SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
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) October 31, 1995
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United Bankshares, Inc.
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(Exact name of registrant as specified in its charter)
West Virginia 0-13322 55-0641179
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
300 United Center
500 Virginia Street, East
Charleston, West Virginia 25301
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(Address of principal executive offices) Zip Code
(304) 424-8761
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or address, if changed since last report)
Item 5. Other Events
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On October 31, 1995, United Bankshares, Inc. acquired First Commercial
Bank, Arlington, Virginia, in a transaction to be accounted for under the
purchase method of accounting.
Item 7. Financial Statements, Pro Forma Financial Information and
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Exhibits
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(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits
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8 Opinion re tax matters, dated October 31, 1995
SIGNATURES
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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.
UNITED BANKSHARES, INC.
Date November 30, 1995 By /s/ Joseph Wm. Sowards
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Joseph Wm. Sowards
Its Executive Vice President
and Secretary
October 31, 1995
First Commercial Bank
3801 Wilson Blvd.
Arlington, Virginia 22203
RE: Merger of First Commercial Bank
Ladies and Gentlemen:
You have requested our opinion concerning certain Federal income tax
consequences incident to a merger of First Commercial Bank, a Virginia banking
institution ("FCB"), into and with Commercial Interim Bank, a banking
institution organized under the laws of the Commonwealth of Virginia ("CIB") as
a wholly-owned subsidiary of United Bankshares, Inc., a West Virginia
corporation ("UBS").
In preparing our opinion, we have examined the Agreement and Plan of
Merger/1/ dated as of March 6, 1995, as amended, among FCB, UBS and CIB (the
"Plan"), the exhibits attached thereto, the Adoption Agreement dated as of June
8, 1995, among FCB, UBS and CIB, the Registration Statement (Form S-4) submitted
by UBS to the Securities and Exchange Commission effective as of September 27,
1995 (the "Registration Statement"), and the agreements and instruments pursuant
to which FCB will (1) merge into and with CIB, with CIB surviving and operating
under the name "First Commercial Bank," and (2) exchange the issued and
outstanding shares of common stock of FCB for a certain number of shares of
common stock of UBS and cash. The foregoing transactions shall be collectively
referred to as the "merger". In addition, we have reviewed the agreements
pursuant to which the compensation and benefits of the key employees of FCB will
be adjusted and modified pursuant to the Plan.
You have represented that the Plan, the exhibits thereto, the certificates
of FCB and the Control Shareholders (described below) and the Registration
Statement (1) present an accurate and complete description of FCB, its intended
transactions and proposed business operations, (2) present an accurate and
complete description of the Control Shareholders' intentions and proposed
transactions with respect to the UBS shares to be received in the merger, (3)
contain no statement of material fact which is untrue and (4) do not omit or
fail to state any material fact necessary in order to make the statements
contained therein not misleading. In addition, in formulating our opinion, we
have relied on that certain "fairness opinion" issued by Baxter, Fentriss &
Company and dated as of September 18, 1995.
/1/ Unless otherwise noted, all terms defined in the Plan have the same meaning
in this letter.
This letter presents our opinion concerning questions of law which are
relevant to the realization by FCB and its shareholders of certain Federal
income tax benefits arising from the merger of FCB into and with CIB. Our
opinion is predicated on facts and assumptions derived from the documents,
agreements, instruments and reports referred to above, including, but not
limited to, assumptions concerning the value of the UBS shares on the Closing
Date. Although we have not independently verified each of the statements of
fact set forth herein, nothing has come to our attention that leads us to
question the accuracy of such statements or requires us, under applicable
principles of legal ethics, to make further inquiry. If there is any change in
material fact, or if any material fact is not true or is not disclosed, or if
stated assumptions concerning future events and transactions do not occur, or if
events and transactions not now contemplated do occur, the conclusions reached
in this letter may be altered and the Federal income tax consequences of the
merger may be adversely affected. We can provide no assurance that the facts,
circumstances and assumptions necessary for favorable Federal income tax
consequences from the merger of FCB into and with CIB will indeed occur.
