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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13E-4
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
(Name of Issuer)
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $1.00 Per Share
(Title of Class of Securities)
360768 10 5
(CUSIP Number of Class of Securities)
Michael S. Paquette
Vice President and Controller
Fund American Enterprises Holdings, Inc.
The 1820 House
Main Street
Norwich, Vermont 05055-0850
(802) 649-3633
Copy to:
Philip A. Gelston, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue - Worldwide Plaza
New York, New York 10019
(212) 474-1000
(Name, address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
December 4, 1995
(Date Tender Offer First Published, Sent, or Given to Security Holders)
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Transaction Value* Amount of Filing Fee*
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$35,500,000 $7,100
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*Based on $71.00 cash price per share for 500,000 shares.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Page 1 of [ ] pages
Exhibit Index is on page [ ]
ITEM 1. Security and Issuer.
(a) The name of the issuer is Fund American Enterprises Holdings, Inc., a
Delaware corporation (the "Company"). The Company's principal executive offices
are located at The 1820 House, Main Street, Norwich, Vermont 05055-0850.
(b) The class of securities to which this statement relates is the Company's
Common Stock, par value $1.00 per share ("Shares"). As of December 1, 1995,
there were 7,534,340 Shares outstanding. The Company is inviting shareholders to
tender Shares to the Company at a price of $71.00 per Share (the "Purchase
Price"), net to the seller in cash, pursuant to the Offer to Purchase dated
December 4, 1995 (the "Offer to Purchase") and the related Letter of Transmittal
(which together constitute the "Offer"), copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively, and are herein incorporated by
reference. All Shares properly tendered and not withdrawn will be purchased at
the Purchase Price, net to the seller in cash, upon the terms and subject to
conditions of the Offer, including the proration provisions thereof. The Company
reserves the right, in its sole discretion, to purchase more than 500,000 Shares
pursuant to the Offer. Reference is hereby made to the "Introduction", Section
1, "Number of Shares; Proration; Extension of Offer", and Section 12,
"Transactions and Arrangements Concerning the Shares", of the Offer to Purchase,
each of which is herein incorporated by reference, for information regarding
whether Shares are to be purchased from any officer, director or affiliate of
the Company.
(c) Reference is Dividends", of the Offer to Purchase, which Section is herein
incorporated by reference.
(d) Not applicable.
ITEM 2. Source and Amount of Funds or Other Consideration.
(a) Reference is hereby made to Section 10, "Source and Amount of Funds", of the
Offer to Purchase, which Section is herein incorporated by reference.
(b) Not applicable.
ITEM 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer or
Affiliates.
Reference is hereby made to the cover page, the "Introduction", Section 6,
"Certain Conditions of the Offer", Section 7, "Price Range of Shares;
Dividends", Section 8, "Purpose of the Offer; Certain Effects of the Offer" and
Section 9, "Certain Information Concerning the Company", each of which is herein
incorporated by reference. Other than as disclosed therein, the Company has no
present plans or proposals which would relate to or would result in any
transaction or other occurrence with respect to the Company or its Shares of the
type listed in paragraphs (a) through (j) of Item 3 of Schedule 13E-4.
ITEM 4. Interest in Securities of the Issuer.
Reference is hereby made to Section 12, "Transactions and Arrangements
Concerning the Shares", of the Offer to Purchase, which Section is herein
incorporated by reference.
ITEM 5. Contracts, Arrangements, Understandings or Relationships with
Respect to the Issuer's Securities.
Reference is hereby made to Section 12, "Transactions and Arrangements
Concerning the Shares", of the Offer to Purchase, which Section is herein
incorporated by reference.
1
ITEM 6. Persons Retained, Employed or to be Compensated.
Reference is hereby made to the "Introduction" and Section 16, "Fees and
Expenses", of the Offer to Purchase, each of which is herein incorporated by
reference.
ITEM 7. Financial Information.
(a) Reference is hereby made to Section 9, "Certain Information Concerning the
Company", of the Offer to Purchase, which Section is herein incorporated by
reference.
(b) Reference is hereby made to Section 9, "Certain Information Concerning
the Company", of the Offer to Purchase, which Section is herein incorporated by
reference.
ITEM 8. Additional Information.
(a) Reference is hereby made to Section 12, "Transactions and Arrangements
Concerning the Shares", of the Offer to Purchase, which Section is herein
incorporated by reference.
(b) Reference is hereby made to Section 13, "Certain Legal Matters; Regulatory
and Foreign Approvals", of the Offer to Purchase, which Section is herein
incorporated by reference.
(c) Reference is hereby made to Section 8, "Purpose of the Offer; Certain
Effects of the Offer", of the Offer to Purchase, which Section is herein
incorporated by reference.
(d) None.
(e) Reference is hereby made to the Offer to Purchase, which is herein
incorporated by reference in its entirety.
ITEM 9. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated December 4, 1995.
(a)(2) Letter of Transmittal (together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Company's Chairman to shareholders dated December 4,
1995.
(a)(5) Form of Letter from First Chicago Trust Company of New York to
Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.
(a)(6) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to their clients.
(a)(7) Form of summary advertisement dated December 4, 1995.
(a)(8) Text of press release dated November 28, 1995.
(a)(9) Text of press release dated November 29, 1995.
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(a)(10) Text of press release dated December 4, 1995.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
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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.
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
December 4, 1995 By: /s/ Michael S. Paquette
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Michael S. Paquette
Vice President and Controller
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EXHIBIT INDEX
Exhibits Page
- -------- ----
(a)(1) Offer to Purchase dated December 4, 1995....................
(a)(2) Letter of Transmittal (together with Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9)........................................
(a)(3) Notice of Guaranteed Delivery...............................
(a)(4) Letter from the Company's Chairman to
Shareholders dated December 4, 1995.........................
(a)(5) Form of Letter from First Chicago Trust Company of
New York to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees..........................
(a)(6) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees to their clients.........
(a)(7) Form of summary advertisement dated December 4, 1995........
(a)(8) Text of press release dated November 28, 1995...............
(a)(9) Text of press release dated November 29, 1995...............
(a)(10) Text of press release dated December 4, 1995................
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Exhibit (a)(1)
Offer to Purchase for Cash
by
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Up to
500,000 Shares of Its Common Stock
At $71.00 Net Per Share
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 2, 1996, UNLESS THE OFFER IS EXTENDED.
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Fund American Enterprises Holdings, Inc., a Delaware corporation (the
"Company"), is offering to purchase up to 500,000 shares of its Common Stock,
par value $1.00 per share ("Shares"), for $71.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which together constitute the
"Offer"), including the proration provisions described herein. The Company
reserves the right, in its sole discretion, to purchase more than 500,000 Shares
pursuant to the Offer.
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THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
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The Shares are listed and traded on the New York Stock Exchange (the "NYSE"). On
November 27, 1995, the last full trading day before the announcement of the
terms of the Offer, the reported closing sales price of the Shares on the NYSE
Composite Tape was $66 1/4 per Share, and on December 1, 1995, the last full
trading day before the commencement of the Offer, the reported closing sales
price was $69 3/8 per Share. Shareholders are urged to obtain a current market
quotation for the Shares.
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NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO
WHETHER ANY SHAREHOLDER SHOULD TENDER ANY OR ALL OF SUCH SHAREHOLDER'S SHARES
PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE SUCH SHAREHOLDER'S OWN
DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
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The Information Agent for the Offer is:
First Chicago Trust Company of New York
December 4, 1995
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (1) complete and sign the Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other documents required by the Letter
of Transmittal to First Chicago Trust Company of New York, the depositary for
the Offer (the "Depositary"), and either mail or deliver the certificates for
such Shares to the Depositary along with the Letter of Transmittal or follow the
procedure for book-entry transfer set forth in Section 3, or (2) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such shareholder. A shareholder having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such shareholder desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates for such
Shares are not immediately available (or who cannot follow the procedure for
book-entry transfer on a timely basis) or who cannot transmit the Letter of
Transmittal and all other required documents to the Depositary before the
Expiration Date (as defined in Section 1) should tender such Shares by following
the procedure for guaranteed delivery set forth in Section 3.
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Any questions or requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at its addresses and telephone number set
forth on the back cover of this Offer to Purchase. Shareholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL.
