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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the
Securities Exchange Act of 1934)
Guaranty National Corporation
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(Name of Issuer)
Orion Capital Corporation
The Connecticut Indemnity Company
Connecticut Specialty Insurance Company
Design Professionals Insurance Company
EBI Indemnity Company
Employee Benefits Insurance Company
The Fire and Casualty Insurance Company of Connecticut
Security Insurance Company of Hartford
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(Name of Person (s) Filing Statement)
Common Stock, par value $1.00 per share
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(Title of Class of Securities)
401192109
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(CUSIP Number of Class of Securities)
Michael P. Maloney, Esq.
Vice President and General Counsel
ORION CAPITAL CORPORATION
600 Fifth Avenue
New York, New York 10020-2302
(212) 332-8080
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
Copy to:
John J. McCann, Esq.
Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
(212) 632-3000
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This Statement is filed by Orion Capital Corporation ("Orion") and the
following of its wholly-owned insurance subsidiaries: The Connecticut Indemnity
Company, Connecticut Specialty Insurance Company, Design Professionals Insurance
Company, EBI Indemnity Company, Employee Benefits Insurance Company, The Fire
and Casualty Insurance Company of Connecticut and Security Insurance Company of
Hartford (collectively with Orion, the "Purchasers") relating to the tender
offer of the Purchasers to purchase up to 4,600,000 shares of common stock, par
value $1.00 per share (the "Shares"), of Guaranty National Corporation, a
Colorado corporation (the "Company"). This Statement further amends the Schedule
13E-3 of the Purchasers, dated May 8, 1996 previously amended by Amendment No. 1
dated May 23, 1996 (as heretofore and hereby amended, the "Schedule 13E-3"), by
incorporating by reference herein the information set forth in the press release
dated June 4, 1996 of Orion attached as Exhibit (d)(11) hereto. This Statement
also amends Items 3, 11, 16 and 17 of the Schedule 13E-3 by adding the
information set forth below. Except as otherwise indicated herein, the Schedule
13E-3 remains unchanged in all respects. Capitalized terms not otherwise defined
herein are defined as set forth in the Schedule 13E-3 or in the Offer to
Purchase of the Purchasers, dated May 8, 1996 (the "Original Offer to Pur-
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chase"), as supplemented by the Supplement to the Offer Purchase dated June 4,
1996 (the "Supplement") which is attached as Exhibit (d)(10) hereto (together
referred to as the "Offer to Purchase").
Item 3. Past Contacts, Transactions or Negotiations.
The information set forth in Item 3 to the Schedule 13E-3 is hereby
supplemented as follows:
At the request of the Chairman of the Special Committee, Mr. Gruber
met with him on May 28, 1996. The Chairman told Mr. Gruber that, while the
Special Committee's financial advisor had not yet given the Committee its
written opinion, it was his personal belief that the financial advisor would be
willing to opine favorably if the Offer price were increased to $19 per Share.
Mr. Gruber pointed out that such an increase would more than double the
financial advisor's fee, which in his view was unconscionable. Mr. Gruber
reiterated the intention of the Purchasers not to raise or reduce the Offer
price of $17.50 per Share. He again pointed out that the retention of the
Special Committee's financial advisor was structured in such a way as to create
an inevitable conflict of interest on the part of the financial advisor and, in
the Purchasers' opinion, called into question the credibility of the Special
Committee's evaluation process.
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The Chairman of the Special Committee informed Mr. Gruber that a meeting of the
Special Committee was scheduled for 8:00 p.m., Denver time, on May 29, 1996.
Following Mr. Gruber's meeting with the Chairman of the Special
Committee on May 28, the Purchasers confirmed to legal counsel for the Company
and the Special Committee on May 29 that, if at least 4,600,000 Shares are
validly tendered and accepted for payment and paid for, then:
1. The Purchasers will not purchase, prior to the third anniversary of
the Expiration Date, additional Shares (if after giving effect to such purchase
they would own more than 81% of the outstanding Shares) other than pursuant to
an offer made to all holders of Shares and which is conditioned on the
acceptance of such offer by holders owning at least a majority of the Shares
then outstanding which are not held by the Purchasers and their affiliates.
2. If an offer is made to holders of Shares, as described in paragraph
1 above, prior to the third anniversary of the Expiration Date, the Purchasers
will offer a purchase price involving cash consideration equal to at least
$17.50 per Share.
3. The Purchasers will support adoption of a policy by the Board of
Directors that any repurchase of Shares by the Company prior to the third
anniversary of the Expiration Date should be approved by a majority of those
members of the Board
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of Directors who are independent of and not employed by any of
the Purchasers.
4. If, at any time during the five years following the Expiration
Date, the Purchasers should wish to sell as a block all the Shares owned by
them, or propose a merger or consolidation involving the Company, they will not
do so unless (a) in the case of a sale of all Purchasers' Shares, the purchaser
of such Shares undertakes to offer to purchase all other Shares outstanding for
consideration of equivalent value to that offered to the Purchasers or (b) in
the case of a merger or consolidation, all Shares are exchanged for
substantially equivalent value.
On the morning of May 30, 1996, the Special Committee reported through
its counsel that it had determined to request an opinion from its financial
advisor with respect to the fairness of the Offer. Later that same morning, Mr.
Gruber called the Chairman of the Special Committee. During that conversation
Mr. Gruber confirmed again the undertakings of the Purchasers as set forth above
and again expressed his reservations concerning the fairness and objectivity of
the evaluation process.
On June 1, 1996, the Special Committee decided to recommend to the
Company's stockholders as follows:
. . . [i]n light of all the relevant circumstances, [that] the Offer is
inadequate because of the Offer price and the fact that the Offer is
for less than 100% of the publicly-held Shares, but nonetheless
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it is making no recommendation at this time to the Company's
shareholders. The Special Committee urges all shareholders to make
their own determination as to whether to tender . . . .
The Special Committee also decided to request its financial advisor to solicit
third party interest in acquiring all or any part of the Company.
Item 11. Contracts, Arrangements, Understandings or Relationships with Respect
to the Issuers' Securities
The information set forth in Item 11 of the Schedule 13E-3 is hereby
supplemented by incorporating the information set forth in Item 3 above.
Item 16. Additional Information.
The information set forth in Item 16 of the Schedule 13E-3 is hereby
supplemented by incorporating by reference the information set forth in the
Supplement, a copy of which is attached as Exhibit (d)(10) hereto.
Item 17. Material to be Filed as Exhibits
(d)(10) Supplement to the Offer to Purchase dated June 4, 1996
(d)(11) Press Release dated June 4, 1996 of Orion Capital Corporation
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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.
Dated: June 4, 1996
ORION CAPITAL CORPORATION
By /s/ Michael P. Maloney
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Vice President, General
Counsel and Secretary
THE CONNECTICUT INDEMNITY COMPANY
CONNECTICUT SPECIALTY INSURANCE COMPANY
DESIGN PROFESSIONALS INSURANCE COMPANY
EBI INDEMNITY COMPANY
EMPLOYEE BENEFITS INSURANCE COMPANY
THE FIRE AND CASUALTY INSURANCE COMPANY OF
CONNECTICUT
SECURITY INSURANCE COMPANY OF HARTFORD
By /s/ Michael P. Maloney
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Senior Vice President
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EXHIBIT INDEX
Exhibit Description
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(d)(10) Supplement to Offer to Purchase
dated June 4, 1996
(d)(11) Press Release dated June 4, 1996
of Orion Capital Corporation
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