Our opinion is also based on the applicable laws of the Commonwealth of
Virginia, pertinent provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), proposed, temporary and final Income Tax and Procedure and
Administration Regulations issued by the Treasury thereunder (the "Regulations")
and interpretations of the Code and Regulations by the courts and the Internal
Revenue Service ("IRS" or "Service"), all as they exist at the date of this
letter. The Code, the Regulations, judicial decisions and administrative
interpretations are subject to change at any time and, in some circumstances,
with retroactive effect. Further, since this letter is not binding on the
Service or the courts, we can provide no assurance that the conclusions reached
herein, if challenged by the Service, will be sustained by a court.
Finally, the views stated in this letter are not intended as a
comprehensive or exhaustive analysis of the Federal income tax issues which may
arise in connection with the merger of FCB into and with CIB. Rather, this
opinion responds to specific questions or issues identified below. Although our
opinion may be used as an exhibit to the Plan or to the Registration Statement,
FCB shareholders should not construe this letter as advice to them. Each FCB
shareholder should consult his or her own counsel concerning the tax
consequences of participation in the merger transaction.
Facts
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FCB is a Virginia corporation and banking institution formed in 1972. FCB
has one class of stock consisting of 400,000 shares of authorized common stock
having a par value of $5.00 per share, of which 201,100 shares are issued and
outstanding. The outstanding shares of FCB stock have been duly and validly
authorized and have not been issued in violation of any preemptive rights of any
of its shareholders. FCB holds no shares of its stock as treasury stock and has
not redeemed any shares within the last two years.
The Control Shareholders (as that term in defined in the Plan) own 137,883
shares, or approximately 68.6 percent, of the issued and outstanding stock of
FCB as follows: James B. Brockett, 400 shares held individually; Janet H.
Brockett, 200 shares held individually; and James and Janet Brockett, 137,283
shares, held jointly. The remaining 63,217 shares of the issued and outstanding
common stock of FCB are held by 300 to 400 shareholders.
UBS is a West Virginia corporation. The authorized capital stock of UBS is
20,000,000 shares of common stock, par value $2.50 per share, of which
11,954,453 are issued and outstanding, and of which 137,520 shares are held in
treasury by UBS.
UBS has caused CIB to be formed as a Virginia banking corporation. UBS is
the sole shareholder of CIB.
Prior to the statutory merger of FCB into and with CIB as described below,
UBF Holding Company, Inc., a wholly-owned second-tier subsidiary of UBS, shall
cause Bank First, N.A., a wholly-owned national association, to merge into and
with CIB pursuant to the terms of a separate merger agreement. CIB shall be the
surviving entity of the merger with Bank First, N.A. Immediately following the
merger of Bank First, N.A. into CIB, UBS shall cause UBF Holding Company, Inc.,
a wholly-owned subsidiary of UBS, to merge into and with UBS pursuant to the
terms of a separate merger agreement. UBS shall be the surviving entity of the
merger with UBF Holding Company, Inc.
Thereafter, and pursuant to the Plan, FCB will be merged into and with CIB
pursuant to the laws of the Commonwealth of Virginia. CIB shall be the
surviving bank and shall operate under the name "First Commercial Bank." As of
the effective date of such statutory merger transaction, (i) all of the common
stock of FCB shall be cancelled and (ii) all of the stock of CIB shall continue
to be issued and outstanding and held by UBS.
For and in consideration of the statutory merger and in accordance with the
Plan, FCB shareholders will receive shares of UBS common stock and cash for each
share of FCB common stock they own; provided, however, that no fractional shares
of UBS stock will be issued, and in lieu thereof, FCB shareholders will receive
cash consideration. FCB shareholders will be entitled to receive UBS stock and
cash as follows:
FCB shareholders, other than Control Shareholders, may elect to receive
either (i) $52.57 per share, all cash, or (ii) 1.12 shares of UBS stock plus
$26.25 in cash for each share of FCB stock that they own. For each share of FCB
stock as to which an FCB shareholder (other than a Control Shareholder) elects
to receive all cash, the Control Shareholders agree to accept an additional 1.12
shares of UBS stock in lieu of a cash payment of $26.25 per share. Control
Shareholders will receive 1.12 shares of UBS stock plus $26.25 in cash per share
for their remaining shares of FCB stock.