IF MADE OR GIVEN, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
TABLE OF CONTENTS
Section Page
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Introduction ............................................................ 1
The Offer ................................................................ 2
1. Number of Shares; Proration; Extension of the Offer ................. 2
2. Tenders by Holders of Fewer than 100 Shares ......................... 4
3. Procedure for Tendering Shares ...................................... 4
Proper Tender of Shares ........................................... 4
Signature Guarantees and Methods of Delivery ...................... 4
Federal Backup Withholding ........................................ 5
Book-Entry Delivery ............................................... 5
Guaranteed Delivery ............................................... 5
Determination of Validity; Rejection of Shares; Waiver of Defects;
No Obligation to Give Notice of Defects ........................ 6
Allianz Asset Accumulation Plan ................................... 6
4. Withdrawal Rights ................................................... 6
5. Acceptance for Payment of Shares and Payment of Purchase Price ...... 7
6. Certain Conditions of the Offer ..................................... 8
7. Price Range of Shares; Dividends .................................... 9
8. Purpose of the Offer; Certain Effects of the Offer .................. 10
9. Certain Information Concerning the Company .......................... 11
Mortgage Operations ............................................... 12
Insurance Operations .............................................. 12
Recent Developments ............................................... 13
Summary Historical Consolidated Financial Information ............. 13
Pro Forma Financial Information (Unaudited) ....................... 15
Shareholder Rights Plan ........................................... 18
Additional Information ............................................ 19
10. Source and Amount of Funds ........................................ 19
11. Certain Federal Income Tax Considerations ......................... 19
Gain or Loss Recognition .......................................... 19
Backup Withholding ................................................ 20
Foreign Shareholder Withholding ................................... 20
State, Local and Foreign Taxes .................................... 20
12. Transactions and Arrangements Concerning the Shares ............... 20
13. Certain Legal Matters; Regulatory and Foreign Approvals ........... 21
14. Allianz Asset Accumulation Plan ................................... 21
15. Extension of Tender Period; Termination; Amendments ............... 22
16. Fees and Expenses ................................................. 22
17. Miscellaneous ..................................................... 23
To the Holders of Common Stock of
Fund American Enterprises Holdings, Inc.:
INTRODUCTION
Fund American Enterprises Holdings, Inc., a Delaware corporation (the
"Company"), is offering to purchase up to 500,000 shares of its Common Stock,
par value $1.00 per share ("Shares"), at a price of $71.00 per Share (the
"Purchase Price"), net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer").
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS (THE "BOARD") MAKES ANY
RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER ANY OR ALL OF SUCH
SHAREHOLDER'S SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE SUCH
SHAREHOLDER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES
TO TENDER.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
As of December 1, 1995, there were 7,534,340 Shares outstanding. Pursuant to the
Fund American Long-Term Incentive Plan (the "Incentive Plan"), as of December 1,
1995, an additional 3,000 Shares were issuable upon the exercise of outstanding
employee stock options. In addition to the Shares potentially issuable pursuant
to the Incentive Plan, another 1,150,000 Shares were potentially issuable as of
December 1, 1995, upon the exercise of warrants held by John J. Byrne, Chairman,
President and Chief Executive Officer of the Company.
Accordingly, the 500,000 Shares which the Company is offering to purchase in the
Offer represent approximately 6.6% of the Shares outstanding as of December 1,
1995, and approximately 5.8% of the sum of the Shares then outstanding and all
Shares which may be issued upon exercise of outstanding options and warrants as
of such date. Holders of options and warrants would have to exercise such
options or warrants and convert them irrevocably into Shares in order to tender
such Shares pursuant to the Offer.
Neither the Company nor the Board makes any recommendation to any holder of
options or warrants as to whether to exercise any or all such options or
warrants or to tender any or all Shares issuable upon such exercise.
The Company has been informed by its directors and officers that they do not
intend to tender Shares owned by them pursuant to the Offer.
If before the Expiration Date (as defined in Section 1), a greater number of
Shares is properly tendered and not withdrawn than will be accepted for purchase
by the Company, the Company will accept Shares for purchase, first, from all
Shares properly tendered by any Odd Lot Holder (as defined in Section 1) who
tenders all Shares beneficially owned by such Odd Lot Holder and complies with
the requirements set forth in Section 2 and, then, from all other Shares
properly tendered on a pro rata basis. See Sections 1 and 2. All Shares not
purchased pursuant to the Offer, including Shares not purchased because of
proration, will be returned to the tendering shareholders at the Company's
expense. Tendering shareholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Company. The
Company will pay all reasonable charges and expenses incurred by First Chicago
Trust Company of New York, which has been appointed as the depositary (the
"Depositary") and the information agent (the "Information Agent") for the Offer.
See Section 16.
The Shares are listed and traded on the New York Stock Exchange (the "NYSE"). On
November 27, 1995, the last full trading day before the announcement of the
terms of the Offer, the reported closing sales price on the NYSE Composite Tape
was $66 1/4 per Share, and on December 1, 1995, the last full trading day before
the commencement of the Offer, the reported closing sales price was $69 3/8 per
Share. See Section 7. Shareholders are urged to obtain a current market
quotation for the Shares.
Participants in the Allianz Asset Accumulation Plan (the "AAAP") may direct the
trustee of the AAAP to tender any or all Shares allocated to their respective
accounts in the AAAP pursuant to the Offer. See Sections 3 and 14.
THE OFFER
1. Number of Shares; Proration; Extension of the Offer
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment (and will thereby purchase) up to 500,000 Shares or such
lesser number of Shares as are properly tendered (and not withdrawn in
accordance with Section 4) before the Expiration Date at the Purchase Price. The
term "Expiration Date" means 12:00 midnight., New York City time, on Tuesday,
January 2, 1996, unless and until the Company shall have extended the period of
time for which the Offer is open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. For a description of the Company's rights to extend
the period of time during which the Offer is open and to delay, terminate or
amend the Offer, see Section 15. See also Section 6. Subject to the purchase of
Shares properly tendered and not withdrawn by Odd Lot Holders as set forth in
Section 2, if the Offer is oversubscribed, Shares tendered before the Expiration
Date will be subject to proration. The proration period also expires on the
Expiration Date.
The Company reserves the right, in its sole discretion, at any time or from time
to time, to extend the period of time during which the Offer is open by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. See Section 15. There can be no assurance, however, that
the Company will exercise its right to extend the Offer.
The Offer is not conditioned upon any minimum number of Shares being tendered.
The Offer is, however, subject to certain other conditions. See Section 6.
All Shares purchased pursuant to the Offer will be purchased at the Purchase
Price, net to the seller in cash. The Company reserves the right, in its sole
discretion, to purchase more than 500,000 Shares pursuant to the Offer. If (a)
the Company (i) increases or decreases the price to be paid for Shares, (ii)
increases the number of Shares being sought and any such increase exceeds 2% of
the outstanding Shares or (iii) decreases the number of Shares being sought, and
(b) the Offer is scheduled to expire at any time earlier than the expiration of
a period ending on the tenth business day from and including the date that
notice of such increase or decrease is first published, sent or given in the
manner specified in Section 15, the Offer will be extended until the expiration
of such ten business day period. For the purposes of the Offer, a "business day"
means any day other than a Saturday, Sunday or Federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, New York City time.
All Shares not purchased pursuant to the Offer, including Shares not purchased
because of proration, will be returned to the tendering shareholders at the
Company's expense as promptly as practicable (which, in the event of proration,
is expected to be approximately 12 NYSE trading days) following the Expiration
Date.
2
If the number of Shares properly tendered and not withdrawn before the
Expiration Date is less than or equal to 500,000 Shares (or such greater number
of Shares as the Company may elect to purchase pursuant to the Offer), the
Company, upon the terms and subject to the conditions of the Offer, will
purchase at the Purchase Price all Shares so tendered and not withdrawn.
If the number of Shares properly tendered and not withdrawn before the
Expiration Date is greater than 500,000 Shares (or such greater number of Shares
as the Company may elect to purchase pursuant to the Offer), the Company, upon
the terms and subject to the conditions of the Offer, will accept Shares for
purchase in the following order of priority:
(a) first, all Shares properly tendered and not withdrawn before the Expiration
Date by any shareholder who beneficially owned as of the close of business
on November 27, 1995, and who continues to own beneficially until the
Expiration Date an aggregate of fewer than 100 Shares (each an "Odd Lot
Holder") who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder (partial
tenders will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery; and
(b) then, after purchase of all the foregoing Shares, all other Shares properly
tendered and not withdrawn before the Expiration Date on a pro rata basis,
if necessary (with adjustments to avoid purchases of fractional Shares).
In the event that proration of tendered Shares is required, the Company will
determine the final proration factor as promptly as practicable after the
Expiration Date. Although the Company does not expect that it will be able to
announce the final proration factor until approximately seven NYSE trading days
after the Expiration Date, it will announce preliminary results of proration by
press release as promptly as practicable after the Expiration Date. Shareholders
may obtain such preliminary information from the Information Agent and may be
able to obtain such information from their brokers or financial advisors.
