an offer to sell or an offer to buy nor shall there be
any sale of the new debentures in any State in which such offer, solicitation or
sale would be unlawful.
Security holders are able to obtain copies of the Registration Statement on
Form S-4 and the preliminary prospectus, CII Financial's Schedule TO and any
other relevant documents for free through the Web site maintained by the SEC at
http://www.sec.gov. In addition, these documents are available free of charge by
contacting the Information Agent for the offer, D.F. King & Co., at (800)
735-3591. If you have any questions about the offer, please call the Dealer
Manager for the offer, Banc of America Securities LLC, at (888) 292-0070.
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