In the opinion of Baxter, Fentriss & Company, the fair market value of the
UBS stock and cash consideration received by each FCB shareholder is
approximately equal to the fair market value of the FCB stock surrendered in the
exchange described above. The Plan provides that if the average closing price
of the UBS common stock is less than $23.50 per share for the twenty trading
days immediately prior to the Closing Date or if for any reason the percentage
of the total consideration for the merger paid in UBS stock is 50 percent or
less of the value of the FCB stock as of the Closing Date, then the exchange
ratio for the merger shall be adjusted upward, to a maximum of 1.348 shares of
UBS stock for each share of FCB stock. The Plan further provides that if the
average closing price of the UBS common stock is $27.00 per share or greater for
the twenty trading days immediately prior to the Closing Date, then the exchange
ratio for the merger shall be adjusted such that the average closing price for
UBS stock for the twenty days immediately prior to the Closing Date multiplied
by the
exchange ratio shall equal $30.24, calculated to four decimal places. For
example, if the UBS stock has an average closing price of $28.00 per share for
the twenty trading days immediately prior to the Closing Date, then FCB
shareholders electing to receive UBS stock would be entitled to receive 1.08
shares of UBS stock for each share of FCB stock they own. For purposes of this
opinion, we have assumed that the Average Price of the UBS common stock on the
Closing Date will be not less than $23.50 per share, such that the proportion of
the total consideration for the merger paid in UBS stock shall be equal to or
greater than 50 percent of the value of the FCB stock on the Closing Date.
You have represented that the Control Shareholders are named parties in a
Chapter 11 bankruptcy action styled as the matter of James B. Brockett and Janet
H. Brockett in the United States Bankruptcy Court for the Eastern District of
Virginia, Case No. 92-15370AB. As set forth in the certificate of the Control
Shareholders, there is no present plan or intention by the Control Shareholders
to sell or otherwise dispose of any of the shares of UBS stock to be issued to
the Control Shareholders in the merger. Rather, the reorganization plan to be
proposed by the Control Shareholders will provide that the UBS stock to be
issued in the merger will be substituted as collateral for certain secured
obligations of the Control Shareholders which are a subject of the referenced
bankruptcy action and which are presently secured by a pledge of their FCB
shares. Further, the Control Shareholders have represented that, if and to the
extent that cash will be required to pay claims presented and allowed in such
bankruptcy proceedings, such cash will not be generated by selling or otherwise
disposing of the UBS shares received by the Control Shareholders in the merger.
The merger qualifies as a statutory merger under the laws of the
Commonwealth of Virginia. Further, under the applicable laws of Virginia, no FCB
shareholder has the right to dissent from the merger and elect to take the
appraised value of his or her shares in cash.
As set forth in the certificates of FCB and the Control Shareholders, FCB
and the Control Shareholders have represented that:
(1) There is no present plan or intention by the Control Shareholders, or
by any other shareholder of FCB who owns one percent or more of the
FCB common stock, and, to the best of the knowledge of the Control
Shareholders and the management of FCB, there is no plan or intention
on the part of the remaining FCB shareholders, to sell, exchange or
otherwise dispose of a number of shares of UBS stock received in the
merger that would reduce the FCB shareholders' ownership of UBS Common
Stock to a number of shares having a value, as of the date of the
transaction, of 50 percent or less of the value of all of the formerly
outstanding stock of FCB as of the same date. For purposes of this
representation, shares of FCB stock exchanged for cash or other
property, if any, or exchanged for cash in lieu of fractional shares
of UBS Common Stock will be treated as outstanding FCB stock on the
date of the transaction. Shares of FCB stock and shares of UBS Stock
held by FCB shareholders and otherwise sold, redeemed or disposed of
prior or subsequent to the transaction will be considered stock
exchanged pursuant to the merger.