On November 11, 1987, the Board declared a dividend distribution of one Right
(each, a "Right") for each Share outstanding on November 25, 1987. In addition,
each Share issued subsequent to November 25, 1987, automatically receives a
Right. The Rights expire on November 25, 1997, unless redeemed earlier by the
Company. Each Right entitles its registered holder to purchase from the Company
1/1000th of a share of Series A Participating Cumulative Preferred Stock, par
value $1.00 per share (the "Participating Stock"), at a price of $105, subject
to adjustment to prevent dilution. The Rights currently are not exercisable and
trade together with the Shares associated therewith, and will not become
exercisable or separately tradeable as a result of the Offer. Absent the
occurrence of circumstances causing the Rights to become exercisable or
separately tradeable before the Expiration Date, the tender of any Shares
pursuant to the Offer will include the tender of the Rights associated
therewith. No separate consideration will be paid for such Rights. Upon the
purchase of Shares by the Company pursuant to the Offer, shareholders selling
those Shares will no longer own the Rights associated with such purchased
Shares. See Section 9.
Since 1991 the Company has not paid regular cash dividends to holders of Shares.
On November 10, 1995, the Board re-established a regular dividend policy and
declared a quarterly dividend of $.20 per Share, payable December 20, 1995, to
shareholders of record as of December 11, 1995. All Shares properly tendered to
the Company pursuant to the Offer (regardless of whether such Shares are
tendered prior to or subsequent to the December 11, 1995 record date) are
entitled to receive the dividend payable December 20, 1995. The Board may, in
its sole discretion, reconsider its dividend policy from time to time. There can
be no assurance as to when or whether the Board will declare additional
dividends on Shares.
3
2. Tenders by Holders of Fewer than 100 Shares
The Company, upon the terms and subject to the conditions of the Offer, will
accept for purchase, without proration, all Shares properly tendered and not
withdrawn before the Expiration Date by or on behalf of Odd Lot Holders. See
Section 1. To avoid proration, however, an Odd Lot Holder must properly tender
all Shares that such Odd Lot Holder beneficially owns. Partial tenders will not
qualify for this preference. This preference is not available to owners of 100
or more Shares even if such owners have separate stock certificates for fewer
than 100 Shares. Any Odd Lot Holder wishing to tender all Shares beneficially
owned by such Odd Lot Holder pursuant to the Offer and qualify for this
preference must complete the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery. See
Section 3.
3. Procedure for Tendering Shares
Proper Tender of Shares. For Shares to be properly tendered pursuant to the
Offer:
(a) the certificates for such Shares (or confirmation of receipt of such Shares
pursuant to the procedure for book-entry transfer set forth below), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile copy thereof) with any required signature guarantees, and any
other documents required by the Letter of Transmittal, must be received
before the Expiration Date by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase; or
(b) the tendering shareholder must comply with the guaranteed delivery procedure
set forth below.
It is a violation of Section 14(e) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the "Exchange
Act"), and Rule 14e-4 promulgated thereunder, for a person to tender Shares for
such person's own account unless the person so tendering:
(a) owns such Shares; or
(b) owns an option, warrant or right to purchase such Shares and intends to
acquire Shares for tender by exercise of such option, warrant or right.
Section 14(e) and Rule 14e-4 provide a similar restriction applicable to the
tender or guarantee of a tender on behalf of another person.
A tender of Shares made pursuant to any method of delivery set forth herein will
constitute a binding agreement between the tendering shareholder and the Company
upon the terms and subject to the conditions of the Offer, including the
tendering shareholder's representation that (i) such shareholder owns the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act and (ii) the tender of such Shares complies with Rule 14e-4.
Signature Guarantees and Methods of Delivery. No signature guarantee is required
on the Letter of Transmittal if the Letter of Transmittal is signed by the
registered owner of the Shares (which term, for purposes of this Section,
includes any participant in The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company (collectively, the
"Book-Entry Transfer Facilities") whose name appears on a security position
listing as the owner of the Shares) tendered therewith, and payment and delivery
are to be made directly to such registered owner at such owner's address shown
on the records of the Company, or if Shares are tendered for the account of a
financial institution (including most banks, savings and loan associations, and
brokerage houses) that is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchanges Medallion Program (each such entity being hereinafter
referred to as an "Eligible Institution"). In all other cases, all signatures on
the Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 1 of the
4
Letter of Transmittal. If a certificate representing Shares is registered in the
name of a person other than the person signing a Letter of Transmittal, or if
payment is to be made, or certificates for Shares not purchased or tendered are
to be issued, to a person other than the registered owner, the certificate must
be endorsed or accompanied by an appropriate stock power, in either case signed
exactly as the name of the registered owner appears on the certificate, with the
signature on the certificate or stock power guaranteed by an Eligible
Institution. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such Shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities), a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and any other documents required by the
Letter of Transmittal.
The method of delivery of all documents, including stock certificates, the
Letter of Transmittal and any other required documents, is at the election and
risk of the tendering shareholder. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended.
Federal Backup Withholding. Unless an exemption applies under the applicable law
concerning "backup withholding" of Federal income tax, the Depositary will be
required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a shareholder (or other payee) pursuant to the Offer unless the
shareholder (or other payee) provides such person's tax identification number
(social security number or employer identification number) and certifies that
such number is correct. Each tendering shareholder, other than a noncorporate
foreign shareholder, should complete and sign the main signature form and the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding,
unless an applicable exemption exists and is proved in a manner satisfactory to
the Company and the Depositary. Noncorporate foreign shareholders generally
should complete and sign a Form W-8, Certificate of Foreign Status, a copy of
which may be obtained from the Depositary, in order to avoid backup withholding.
For a discussion of certain other Federal income tax consequences of the Offer,
see Section 11.
Book-Entry Delivery. The Depositary will establish an account with respect to
the Shares at each of the Book-Entry Transfer Facilities for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in a Book-Entry Transfer Facility's
system may make book-entry delivery of the Shares by causing such facility to
transfer such Shares into the Depositary's account in accordance with such
facility's procedure for such transfer. Even though delivery of Shares may be
effected through book-entry transfer into the Depositary's account at one of the
Book-Entry Transfer Facilities, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature guarantees and
other required documents, must, in any case, be transmitted to and received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase before the Expiration Date, or the guaranteed delivery procedure set
forth below must be followed. Delivery of the Letter of Transmittal and any
other required documents to one of the Book-Entry Transfer Facilities does not
constitute delivery to the Depositary.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to the
Offer and such shareholder's stock certificates are not immediately available
(or the procedure for book-entry transfer cannot be followed on a timely basis)
or time will not permit the Letter of Transmittal and all other required
documents to reach the Depositary before the Expiration Date, such Shares may
nevertheless be tendered provided that all the following conditions are
satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail or facsimile transmission) before
the Expiration Date, a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form the Company has provided
with this Offer to Purchase; and
5
(c) the certificates for all tendered Shares in proper form for transfer (or
confirmation of book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), together with a
properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within five NYSE trading days
after the date of execution of such Notice of Guaranteed Delivery.
Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the number of Shares to be
accepted and the validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of Shares will be determined by the
Company, in its sole discretion, which determination shall be final and binding
on all parties. The Company reserves the absolute right to reject any or all
tenders determined by it not to be in proper form or the acceptance for payment
of which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Offer
(except as otherwise provided in Section 6) and any defect or irregularity in
the tender of any particular Shares. No tender of Shares will be deemed properly
made until all defects or irregularities have been cured or waived. None of the
Company, the Depositary, the Information Agent or any other person is or will be
obligated to give notice of any defects or irregularities in tenders, and none
of them will incur any liability for failure to give any such notice.
Allianz Asset Accumulation Plan. Participants in the AAAP who wish to have the
trustee of the AAAP tender Shares allocated to their accounts should so indicate
by completing, executing and returning to the trustee the instruction form
included in the notice sent to such participants. Participants in the AAAP may
not use the Letter of Transmittal to direct the trustee to tender Shares
allocated to such shareholders but must use the separate instruction form sent
to them. Under the Employee Retirement Income Security Act of 1974 ("ERISA"),
the trustee may be obligated to take action and make an independent decision
irrespective of directions given by participants. Accordingly, although
instructions from participants are being solicited for the trustee's information
and will be given due consideration by it, the trustee is not bound under ERISA
by such instructions and thus may tender Shares or may not tender Shares, as the
case may be, contrary to such designations. Of course, directions as to the
subsequent reinvestment of the proceeds from the tendered Shares will be
followed by the Trustee. Participants in the AAAP are urged to read the separate
instruction forms and related materials sent to them carefully. See Section 14.
4. Withdrawal Rights
Except as otherwise provided in this Section 4, a tender of Shares pursuant to
the Offer is irrevocable. Shares tendered pursuant to the Offer may be withdrawn
at any time before the Expiration Date and, unless theretofore accepted for
payment by the Company, after 12:00 midnight, New York City time, on Tuesday,
January 30, 1996.
