UNITED STATES
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 17, 1997
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PAC RIM HOLDING CORPORATION
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DELAWARE 0-18779 95-4105740
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
6200 CANOGA AVENUE, WOODLAND HILLS, CALIFORNIA 91367-2402
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (818) 226-6200
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(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT.)
ITEM 5: OTHER EVENTS
Pac Rim Holding Corporation, a Delaware corporation ("Registrant") did on
or about February 17, 1997 execute an Amended and Restated Agreement and Plan of
Merger ("Amended Agreement") with Superior National Insurance Group, Inc., a
California corporation, and SNTL Acquisition Corp., a Delaware corporation
(collectively "Superior"), pursuant to the terms and provisions of which,
subject to the fulfillment of certain conditions, it is contemplated that the
transaction shall occur and close on or about April 15, 1997, or sooner,
although the Amended Agreement does extend through May 15, 1997. In the event
that transaction is completed, all of Registrant's issued and outstanding shares
of common stock and "in the money" stock options, together with its outstanding
debentures and warrants, shall be acquired and liquidated for cash
consideration, which cash shall be payable at close of the contemplated
transaction. The stockholders would receive $2.11 per share (a total of
approximately $20,063,293), the convertible debenture holders would receive face
value for the debentures or $20,000,000, and $1,957,739 would be paid to acquire
all of the issued and outstanding warrants of the Company and options to
purchase common stock that are "in-the-money", for a total consideration of
approximately $42,021,032.
An adjustment to increase the loss and loss adjustment expense reserves of
Pac Rim's subsidiary, The Pacific Rim Assurance Company, by $12 million
necessitated renegotiation of the terms of the prior definitive agreement with
Superior National. The revised terms reflect a reduction of $12 million from the
approximately $54 million in total consideration announced on September 17,
1996. Payment of that consideration would have resulted in Pac Rim's common
shareholders and debenture, warrant and option holders receiving between $3.00
to $3.10 per share.
Pac Rim, through its subsidiary, Pacific Rim Assurance, is engaged in the
writing of workers' compensation insurance in California, Arizona, Texas,
Georgia, and Alabama.
Since its September 17 announcement of the transaction with Superior
National, and the distribution of a proxy statement to shareholders on November
21, 1996, Pac Rim, on December 10, 1996 and January 10, 1997, announced
postponements of its planned Special Meeting of Stockholders to approve the
transaction. Those postponements were due to delays in securing California
Department of Insurance ("DOI") approval of the pending transaction. The DOI had
linked the approval of the transaction with the completion of its triennial
examination of Pacific Rim Assurance as of December 31, 1995.
Pacific Rim Assurance, similar to other California workers' compensation
carriers, has experienced, and has previously disclosed, volatility in its
claims experience of prior accident years. Such volatility is due to significant
changes in legislative, economic, managed medical care, and other significant
factors affecting loss and loss adjustment expense reserves. Pacific Rim
Assurance, in conjunction and consultation with its internal and external
actuaries, and with the concurrence of the DOI, increased its loss and loss
adjustment expense reserves by approximately $12 million for accident years 1995
and prior, in its fourth quarter 1996 operating results. As a result of the
increase to strengthen reserves, Pac Rim reported a significant loss in its
results of operations for the fourth quarter of 1996 and the year ended December
31, 1996.
The reduction in the purchase price to be paid by Superior National under
the Agreement is entirely attributable to the reserve increase described above.
Pac Rim and its actuaries believe that this strengthening of reserves will
conclude the DOI's triennial examination and facilitate securing regulatory
approval of the pending transaction. Both Pac Rim and Superior National believe
that the pending acquisition transaction, as restated and described above, will
be completed shortly.
Completion and close of the proposed transaction is subject to the
fulfillment and satisfaction of several conditions, including affirmative
stockholders' vote by common stockholders of both Superior and Registrant,
together with securing the consent and affirmative vote of holders of
outstanding Series A Convertible Debentures and Series 1, 2 and 3 Detachable
Warrants of Registrant. Registrant has scheduled a special stockholders meeting
to vote upon the proposal on April 8, 1997. The completion of the transaction
also shall be conditioned upon obtaining certain regulatory and governmental
approvals, including approvals from the Departments of Insurance in various
states and jurisdictions in which Registrant and Superior conduct insurance
business.
A copy of the Amended and Restated Merger Agreement, as executed on
February 17, 1997, is attached as an exhibit to this Form 8-K. After the Board
of Directors of Registrant executed the Agreement, such event was subsequently
announced in a press release dated February 18, 1997, a copy of which is
attached as an exhibit hereto.
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ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
EXHIBITS
5.4 Amended and Restated Agreement and Plan of Merger dated February 17, 1997
by and between Superior National Insurance Group, Inc.; a California
corporation, SNTL Acquisition Corp., a Delaware corporation, and Pac Rim
Holding Corporation, a Delaware corporation*
5.5 Press Release dated February 18, 1997
* The attached copy of the Plan of Merger and Acquisition does not, pursuant to
the terms and provisions of Regulation 229.601(b)(2), contain schedules attached
to the original Agreement, excepting there is attached to the Exhibit Index a
list which briefly identifies the contents of the omitted schedules. Registrant
agrees, upon request of the Securities and Exchange Commission, to
supplementally furnish a copy of any omitted schedule as identified on the list.
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SIGNATURES
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 hereunto duly authorized.
PAC RIM HOLDING CORPORATION,
a Delaware Corporation
Dated March 4, 1997 By: /s/ Paul W. Craig
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Paul W. Craig
Executive Vice President
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
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5.4 Amended and Restated Agreement and Plan of Merger dated February 17, 1997
by and between Superior National Insurance Group, Inc.; a California
corporation, SNTL Acquisition Corp., a Delaware corporation, and Pac
Rim Holding Corporation, a Delaware corporation*
5.5 Press Release dated February 18, 1997
* The attached copy of the Plan of Merger and Acquisition does not, pursuant to
the terms and provisions of Regulation 229.601(b)(2), contain schedules attached
to the original Agreement, excepting there is attached to this Exhibit Index a
list which briefly identifies the contents of the omitted schedules. Registrant
agrees, upon request of the Securities and Exchange Commission, to
supplementally furnish a copy of any omitted schedule as identified on the list.
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SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
SCHEDULE OF EXHIBITS TO
EXHIBIT 5.4 -- AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
The following is a list and description of the Exhibits and Schedules
attached to the Amended and Restated Agreement and Plan of Merger among Superior
National Insurance Group, Inc., SNTL Acquisition Corp. and Pac Rim Holding
Corporation, dated February 17, 1997.
Schedule 7.11(e): Description of Severance Program for Pac Rim employees.
Exhibit A: Certificate of Incorporation of SNTL Acquisition Corp.
Exhibit B: Bylaws of SNTL Acquisition Corp.
Exhibit C: Series A Convertible Debentures and Series 1, 2 and 3
Detachable Warrants Purchase Agreement and First Amendment to
Series A Convertible Debentures and Series 1, 2 and 3
Detachable Warrant Purchase Agreement.
Exhibit D: Schedule of Options Outstanding under Pac Rim Stock Options
Plans Including Exercise Price and Vesting Status Thereof
(assuming a closing occurs).
Exhibit E: Series 3 Warrant Surrender Agreement and First Amendment to
Series 3 Warrant Surrender Agreement.
Exhibit F: Executed Insurance Partners Stock Purchase Agreement.
Exhibit G: Voting Agreement.
Exhibit H: Compensation Plan for Senior Management Team.
Exhibit I: Stanley Braun Employment Agreement and Amendments thereto.
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