(2) In the merger, CIB will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market
value of the gross assets held by FCB immediately prior to the merger
transaction. For purposes of this representation, amounts paid by FCB
to shareholders who received cash or other property, if any, FCB
assets used by FCB to pay reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends) made by FCB
immediately preceding the transfer, will be included as assets of FCB
immediately prior to the transaction.
(3) The liabilities of FCB assumed by CIB and the liabilities to which the
transferred assets of FCB are subject were incurred by FCB in the
ordinary course of business.
(4) There is no intercorporate indebtedness existing between any of (i)
UBS and FCB or (ii) CIB and FCB that was issued, acquired or will be
settled at a discount.
(5) FCB is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of section 368(a)(3)(A) of the Code.
(6) The fair market value of the assets of FCB transferred to CIB will
equal or exceed the sum of the liabilities assumed by CIB, if any,
plus the amount of liabilities, if any, to which the transferred
assets are subject.
(7) FCB and any shareholder thereof will pay their respective expenses, if
any, incurred in connection with the merger.
(8) FCB is not an investment company, as defined in section
368(a)(2)(F)(iii) and (iv) of the Code.
(9) The payment of cash to FCB shareholders in lieu of fractional shares
of UBS common stock is not separately bargained for consideration and
is solely for the purpose of saving UBS the expense and inconvenience
of issuing fractional shares. The total cash consideration that will
be paid in the merger to the FCB shareholders instead of issuing
fractional shares of UBS common stock will not exceed one percent of
the total consideration to be issued in the transaction to FCB
shareholders in exchange for their shares of FCB common stock. The
fractional share interests of each FCB shareholder will be aggregated
and no FCB shareholder will receive cash for fractional shares in an
amount equal to or greater than the value of one full share of UBS
common stock.
(10) None of the compensation received by any shareholder-employees of FCB
will be separate consideration for, or allocable to, any of their
shares of FCB stock; none of the shares of UBS common stock received
by any shareholder-employees will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to
any shareholder-employees will be for services actually rendered and
will be commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.
As set forth in the Plan, UBS and CIB have made the following
representations:
(1) UBS has no plan or intention to liquidate CIB; to merge CIB with or
into another corporation; to sell or otherwise dispose of the stock of
CIB; or to cause CIB to sell or otherwise dispose of any of the assets
of FCB acquired in the merger, including UBS stock acquired by FCB
pursuant to the merger, except for dispositions made in the ordinary
course of business or transfers described in section 368(a)(2)(C) of
the Code.
(2) Following the merger, CIB will continue the historic business of FCB
or use a significant portion of FCB's business assets in a business.
(3) UBS has no plan or intention to reacquire any of its stock issued in
the merger.
(4) Neither UBS nor CIB has any plan or intention to sell or otherwise
dispose of any of the assets of FCB acquired in the merger, except for
dispositions made in the ordinary course of business, dispositions in
arm's-length transactions made to avoid duplicative facilities or to
comply with regulatory requirements, or transfers described in section
368(a)(2)(C) of the Code.
(5) Neither UBS nor CIB owns directly or indirectly, nor have they owned
during the past five years, directly or indirectly, any stock of FCB.
(6) Prior to the merger, UBS holds 100 percent of the issued and
outstanding stock of CIB, and therefore, UBS shall be in control of
CIB within the meaning of section 368(c) of the Code.
(7) Following the merger, CIB will not issue any additional shares of its
stock that would result in UBS losing control of CIB within the
meaning of section 368(c) of the Code.
(8) Neither UBS, CIB nor FCB are investment companies, as defined in
sections 368(a)(2)(F)(iii) and (iv) of the Code.
(9) No stock of CIB will be issued in the merger transaction.
(10) UBS, CIB and FCB, and the shareholders thereof, will pay their
respective expenses, if any, incurred in connection with the merger.