For a withdrawal to be effective, the Depositary must timely receive (at one of
its addresses set forth on the back cover of this Offer to Purchase) a written
or facsimile transmission notice of withdrawal. Any notice of withdrawal must
specify the name of the person having tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and, if different from the name of the person
who tendered the Shares, the name of the registered owner of such Shares. If the
certificates have been delivered or otherwise identified to the Depositary,
then, prior to the release of such certificates, the tendering shareholder must
also submit the serial numbers shown on the particular certificates evidencing
such Shares and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been delivered pursuant to the procedure for book-
entry transfer set forth in Section 3, the notice of withdrawal must specify the
name and the number of the account at the applicable Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
procedures of such facility.
All questions as to the form and validity (including time of receipt) of notices
of withdrawal will be determined by the Company, in its sole discretion, which
determination shall be final and binding on all parties. None of the Company,
the Depositary, the Information Agent or any other person is or will be
obligated to give any notice of any defects or irregularities in any notice of
withdrawal, and none of them will incur any liability for failure to give any
such notice. A
6
withdrawal of a tender may not be rescinded and Shares properly withdrawn shall
thereafter be deemed not to be validly tendered for purposes of the Offer.
Withdrawn Shares, however, may be retendered before the Expiration Date by again
following one of the procedures described in Section 3.
5. Acceptance for Payment of Shares and Payment of Purchase Price
Upon the terms and subject to the conditions of the Offer, as soon as
practicable after the Expiration Date, the Company will purchase and pay the
Purchase Price for 500,000 Shares (subject to increase or decrease as provided
in Sections 1 and 15) or such lesser number of Shares as are properly tendered
and not withdrawn as permitted in Section 4. For purposes of the Offer, the
Company will be deemed to have accepted for payment (and thereby purchased),
subject to proration, Shares which are tendered and not withdrawn when, as and
if the Company gives oral or written notice to the Depositary of the Company's
acceptance of such Shares for payment pursuant to the Offer.
In the event that proration of tendered Shares is required, the Company will
determine the final proration factor as promptly as practicable after the
Expiration Date. Although the Company does not expect that it will be able to
announce the final proration factor until approximately seven NYSE trading days
after the Expiration Date, it will announce the preliminary results of proration
by press release as promptly as practicable after the Expiration Date.
Shareholders may obtain such preliminary information from the Information Agent
and may be able to obtain such information from their brokers or financial
advisors. Certificates for all Shares not purchased pursuant to the Offer,
including Shares not purchased because of proration, will be returned to the
tendering shareholders (or, in the case of Shares delivered by book-entry
transfer, such Shares will be credited to the account maintained with one of the
Book-Entry Transfer Facilities by the participant therein who so delivered such
Shares) at the Company's expense as promptly as practicable (which, in the event
of proration, is expected to be approximately 12 NYSE trading days following the
Expiration Date).
Payment for Shares purchased pursuant to the Offer will be made by the Company
by depositing the aggregate Purchase Price therefor with the Depositary, which
will act as agent for tendering shareholders for the purpose of receiving
payment from the Company and transmitting payment to the tendering shareholders.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation by a Book-Entry Transfer Facility of book-entry transfer of such
Shares to the Depositary), a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) with any required signature guarantees and
any other required documents. Under no circumstances will interest be paid on
the Purchase Price of the Shares to be paid by the Company, regardless of any
delay in making such payment.
The Company will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or to its order pursuant to the Offer. If, however, payment
is to be made to, or certificates for Shares not purchased or tendered are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing the Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such other person) payable on
account of the transfer to such person will be deducted from the Purchase Price
unless evidence satisfactory to the Company of the payment of such taxes or an
exemption therefrom is submitted. See Instruction 6 of the Letter of
Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN
THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN THE CASE
OF A NONCORPORATE FOREIGN SHAREHOLDER, A FORM W-8, WHICH IS OBTAINABLE FROM THE
DEPOSITARY) MAY BE SUBJECT TO A FEDERAL BACKUP WITHHOLDING TAX OF 31% OF THE
GROSS PROCEEDS TO BE PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE
OFFER. SEE SECTIONS 3 AND 11.
7
6. Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, and in addition to (and not in
limitation of) the Company's right to extend, amend or terminate the Offer at
any time in its sole discretion, the Company shall not be required to accept for
payment or pay for any Shares tendered, and may terminate or amend the Offer if,
before acceptance for payment of or payment for any such Shares, any of the
following shall have occurred (or shall have been determined by the Company to
have occurred):
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency or authority or tribunal or any other person, domestic or foreign,
before any court or governmental, regulatory or administrative authority,
agency or tribunal, domestic or foreign, which (i) challenges the making of
the Offer or the acquisition of Shares pursuant to the Offer, or otherwise,
directly or indirectly, relates in any manner to the Offer; or (ii) in the
reasonable good faith judgment of the Company, could materially affect the
business, condition (financial or otherwise), income, operations or prospects
of the Company and its subsidiaries, taken as a whole, or otherwise materially
impair in any way the contemplated future conduct of the business of the
Company or any of its subsidiaries or materially impair the Offer's
contemplated benefits to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any government or governmental,
regulatory or administrative authority, agency or tribunal, domestic or
foreign, which, in the Company's reasonable good faith judgment, would or
might directly or indirectly (i) make the acceptance for payment of, or
payment for, some or all the Shares illegal or otherwise restrict or prohibit
consummation of the Offer; (ii) delay or restrict the ability of the Company,
or render the Company unable, to accept for payment, or pay for, some or all
the Shares; (iii) materially impair the contemplated benefits of the Offer to
the Company; or (iv) materially affect the business, condition (financial or
otherwise), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way the
contemplated future conduct of the business of the Company or any of its
subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any United States national securities
exchange or in the over-the-counter market (excluding any coordinated trading
halt triggered solely as a result of a specified decrease in a market index);
(ii) the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; (iii) the commencement of a war, armed
hostilities or other international or national crisis directly or indirectly
involving the United States; (iv) any limitation (whether or not mandatory) by
any governmental, regulatory or administrative agency or authority on, or any
event which, in the reasonable good faith judgment of the Company, might
affect, the extension of credit by banks or other lending institutions in the
United States; (v) any significant decrease in the market price of the Shares;
(vi) any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the reasonable good
faith judgment of the Company, have a material adverse effect on the business,
condition (financial or otherwise), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or the trading in the Shares;
(vii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, in the reasonable good faith judgment of the
Company, a material escalation, acceleration or worsening thereof; or (viii)
any decline in either the Dow Jones Industrial Average (5,087.13 at the close
of business on December 1, 1995) or the Standard and Poor's Index of 500
Industrial Companies (606.98 at the close of business on December 1, 1995) by
an amount in excess of 10% measured from the close of business on December 1,
1995;
(d) after December 1, 1995, any tender or exchange offer with respect to the
Shares (other than the Offer), or any merger, acquisition, business
combination or other similar transaction with or involving the Company or any
subsidiary, shall have been proposed, announced or made by any person or
entity;
8
(e) after December 1, 1995, any change shall occur or be threatened in the
business, condition (financial or otherwise), income, operations or prospects
of the Company and its subsidiaries, taken as a whole, which, in the
reasonable good faith judgment of the Company, is or may be material to the
Company;
(f) (i) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired, or proposed to acquire,
beneficial ownership of more than 5% of the outstanding Shares (other than a
person, entity or group which had publicly disclosed such ownership in a
Schedule 13D or 13G (or an amendment thereto) on file with the Securities and
Exchange Commission (the "SEC") prior to December 1, 1995), (ii) any new group
shall have been formed which beneficially owns more than 5% of the outstanding
Shares; or (iii) any person, entity or group shall have filed a Notification
and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, or made a public announcement reflecting an intent to acquire the
Company or any of its subsidiaries or any of their respective assets or
securities; or
(g) there shall be a reasonable likelihood that the purchase of Shares
pursuant to the Offer will cause either (i) the Shares to be held of record by
less than 300 persons; or (ii) the Shares neither to be listed on any
"national securities exchange" (as used in the Exchange Act) nor to be
"authorized to be quoted on an inter-dealer quotation system of any registered
national securities association" (as used in Rule 13e-3(a)(3)(ii)(B) under the
Exchange Act);
which, in the reasonable good faith judgment of the Company, in any such case
and regardless of the circumstances (including any action or inaction by the
Company) giving rise to such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition and, except as set
forth in the next sentence, any such condition may be waived by the Company, in
whole or in part, at any time and from time to time in its sole discretion. The
Company will not under any circumstances waive the condition set forth in
paragraph (g) above. The Exchange Act requires that all conditions to the Offer
must be satisfied or waived before the final Expiration Date. In certain cases,
waiver of a condition to the Offer would require an extension of the Offer. See
Section 15.
The Company's failure at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts or circumstances; and each such right shall be deemed
an ongoing right which may be asserted at any time and from time to time. Any
determination by the Company concerning the events described above and any
related judgment by the Company regarding the inadvisability of proceeding with
the acceptance for payment or payment for any tendered Shares will be final and
binding on all parties.
