SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event
reported: December 6, 1994
THE CONTINENTAL CORPORATION
(Exact name of registrant as specified in its charter)
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New York 1-5686 13-2610607
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(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
180 Maiden Lane New York, New York 10038
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(Address of principal executive offices) (Zip Code)
(212) 440-3000
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(Registrant's telephone number)
Page 1 of 303 Pages
Exhibit Index on Page 5
Item 2. Acquisitions or Dispositions of Assets.
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On December 6, 1994, The Continental Corporation (the "Company") entered
into a merger agreement under which CNA Financial Corporation ("CNA Financial")
will acquire the Company through a merger with a wholly-owned CNA subsidiary.
Under the merger agreement, holders of Continental common stock will receive $20
per share in cash. The proposed transaction is subject to satisfaction of
certain conditions, including approval by the Company's shareholders, regulatory
approvals and expiration of the Hart-Scott-Rodino waiting period, and is
required to be consummated prior to December 31, 1995. Completion of the
proposed transaction is expected in the first half of 1995.
Under a separate agreement, CNA has agreed to invest $275 million in the
Company. The capital investment by CNA, which is expected to be completed on
or before December 12, 1994, takes the place of an investment in the Company
under a previously announced agreement with Insurance Partners L.P. The Company
has terminated the Insurance Partners agreement and, as provided in the
Insurance Partners agreement, will pay a termination fee to Insurance Partners
not exceeding 1-7/8% of the aggregate merger consideration plus expenses not
exceeding $10 million.
Under the investment agreement, CNA will acquire for cash $200 million in
liquidation value of two series of 9.75% non-convertible preferred stock,
redeemable under certain circumstances at a price reflecting any increase in the
per share price of the Company's common stock over $15.75. CNA will also
receive an option to acquire $125 million in liquidation preference of another
series of 9.75% non-convertible preferred stock. The option and its underlying
preferred stock will be redeemable under certain circumstances at a price
reflecting any increase in the per share price of the common stock over $17.75.
The 9.75% preferred stock will mature in 40 years, with a right of the holders
to require redemption in 15 years, and may be redeemed by Continental under
certain circumstances. In addition, CNA will acquire for cash $75 million in
liquidation value of a series of 12% non-convertible preferred stock, maturing
in 10 years and redeemable under certain circumstances. If the merger is not
completed,
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CNA may, subject to regulatory approvals, exchange approximately $165 million of
the 9.75% preferred stock for another series of preferred stock that would be
convertible into approximately 19% of the Company's currently outstanding common
shares. Subject to adjustment, the conversion price would be $15.75. Following
such exchange, CNA would be entitled to nominate up to four directors to serve
on Continental's board. CNA would also be subject to certain standstill
agreements and restrictions on transfer.
The merger agreement and securities purchase agreement are filed as
exhibits and this discussion is qualified in its entirety by reference to
those exhibits.
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Item 7. Exhibits
Exhibit 2(a) Agreement and Plan of Merger, dated as of December 6, 1994, by
and among The Continental Corporation, CNA Financial Corporation
and Chicago Acquisition Corp. (Annex A, Securities Purchase
Agreement, filed as Exhibit 10(b)).
Exhibit 10(a) (Filed as Exhibit 2(a).)
Exhibit 10(b) Securities Purchase Agreement, dated as of December 6, 1994,
between The Continental Corporation and CNA Financial
Corporation, with Schedule 1 and Exhibits A through D.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 9, 1994
THE CONTINENTAL CORPORATION
By /s/ William F. Gleason, Jr.
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William F. Gleason, Jr.
Senior Vice President,
General Counsel and
Secretary
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Exhibit Index
Sequentially
Numbered
Page
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Exhibit 2(a) Agreement and Plan of Merger, dated as of December 6, 1994 by,
and among The Continental Corporation, CNA Financial Corporation
and Chicago Acquisition Corp. (Annex A, Securities Purchase
Agreement, filed as Exhibit 10(b).)
Exhibit 10(a) (Filed as Exhibit 2(a).)
Exhibit 10(b) Securities Purchase Agreement, dated as of December 6, 1994,
between The Continental Corporation and CNA Financial
Corporation, a Delaware corporation, with Schedule 1 and
Exhibits A through D.
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