(11) The payment of cash to FCB shareholders in lieu of fractional shares
of UBS stock is not separately bargained for consideration and is
solely for the purpose of saving UBS the expense and inconvenience of
issuing fractional shares. The total cash consideration that will be
paid in the merger to the FCB shareholders instead of issuing
fractional shares of UBS stock will not exceed one percent of the
total consideration to be issued in the transaction to FCB
shareholders in exchange for their shares of FCB common stock. The
fractional share interests of each FCB shareholder will be aggregated
and no FCB shareholder will receive cash for fractional shares in an
amount equal to or greater than the value of one full share of UBS
stock.
Issues
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You have requested our opinion, based on the foregoing facts, concerning
the following Federal income tax issues:
(1) Whether the merger of FCB into and with CIB will constitute a
nontaxable reorganization within the meaning of sections 368(a)(1)(A) and
368(a)(2)(D) of the Code.
(2) Whether the gain, if any, realized by an FCB shareholder upon receipt
of UBS shares plus cash, including cash received in lieu of fractional shares,
will be recognized, but not in any amount in excess of all cash received as part
of the merger transaction; and whether the receipt of UBS shares plus cash has
the effect of a redemption or the distribution of a dividend, i.e., whether the
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character of such gain will be considered capital gain or ordinary income.
(3) Whether the holding period of the UBS stock received by each holder of
FCB's common stock will include the period during which the stock of FCB
surrendered in exchange therefor was held, provided that such stock was a
capital asset in the hands of the shareholder at the time of the Closing Date.
(4) Whether an FCB shareholder who elects to receive all cash in exchange
for his or her FCB stock will be treated as having received such cash in
redemption of his or her FCB stock, subject to the provisions of sections 302
and 318 of the Code.
Opinions
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On the basis of the facts, circumstances and assumptions stated above, and
subject to the qualifications and limitations stated herein, we are of the
opinion that the merger of FCB into and with CIB qualifies as a "forward
triangular merger" and constitutes a nontaxable reorganization within the
meaning of sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. If the parties
engage in transactions in the manner described herein, FCB and its shareholders
will realize the material tax benefits described in the Registration Statement.
Specifically, we are of the opinion, based on the facts, circumstances and
opinions stated above and subject to the qualifications discussed herein, that:
(1) The statutory merger of FCB into and with CIB will constitute a
nontaxable reorganization within the meaning of sections 368(a)(1)(A) and
368(a)(2)(D) of the Code.
(2) The gain, if any, realized by an FCB shareholder upon receipt of UBS
shares plus cash will be recognized, but not in any amount in excess of all
cash, including cash received in lieu of fractional shares received as part of
the merger transaction. The provisions of section 302 of the Code will govern
whether the character of the gain will be ordinary income or capital gain.
(3) The holding period of the UBS stock received by each holder of FCB's
common stock will include the period during which the stock of FCB surrendered
in exchange therefor was held, provided such stock was a capital asset in the
hands of the FCB shareholder at the time of the Closing Date.
(4) An FCB shareholder who elects to receive all cash in exchange for his
or her FCB stock will be treated as having received such cash in redemption of
his or her FCB stock, subject to the provisions of sections 302 and 318 of the
Code.
Please note that Regulations section (S) 1.368-3 requires certain records
to be kept and information to be filed with the Federal income tax returns of
each corporation which is a party to the reorganization. This same regulation
requires each FCB shareholder who has received UBS shares in connection with the
merger to attach to his or her Federal income tax return for the year in which
such shares are received a statement disclosing the exchange of FCB stock for
shares of UBS common stock and reporting the cost or other basis of the FCB
stock given up and the number and value of the UBS shares received.
Conclusion
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In light of the foregoing discussion and because the Service will
scrutinize carefully those transactions which have significant tax benefits to
taxpayers, there can be no assurance that the Service will not take positions in
conflict with our opinion expressed herein which might ultimately be sustained
by the courts. This qualification is intended not to detract from our opinion
as set forth above, but to indicate that the issues discussed herein are complex
and that the governing law is continually developing and in a state of flux. We
believe that, if the issues discussed herein were decided today, they would in
each instance be resolved favorably and consistently with our opinion.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Registration
Statement.
Sincerely,
ROBINS, KAPLAN, MILLER & CIRESI