7. Price Range of Shares; Dividends
The Shares (symbol FFC) are listed and traded on the NYSE. The table below sets
forth, for the calendar quarters indicated, the reported high and low closing
sales prices of the Shares on the NYSE Composite Tape:
9
- --------------------------------------------------------------------------------
High Low
- --------------------------------------------------------------------------------
1993:
First Quarter $ 80 1/2 $ 71 5/8
Second Quarter 86 1/2 79 3/4
Third Quarter 90 1/4 82
Fourth Quarter 92 3/8 73 1/2
1994:
First Quarter 77 64 3/4
Second Quarter 70 3/8 60 1/2
Third Quarter 78 3/8 69 3/4
Fourth Quarter 79 1/4 70 1/2
1995:
First Quarter 76 71 3/4
Second Quarter 72 5/8 68 3/8
Third Quarter 76 68 1/4
Fourth Quarter (through December 1) 73 1/4 66 1/4
- --------------------------------------------------------------------------------
On November 27, 1995, the last full trading day before the announcement of the
Offer, the reported closing sales price of the Shares on the NYSE Composite Tape
was $66 1/4 per Share, and on December 1, 1995, the last full trading day before
the commencement of the Offer, the reported closing sales price was $69 3/8 per
Share. Shareholders are urged to obtain a current market quotation for the
Shares.
Since 1991 the Company has not paid regular cash dividends to holders of Shares.
On November 10, 1995, the Board re-established a regular dividend policy and
declared a quarterly dividend of $.20 per Share, payable December 20, 1995, to
shareholders of record as of December 11, 1995. All Shares properly tendered to
the Company pursuant to the Offer (regardless of whether such Shares are
tendered prior to or subsequent to the December 11, 1995 record date) are
entitled to receive the dividend payable December 20, 1995. The Board may, in
its sole discretion, reconsider its dividend policy from time to time. There can
be no assurance as to when or whether the Board will declare additional
dividends on Shares.
On December 22, 1993, the Company distributed to its shareholders approximately
74% of the outstanding shares of Common Stock of White River Corporation
(together with its subsidiaries, "White River"). White River was capitalized by
the Company on September 24, 1993, with $257.6 million in total assets and
$200.0 million of common shareholder's equity. The distribution of shares of
White River Common Stock had the effect of reducing the Company's book value per
common and equivalent share as of December 31, 1993, by approximately $15.
The Company may in the future purchase additional Shares on the open market, in
private transactions, through tender offers or otherwise although it has no
current Board authorization to do so. See Section 8.
8. Purpose of the Offer; Certain Effects of the Offer
This tender is primarily being offered to provide shareholders with added
liquidity. The Company recognizes that its Common Stock is not widely held, not
regularly followed by analysts and is thinly traded. The Company believes that
it currently has adequate capital to fund the maximum amount contemplated by the
Offer and to meet its ongoing needs. Accordingly, the Board has determined that
it is in the interest of the Company's shareholders to create a selling
opportunity for shareholders through a repurchase by the Company of up to
500,000 Shares. The Offer will also afford
10
to shareholders the opportunity to dispose of Shares without the usual
transaction costs associated with any market sale. The Offer will further allow
qualifying Odd Lot Holders whose Shares are purchased pursuant to the Offer to
avoid the payment of brokerage commissions and any applicable odd-lot discount
payable on a sale of Shares in a transaction effected on a securities exchange.
Shareholders whose Shares are not purchased in the Offer will obtain an increase
in their ownership interest in the Company and thus in the Company's future
earnings and assets. To the extent the purchase of Shares in the Offer results
in a reduction in the number of shareholders of record, the costs to the Company
for services to shareholders will be reduced.
NEITHER THE COMPANY NOR THE BOARD MAKES ANY RECOMMENDATION AS TO WHETHER ANY
SHAREHOLDER SHOULD TENDER ANY OF OR ALL SUCH SHAREHOLDER'S SHARES PURSUANT TO
THE OFFER. EACH SHAREHOLDER MUST MAKE SUCH SHAREHOLDER'S OWN DECISION WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
Aside from the Offer and the November 10, 1995 dividend declaration, the Board
has not determined if or when any future distributions to common shareholders
will occur. See Section 7. The Company may in the future purchase additional
Shares on the open market, in private transactions, through tender offers or
otherwise. Any such purchases may be on the same terms or on terms which are
more or less favorable to shareholders than the terms of the Offer. The Offer,
if fully subscribed, will exhaust the Company's remaining authorization to
repurchase Shares. At present, the Company's Board has not authorized any future
repurchases of Shares aside from the Offer.
Any possible future repurchases of Shares by the Company would depend on many
factors, including among others, the market price of the Shares, the results of
the Offer, the Company's business and financial position and general economic
and market conditions. Rule 13e-4 under the Exchange Act generally prohibits the
Company and its affiliates from purchasing any Shares, other than pursuant to
the Offer, for at least ten business days after the Expiration Date.
Shares acquired by the Company pursuant to the Offer will be retired. Certain
pro forma financial effects of the purchase of 500,000 Shares pursuant to the
Offer are described in Section 9.
The purchase of 500,000 Shares pursuant to the Offer will not cause the Shares
to be delisted by the NYSE or deregistered under the Exchange Act. See clause
(g) of Section 6.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Following the repurchase of
Shares pursuant to the Offer, the Shares not purchased will continue to be
"margin securities" for purposes of the Federal Reserve Board's margin
regulations.
9. Certain Information Concerning the Company
The Company was organized in 1980. The Companys conducts mortgage operations
through its wholly owned subsidiary, Source One Mortgage Services Corporation,
and its subsidiaries (collectively, "Source One") and recently began conducting
property-casualty insurance operations through its wholly owned subsidiary,
White Mountains Insurance Company ("White Mountains"). Operating affiliates of
the Company include Financial Security Assurance Holdings Ltd. ("FSA"), a
leading Aaa/AAA writer of financial guarantee insurance, and Main Street America
Holdings, Inc. ("MSA"), a unit of National Grange Mutual Insurance Company
("NGM"), a property-casualty insurer. The Company also owns a portfolio of
common equity securities and other investments totalling $449.0 million as of
September 30, 1995. The portfolio investments consist in great part of large
blocks of securities of a small number of issuers, many of them in the energy,
natural resources and related industries. This concentration may make the value
of the Company's investment portfolio more volatile than the value of a more
diversified portfolio.
11
The Company's principal office is located at The 1820 House, Main Street,
Norwich, Vermont, 05055-0850, and its telephone number is (802) 649-3633.
Mortgage Operations. Source One is one of the largest mortgage banking companies
in the United States based on the size of its mortgage loan servicing portfolio.
As of September 30, 1995, Source One had a mortgage loan servicing portfolio
totalling $28.6 billion, which is serviced on behalf of approximately 325
institutional investors and numerous other security holders. As of September 30,
1995, Source One had 130 retail branch offices in 27 states and originated $1.9
billion in new mortgage loans for the nine month period then ended.
Source One engages primarily in the business of producing, selling and servicing
residential mortgage loans. Its sources of revenue are net mortgage servicing
fees, net interest revenue, net gain on sales of mortgages and other revenue
(including underwriting and appraisal fees). Through subsidiaries, Source One
also sells credit-related insurance products (such as life, disability, health,
accidental death, and property/casualty insurance) and provides bi-weekly
mortgage payment services.
Source One produces residential mortgage loans through a system of retail branch
offices, mortgage brokers, a refinance division, and a correspondent network of
banks, thrift institutions and other mortgage lenders. Loans produced, whether
through origination or purchase, include conventional residential mortgage loans
as well as mortgage loans which are either insured by the Federal Housing
Administration ("FHA") or partially guaranteed by the Veterans Administration
("VA"). It is the policy of Source One to produce primarily fixed rate mortgage
loans. Mortgage loans originated by Source One are subject to a defined
underwriting process in order to assess each prospective borrower's ability to
repay the loan requested and the adequacy of each property as collateral. In
addition, Source One is subject to the underwriting guidelines of FHA, VA, the
Federal Home Loan Mortgage Corporation ("FHLMC") and the Federal National
Mortgage Association ("FNMA"), as well as specific contractual requirements of
institutional investors who have agreed to acquire mortgage loans originated by
Source One.
Source One sells loans either through mortgage-backed securities issued pursuant
to programs of the Government National Mortgage Association ("GNMA"), FNMA and
FHLMC, or to institutional investors. Most loans are aggregated in pools of $1.0
million or more, which are purchased by institutional investors after having
been guaranteed by GNMA, FNMA or FHLMC. Source One, primarily through investment
bankers, also arranges to sell mortgage-backed securities to investors.
