- --------------------------------------------------------------------------------
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): February 3, 1997
----------------
__________
ALLMERICA FINANCIAL CORPORATION
-------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 1-13754 04-3263626
-------- ------- ----------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer I.D.
of Incorporation) Number)
__________
440 Lincoln Street, Worcester, Massachusetts 01653
-------------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
(508) 855-1000
------------------------------------------------
Registrant's Telephone Number, including area code
Page 1 of 4 pages
Exhibit Index on page 4
- --------------------------------------------------------------------------------
Item 5. Other Events
On February 3, 1997 AFC announced the sale of $300 million of Capital
Securities issued by AFC Capital Trust I (the "Trust"), a newly created
subsidiary business trust of AFC. Each Capital Security will pay cumulative cash
distributions at an annual rate of 8.207% of the stated $1,000 liquidation
amount per security, payable semi-annually commencing August 15, 1997.
Proceeds from the offering of approximately $296.3 million, after
commissions and other associated costs, are intended to fund a portion of
proposed acquisition of the 24.2 million, publicly-held shares of its 59.5%-held
subsidiary, Allmerica Property & Casualty Companies, Inc. No agreement on the
proposed acquisition has been reached. In the event the proposed acquisition
does not occur, the proceeds will be used for working capital and other
corporate purposes.
The Trust exists for the sole purpose of issuing the Capital Securities and
investing the proceeds thereof in an equivalent amount of 8.207% Junior
Subordinated Deferrable Interest Debentures (the "Junior Subordinated
Debentures") issued by AFC. The Junior Subordinated Debentures will mature
on February 3, 2027 (the "Stated Maturity Date").
So long as no event of default with respect to the Junior Subordinated
Debentures has occurred and is continuing, AFC has the right to defer payments
of interest on the Junior Subordinated Debentures at any time and from time to
time for a period not exceeding 10 consecutive semi-annual periods with respect
to each deferral period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity Date. Upon the
termination of any such Extension Period and the payment of all amounts then
due, AFC may elect to begin a new Extension Period, subject to certain
requirements. If and for so long as interest payments on the Junior Subordinated
Debentures are so deferred, distributions on the Capital Securities will also be
deferred and AFC will not be permitted, subject to certain exceptions, to
declare or pay any cash distributions with respect to AFC's capital stock (which
includes common and preferred stock) or to make any payment with respect to debt
securities of AFC that rank pari passu with or junior to the Junior Subordinated
Debentures. During an Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of distributions to which
holders of the Trust Securities are entitled will continue to accumulate) at the
rate of 8.207% per annum, compounded semi-annually.
AFC will, through certain guarantees, the Junior Subordinated Debentures,
the Indenture, and the Declaration of Trust, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the Capital
Securities.
The Capital Securities will be subject to mandatory redemption, in whole
but not in part, (i) on the Stated Maturity Date upon repayment of the Junior
Subordinated Debentures at a redemption price equal to the principal amount of,
plus accrued and unpaid interest on, the Junior Subordinated Debentures (the
"Maturity Redemption Price") and (ii) at any time before the Stated Maturity
Date contemporaneously with the optional prepayment of the Junior Subordinated
Debentures.
The Junior Subordinated Debentures will be prepayable prior to the Stated
Maturity Date at the option of AFC in whole but not in part, if as a result of a
change in law, the interest payable by AFC on the Junior Subordinated Debentures
is not tax deductible for Federal income tax purposes or the Trust is deemed to
be an "investment company" for purposes of the Investment Company Act of 1940.
Under certain circumstances the prepayment of the Junior Subordinated Debentures
is subject to the payment of a premium over par. In additon, AFC has the right
to liquidate the Trust and distribute the Junior Subordinated Debentures to the
holders of the Capital Securities.
The Capital Securities were sold in a private placement to qualified
institutional buyers, and have not been registered under the Securities Act of
1993, as amended (the "Act"), and may not be offered or sold in the United
States absent of registration under, or an applicable exemption from the
registration requirements of the Act and applicable state securities laws. The
issue was managed by Merrill Lynch & Co., and Morgan Stanley & Co.
AFC and the Trust have agreed to file a registration statement relating to
an exchange offer pursuant to which another series of capital securities of the
Trust, guarantees and series of junior subordinated debentures of the Company
each covered by such registration statement and having the same terms as the
Capital Securities, and the current guarantees and the Junior Subordinated
Debentures, respectively (the "Exchange Securities"), would be offered in
exchange for the Capital Securities, the current guarantees and the Junior
Subordinated Debentures, respectively (the "Exchange Offer"). Under certain
circumstances, in lieu of effecting the registration of the Exchange Securities,
AFC and the Trust will file a shelf registration statement registering the
resale of the Capital Securities, the guarantees and the Junior Subordinated
Debentures.
A copy of AFC's press release announcing the sale of the Capital Securities
and certain agreements relating to the Capital Securities are attached hereto as
Exhibits and are incorporated by reference herein.
Item 7. Financial Statements and Exhibits
Exhibit 1 Press Release of AFC dated February 3, 1997 announcing the
Completion of the sale of $300 million of Capital
Securities by AFC Capital Trust I.
Exhibit 2 Amended and Restated Declaration of Trust of AFC Capital
Trust I dated February 3, 1997
Exhibit 3 Indenture dated February 3, 1997 relating to the Junior
Subordinated Debentures of AFC
Exhibit 4 Series A Capital Securities Guarantee Agreement dated
February 3, 1997
Exhibit 5 Common Securities Guarantee Agreement dated
February 3, 1997
Exhibit 6 Registration Rights Agreement dated February 3, 1997
Exhibit 7 Purchase Agreement dated February 3, 1997 relating to the
Capital Securities
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ALLMERICA FINANCIAL CORPORATION
By: /s/ Edward J. Parry III
---------------------------
Title: Vice President,
Chief Financial Officer,
and Treasurer
Date: February 3, 1997
3
Exhibit Index Page
- ------------- ----
Exhibit 1 Press Release of AFC dated February 3, 1997 announcing the
completion of the sale of $300 million of Capital Securities by AFC
Capital Trust I.
Exhibit 2 Amended and Restated Declaration of Trust of AFC Capital
Trust I dated February 3, 1997
Exhibit 3 Indenture dated February 3, 1997 relating to the Junior
Subordinated Debentures of AFC
Exhibit 4 Series A Capital Securities Guarantee Agreement dated
February 3, 1997
Exhibit 5 Common Securities Guarantee Agreement dated
February 3, 1997
Exhibit 6 Registration Rights Agreement dated February 3, 1997
Exhibit 7 Purchase Agreement dated February 3, 1997 relating to the
Capital Securities
4