Source One currently retains the rights to service the majority of all the
mortgage loans it produces. In addition, Source One may acquire the rights to
service or subservice a mortgage loan portfolio without originating or acquiring
the underlying mortgage loans. Source One customarily makes such purchases of
servicing rights from banks, thrift institutions and other mortgage lenders. The
fees paid to acquire such servicing rights are negotiated on a case-by-case
basis. Mortgage loan servicing consists primarily of collecting monthly loan
payments, remitting amounts due to investors, collecting property tax and
insurance escrow deposits, and making tax and insurance premium payments when
due. Source One retains a servicing fee from each monthly loan payment equal to
a fixed percentage of the outstanding principal balance of each loan, plus any
late charges.
On August 4, 1994 the Company announced that it was in the process of
determining the extent of interest in a purchase of Source One by a third party.
No transaction has been consummated in connection with such announcement. The
Company continues to consider its strategic alternatives regarding Source One.
Insurance Operations.
Financial Security Assurance Holdings Ltd. On May 13, 1994, the Company
purchased 2,000,000 shares of FSA common stock from U S WEST Capital Corp., a
wholly-owned subsidiary of U S WEST, Inc., as part of an initial public offering
of
12
8,082,385 shares of FSA's common stock at the initial offering price of $20.00
per share. The Company's initial stake represented a 7.6% ownership of FSA. The
Company's Chairman, John J. Byrne, has also become Chairman of FSA.
FSA conducts operations principally through Financial Security Assurance, Inc.,
a wholly-owned monoline financial guarantee insurance subsidiary. FSA is
principally engaged in guaranteeing residential mortgage and other asset-backed
securities and municipal bonds.
Following receipt of regulatory approvals, on September 2, 1994, the Company
acquired additional rights and securities whereby it substantially increased its
holdings in FSA. Such additional rights and securities included (i) various
fixed price options and shares of convertible preferred stock which, in total,
give the Company the right to acquire over the next five to ten years up to
4,560,607 additional shares of FSA common stock for aggregate consideration of
$125.7 million; and (ii) a "call right" which, in general, gave the Company the
right to acquire up to 9,000,000 additional shares of FSA common stock for per
share consideration equal to the higher of (a) market price or (b) a fixed price
ranging from $29.00 to $30.50. The call right expired on November 13, 1995
without being exercised by the Company. All shares of FSA common stock owned or
acquired by the Company as described above will be subject to certain
restrictions on transfer, voting provisions and other limitations and
requirements set forth in a Shareholders' Agreement, a Registration Rights
Agreement and a Voting Trust Agreement.
The Company purchased an additional 460,200 shares of FSA common stock on the
open market in the first quarter of 1995 for $8.8 million. The Company's voting
control of FSA as of December 1, 1995 is approximately 25%.
Main Street America Holdings, Inc. In December 1994 the Company purchased a 33%
interest of MSA for $25.0 million in cash. MSA shares in 40% of NGM's business
through a reinsurance agreement.
White Mountains Insurance Company. In February 1995 the Company capitalized its
newly formed subsidiary, White Mountains Insurance Company ("White Mountains"),
with $25.0 million in cash. In March 1995 White Mountains received its license
from the Insurance Commissioner of the State of New Hampshire to engage in the
sale of property casualty insurance. White Mountains wrote its first policies in
the 1995 third quarter. White Mountains is expected to expand its operations to
other states as additional regulatory approvals are obtained.
Recent Developments. On December 1, 1995, Fund American acquired the Valley
Insurance Company ("Valley") and the Charter Indemnity Company ("Charter") for a
cash purchase price of $41.1 million. The financial statement effects of the
acquisition of Valley and Charter are considered to be immaterial in relation to
the Company's consolidated financial statements.
On November 7, 1995, the Securities and Exchange Commission approved a
registration statement allowing Source One to offer to exchange up to $100
million aggregate principal amount of Quarterly Income Capital Securities for up
to four million shares of its outstanding 8.42% Cumulative Preferred Stock
Series A.
Summary Historical Consolidated Financial Information. The summary financial
information for the years ended December 31, 1994 and 1993, set forth below, has
been derived from and should be read in conjunction with the audited
consolidated financial statements (including the related notes thereto) included
in the Company's Annual Report on Form 10-K for the year ended December 31, 1994
(the "Form 10-K"). The summary financial information for the nine month periods
ended September 30, 1995 and 1994, has been derived from and should be read in
conjunction with the unaudited consolidated financial statements for such
periods included in the Company's Quarterly Report on Form 10-Q for the three
and nine month periods ended September 30, 1995 (the "Form 10-Q"). Such summary
financial information is qualified in its entirety by reference to such reports
and all financial statements and related notes contained therein. The Form 10-K
and the Form 10-Q are available for examination, and copies are obtainable, in
the manner set forth below under "Additional Information".
13
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
Nine Months Ended Year Ended
September 30, December 31,
-------------------------- --------------------------
1995 (1) 1994 1994 1993
---------- ---------- ---------- ----------
(Dollars in millions, except per share amounts)
Ending Balance Sheet Data:
Total assets $ 1,720.7 $ 1,807.3 $ 3,305.0
Short-term debt 321.6 254.1 1,536.8
Long-term debt 456.4 547.0 601.3
Minority interest - preferred stock of subsidiary 100.0 100.0 -
Shareholders' equity 653.1 661.1 905.0
Book value per common and equivalent share 81.94 68.95 77.27
Income Statement Data:
Total revenues $ 168.7 $ 187.1 $ 228.5 $ 251.0
Total expenses (173.1) (173.6) (225.7) (234.1)
Net investment gains 31.8 43.0 38.8 124.0
Income tax provision (11.3) (23.3) (20.5) (70.5)
---------- --------- --------- ----------
After tax earnings 16.1 33.2 21.1 70.4
Tax benefit from sale of discontinued operations 66.0 - - -
Loss on early extinguishment of debt, after tax (.4) - - -
Cumulative effect of accounting change -
capitalized mortgage servicing, after tax - (44.3) (44.3) -
---------- --------- --------- ----------
Net income (loss) $ 81.7 $ (11.1) $ (23.2) $ 70.4
========== ========= ========= ==========
Primary earnings per share:
After tax earnings $ 1.46 $ 2.61 $ 1.20 $ 5.68
Net income (loss) 9.26 (2.01) (3.51) 5.68
Fully diluted earnings per share:
After tax earnings $ 1.74 $ 2.60 $ 1.20 $ 5.68
Net income (loss) 8.86 (2.01) (3.51) 5.68
Ratio of earnings to combined fixed charges and
preferred stock dividends 1.34 1.51 1.20 1.90
(1) As further described in the Form 10-Q, in the third quarter of 1995 Fund
American adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 122, "Accounting for Mortgage Servicing Rights" as
of January 1, 1995. SFAS No. 122 prohibits retroactive application to
periods prior to January 1, 1995. Therefore, the reported results for 1995
may not be comparable to respective prior year amounts.
14
Notes to Summary Historical Consolidated Financial Information
(A) The ratios of earnings to combined fixed charges and preferred stock
dividends were computed by dividing pretax earnings as adjusted by total fixed
charges and preferred stock dividends:
Nine Months Year
Ended Ended
September 30, December 31,
------------------- ------------------
(Dollars in millions) 1995 1994 1994 1993
------ ------ ------ ------
Pretax earnings $ 27.4 $ 56.5 $ 41.6 $140.9
Equity in earnings of unconsolidated affiliates (7.2) (2.1) (2.5) -
Equity in distributed income of unconsolidated affiliates .6 .2 .3 -
Interest expense 34.3 64.3 78.8 103.1
Portion of rent representative of interest expense 1.2 1.6 2.3 1.9
------ ------ ------ ------
Pretax earnings as adjusted $ 56.3 $120.5 $120.5 $245.9
====== ====== ====== ======
Preferred stock dividend requirements $ 6.5 $ 13.9 $ 19.4 $ 24.4
Interest expense 34.3 64.3 78.8 103.1
Portion of rent representative of interest expense 1.2 1.6 2.3 1.9
------ ------ ------ ------
Total fixed charges and preferred
stock dividends $ 42.0 $ 79.8 $100.5 $129.4
====== ====== ====== ======
(B) Primary earnings per share amounts for the nine month periods ended
September 30, 1995 and 1994 are based on the weighted average number of common
and dilutive common equivalent Shares outstanding of 8,411,168 and 9,590,721,
respectively. Fully diluted earnings per share amounts for the nine month
periods ended September 30, 1995 and 1994 are based on the weighted average
number of common Shares outstanding, assuming full dilution, of 9,221,554 and
9,619,247, respectively. Earnings per share amounts for the year ended December
31, 1994 and 1993 are based on the weighted average number of common and
dilutive common equivalent Shares outstanding of 9,408,785 and 10,247,746,
respectively.
Pro Forma Financial Information (Unaudited). The following unaudited pro forma
financial information sets forth the pro forma effects on the historical
financial results of the Company of the Offer assuming 500,000 Shares are
purchased in the Offer for $71.00 per Share, net to the seller in cash, or an
aggregate cost to the Company of approximately $35.6 million including estimated
related fees and expenses of $.1 million.
The condensed consolidated pro forma balance sheets as of September 30, 1995 and
December 31, 1994, assume that the repurchase of Shares by the Company pursuant
to the Offer had occurred as of September 30, 1995 and December 31, 1994,
respectively. The condensed consolidated pro forma income statements for the
periods ended September 30, 1995 and December 31, 1994, assume that the
repurchase of Shares by the Company pursuant to the Offer had occurred as of
January 1, 1995 and January 1, 1994, respectively. See "Notes to Pro Forma
Financial Information" in this Section 9 below.
The estimated financial effects of the repurchase of Shares by the Company
pursuant to the Offer presented in the pro forma financial information are not
necessarily indicative of either the Company's financial position or the results
of its operations which would have been obtained had the transactions described
above actually occurred on the dates described above, nor are they necessarily
indicative of the results of future operations. The pro forma financial
information should be read in conjunction with the Form 10-K and Form 10-Q.
15
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEETS
(Dollars in millions, except per share amounts)
September 30, 1995 December 31, 1994
------------------------------ -------------------------------
Adjust- Pro Adjust- Pro
Actual ments Forma Actual ments Forma
---------- --------- --------- ---------- --------- ---------
Assets
Common equity securities, at market value $ 295.4 $ 295.4 $ 332.4 $ 332.4
Other investments 153.6 153.6 157.3 157.3
Short-term investments, at amortized cost 68.9 $(35.6) 33.3 119.2 $(35.6) 83.6
---------- ------ --------- ---------- ------ ---------
Total investments 517.9 (35.6) 482.3 608.9 (35.6) 573.3
Cash .4 .4 1.5 1.5
Capitalized mortgage servicing, net 367.5 367.5 530.5 530.5
Mortgage loans held for sale 388.3 388.3 210.5 210.5
Other mortgage origination and
servicing assets 178.9 178.9 213.7 213.7
Investments in unconsolidated affiliates 91.9 91.9 69.7 69.7
Other assets 175.8 175.8 172.5 172.5
---------- ------ --------- ---------- ------ ---------
Total assets $ 1,720.7 $(35.6) $ 1,685.1 $ 1,807.3 $(35.6) $ 1,771.7
========== ====== ========= ========== ====== =========
Liabilities
Short-term debt $ 321.6 $ 321.6 $ 254.1 $ 254.1
Long-term debt 456.4 456.4 547.0 547.0
Accounts payable and other liabilities 189.6 189.6 245.1 245.1
---------- ------ --------- ---------- ------ ---------
Total liabilities 967.6 967.6 1,046.2 1,046.2
---------- ------ --------- ---------- ------ ---------
Minority Interest - preferred stock of subsidiary 100.0 100.0 100.0 100.0
---------- ------ --------- ---------- ------ ---------
Shareholders' Equity
Preferred stock - - 75.0 75.0
Common stock and paid-in surplus 408.3 $ (5.5) 402.8 371.7 $ (5.5) 366.2
Retained earnings 1,121.5 (30.1) 1,091.4 1,098.2 (30.1) 1,068.1
Common stock in treasury (878.4) (878.4) (878.5) (878.5)
Net unrealized gains on
investment securities 27.2 27.2 19.7 19.7
Loan for common stock issued (25.5) (25.5) (25.0) (25.0)
---------- ------ --------- ---------- ------ ---------
Total shareholders' equity 653.1 (35.6) 617.5 661.1 (35.6) 625.5
---------- ------ --------- ---------- ------ ---------
Total liabilities, minority interest and
shareholders' equity $ 1,720.7 $(35.6) $ 1,685.1 $ 1,807.3 $(35.6) $ 1,771.7
========== ====== ========= ========== ====== =========
Book value per common and
equivalent share $ 81.94 $ .65 $ 82.59 $ 68.95 $ (.12) $ 68.83
16
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
CONDENSED CONSOLIDATED PRO FORMA INCOME STATEMENTS
(Dollars in millions, except per share amounts)
Nine Months Ended Year Ended
September 30, 1995 December 31, 1994
------------------------------ -------------------------------
Adjust- Pro Adjust- Pro
Actual ments Forma Actual ments Forma
---------- --------- --------- ---------- --------- ---------
Revenues:
Mortgage servicing revenue $ 107.4 $ 107.4 $ 169.3 $ 169.3
Amortization of capitalized servicing 51.6 51.6 86.9 86.9
---------- --------- --------- ---------- --------- ---------
Net servicing revenue 55.8 55.8 82.4 82.4
Net gain on sales of mortgages 15.3 15.3 29.5 29.5
Gain on sale of mortgage servicing 28.2 28.2 - -
Other mortgage operations revenue 10.5 10.5 23.9 23.9
Equity in earnings of unconsolidated affiliates 7.2 7.2 2.5 2.5
Investment income and other revenue 51.7 $ (1.5) 50.2 90.2 $ (1.3) 88.9
---------- --------- --------- ---------- --------- ---------
Total revenues 168.7 (1.5) 167.2 228.5 (1.3) 227.2
---------- --------- --------- ---------- --------- ---------
Expenses:
Interest expense 34.3 34.3 78.8 78.8
Compensation and benefits 96.7 96.7 69.2 69.2
General expenses 42.1 42.1 77.7 77.7
---------- --------- --------- ---------- --------- ---------
Total expenses 173.1 173.1 225.7 225.7
---------- --------- --------- ---------- --------- ---------
Pretax operating earnings (loss) (4.4) (1.5) (5.9) 2.8 (1.3) 1.5
---------- --------- --------- ---------- --------- ---------
Net realized investment gains 31.8 31.8 38.8 38.8
---------- --------- --------- ---------- --------- ---------
Pretax earnings 27.4 (1.5) 25.9 41.6 (1.3) 40.3
Income tax provision 11.3 (.6) 10.7 20.5 (.5) 20.0
---------- --------- --------- ---------- --------- ---------
After tax earnings $ 16.1 $ (.9) $ 15.2 $ 21.1 $ (.8) $ 20.3
========== ========= ========= ========== ========= =========
After tax earnings per share:
Primary $ 1.46 $ (.03) $ 1.43 $ 1.20 $ (.03) $ 1.17
Fully diluted 1.74 - 1.74 1.20 (.03) 1.17
Earnings per share denominator
(in thousands)
Primary 8,411 (500) 7,911 9,409 (500) 8,909
Fully Diluted 9,222 (500) 8,722 9,409 (500) 8,909
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.34 (.04) 1.30 1.20 (.02) 1.18
17
Notes to Pro Forma Financial Information (Unaudited)
The condensed consolidated pro forma balance sheets as of September 30, 1995 and
December 31, 1994, assume that the repurchase of Shares by the Company pursuant
to the Offer had occurred as of September 30, 1995 and December 31, 1994,
respectively. The condensed consolidated pro forma income statements for the
periods ended September 30, 1995 and December 31, 1994, assume that the
repurchase of Shares by the Company pursuant to the Offer had occurred as of
January 1, 1995 and January 1, 1994, respectively, and includes only those
adjustments that are expected to have a continuing impact on the Company. The
adjustments presented in the pro forma financial information reflect the
following assumptions:
a) The condensed consolidated pro forma balance sheets assume that (i) the
$35.6 million of funds used by the Company to repurchase 500,000 Shares
pursuant to the Offer and pay related fees and expenses are derived from
sales and maturities of short-term investments, and (ii) the Shares
repurchased by the Company pursuant to the Offer are retired.
b) The condensed consolidated pro forma income statements assume that the
annualized yield on short-term investments used to fund the repurchase of
Shares was 5.47% and 3.57% for the periods ended September 30, 1995 and
December 31, 1994, respectively. This assumed yield is equal to the average
yield actually experienced with respect to the Company's short-term
investments during the period indicated.
c) The condensed consolidated pro forma income statements do not include the
financial effects of the Company's December 1, 1995 acquisition of Valley
and Charter for $41.1 million cash. Such financial statement effects are
considered to be immaterial in relation to the Company's consolidated
financial statements.
The condensed consolidated pro forma income statements also assume that the
effective tax rate related to the reduction in investment income is 35%,
the maximum Federal statutory rate for corporations.
Shareholder Rights Plan. The Board adopted in 1987, and in 1988 and 1993
amended, a Shareholders' Rights Plan under which Rights to purchase preferred
stock were distributed to shareholders at the rate of one Right for each Share.
Each Right entitles the holder to purchase one one-thousandth of a share of
Participating Stock.
The Rights enable the holders to acquire additional equity in either the Company
or the acquiring company, and are exercisable if an unrelated person or group
(other than American Express Company or a wholly owned subsidiary thereof, any
subsidiary of the Company, any employee benefit plan of the Company or its
subsidiaries or certain affiliates of the Company and certain persons who
inadvertently and temporarily cross the 25% threshold) acquires beneficial
ownership of 25% or more of the outstanding Shares (such a 25% or more
beneficial owner is deemed an "Acquiring Person"). Thereafter, the Rights would
trade separately from the Shares and separate certificates representing the
Rights would be issued. The terms of the Participating Stock are such that each
one one-thousandth of a share would be entitled to participate in dividends and
to vote on an equivalent basis with one whole Share, along with other
preferential dividend rights and preferential distribution rights in
liquidation.
Upon the existence of an Acquiring Person, the Rights will entitle each holder
of a Right to purchase, at the exercise price, that number of one one-thousandth
of a share of Participating Stock equivalent to the number of Shares which, at
the time of the transaction, would have a market value of twice the exercise
price. If certain acquisitions of the Company occur, a similar right to purchase
securities of the Company or the entity acquiring the Company at a discount
would arise.
Any Rights that are beneficially owned by an Acquiring Person (or any affiliate
or associate of an Acquiring Person) are null and void and any holder of any
such Right (including any subsequent holder) will be unable to exercise or
transfer any such Right.
18
At any time after a person becomes an Acquiring Person, the Board may
mandatorily exchange all or some of the Rights for consideration per Right equal
to one-half of the securities issuable upon the exercise of one Right pursuant
to the terms of the Rights Agreement (or the common share equivalent) and
without payment of the exercise price.
The Rights, which do not have the right to vote or receive dividends, expire
November 25, 1997, and may be redeemed by the Company at a price of $.01 per
Right at any time prior to the earlier of: (i) such time as a person becomes an
Acquiring Person; or (ii) the expiration date. Under certain circumstances, the
Board may redeem the Rights only if a majority of the disinterested directors
(as defined in the Shareholders' Rights Plan) agrees that the redemption is in
the best interests of the Company and its shareholders.
The foregoing description of the Rights is qualified in its entirety by
reference to the Shareholders Rights Plan.
The Rights currently are not exercisable and trade together with the Shares
associated therewith, and will not become exercisable or separately tradeable as
a result of the Offer. Absent the occurrence of circumstances causing the Rights
to become exercisable or separately tradeable before the Expiration Date, the
tender of any Shares pursuant to the Offer will include the tender of the Rights
associated therewith. No separate consideration will be paid for such Rights.
Upon the purchase of Shares by the Company pursuant to the Offer, the
shareholders selling those Shares will no longer own the Rights associated with
such purchased Shares.
Additional Information. The Company is subject to the informational reporting
requirements of the Exchange Act and in accordance therewith the Company files
reports, proxy statements and other information with the SEC. Additional
information concerning the Company is set forth in such proxy statements, the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, and
the Company's Quarterly Report on Form 10-Q for the three and nine month periods
ended September 30, 1995. The Company has filed the Schedule 13E-4 with the SEC
which includes certain additional information relating to the Offer. The
reports, proxy statements and other information filed by the Company with the
SEC can be inspected and copied at the public reference facilities maintained by
the SEC at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60661. Copies of such material also can be
obtained at prescribed rates from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, material filed by the
Company can also be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. The Company's Schedule 13E-4 will not be available at the
SEC's regional offices.
10. Source and Amount of Funds
If 500,000 Shares are purchased by the Company pursuant to the Offer at $71.00
per Share, net to the seller in cash, the aggregate cost to the Company,
including all related fees and expenses of the Offer, will be approximately
$35.6 million. The Company anticipates that it will fund the purchase of Shares
pursuant to the Offer through sales and maturities of short-term investments.
11. Certain Federal Income Tax Considerations
Set forth below is a brief summary of the principal Federal income tax
consequences of a sale of Shares pursuant to the Offer under the Internal
Revenue Code of 1986, as amended to date (the "Code").
Gain or Loss Recognition. A tendering shareholder generally will recognize
taxable gain (or loss) upon the sale of Shares pursuant to the Offer equal to
the difference between the amount of cash received by such shareholder pursuant
to the Offer and such shareholder's tax basis in the Shares sold pursuant to the
Offer. Such gain (or loss) will be capital gain (or loss), assuming that such
Shares are held as a capital asset, and will be long-term capital gain (or loss)
if such Shares have been held for more than one year at the time of sale.
19
Notwithstanding the foregoing, the amount received by a tendering shareholder
will be treated as a dividend taxable as ordinary income if the Offer does not
result in (i) a complete termination of such shareholder's stock interest in the
Company, (ii) a more than 20% decrease in such shareholder's ownership of Shares
and other voting stock of the Company or (iii) a "meaningful reduction" in such
shareholder's proportionate interest in the Company. There are no precise rules
on what constitutes a "meaningful reduction" in a shareholder's proportionate
interest, but the Internal Revenue Service has ruled that even a small reduction
is meaningful where the stock owned by the shareholder prior to reduction
represents a "minimal" interest in the corporation (only .0001118% in the
ruling) and the shareholder does not otherwise exercise any control over the
affairs of the corporation. The extent to which a shareholder's proportionate
interest is reduced will depend upon the extent to which other shareholders
tender Shares in the Offer. In determining the extent to which a shareholder's
proportionate interest is reduced, the shareholder must take into account any
Shares owned by related persons that such shareholder is deemed to own under the
constructive ownership rules of Sections 302(c) and 318 of the Code.
In the case of a corporate shareholder, if the amount received is treated as a
dividend, the dividend income may be eligible for the 70% dividends-received
deduction. The dividends-received deduction is subject to certain limitations,
and may not be available if the corporate shareholder does not satisfy certain
holding period requirements with respect to the Shares or if the Shares are
treated as "debt financed portfolio stock". Generally, if a dividends-received
deduction is available, the dividend will probably be treated as an
"extraordinary dividend" under Section 1059(a) of the Code, in which case such
corporate shareholder's tax basis in Shares retained by such shareholder would
be reduced, but not below zero, by the amount of the nontaxed portion of the
dividend. Any amount of the nontaxed portion of the dividend in excess of the
shareholder's basis would generally be subject to tax upon sale or disposition
of those Shares.
Backup Withholding. Each tendering shareholder must provide certain information
through the Letter of Transmittal to avoid the 31% Federal "backup withholding"
tax on the gross proceeds payable pursuant to the Offer. See Section 3.
Foreign Shareholder Withholding. Foreign shareholders should note that the 30%
U.S. withholding tax generally applicable to corporate distributions should not
apply to the proceeds payable pursuant to the Offer, unless such proceeds are
treated as a dividend under the rules described in "Gain or Loss Recognition"
above. (However, as indicated in the preceding paragraph, Federal backup
withholding tax may be applicable.)
State, Local and Foreign Taxes. The foregoing discussion relates only to Federal
income tax consequences of the Offer. Shareholders should consult their own tax
advisors regarding the possible state, local and foreign tax consequences of the
Offer.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE
BY THEM PURSUANT TO THE OFFER IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
12. Transactions and Arrangements Concerning the Shares
Based upon the Company's records and upon information provided to the Company by
its directors and executive officers, neither the Company nor any of its
subsidiaries nor, to the best of the Company's knowledge, any of the directors
or officers of the Company, nor any associates of any of the foregoing, has
effected any transactions in the Shares during the 40 business days prior to the
date hereof, except for the purchase by the Company of: (a) 636 Shares for $72
1/2 per Share on October 2, (b) 642 Shares for $71 3/4 per Share on October 3,
(c) 651 Shares for $70 3/4 per Share on October 4, (d) 649 Shares for $71.00 per
Share on October 5, (e) 645 Shares for $71 1/2 per Share on October 6, (f) 4,722
Shares for $71.00 per Share on October 25, (g) 777 Shares for $69 3/8 per Share
on November 1, (h) 773 Shares for $69 3/4 per Share on November 2, (i) 768
Shares for $70 1/4 per Share on November 3, (j) 775 Shares for $69 5/8 per Share
on November 6, and (k) 782 Shares for $69.00 per Share on November 7.
20
All of the aforementioned purchases of Shares were effected pursuant to a
prearranged program with the AAAP whereby the Company has agreed to purchase
Shares offered to it from time to time by the AAAP trustee. The purchase price
of Shares purchased pursuant to such program is equal to the closing price of
Shares, as reported on the NYSE Composite Tape, on the day the transaction is
executed.
Except as set forth in this Offer to Purchase, neither the Company nor, to the
best of the Company's knowledge, any of its directors or officers, is a party to
any contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to the Offer with respect to any securities of
the Company (including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations).
The Company has been informed by its directors and officers that they do not
intend to tender Shares owned by them pursuant to the Offer.
13. Certain Legal Matters; Regulatory and Foreign Approvals
The Company is not aware of any license or regulatory permit that appears to be
material to its business that might be adversely affected by its acquisition of
Shares as contemplated in the Offer or of any approval or other action by any
government or governmental, administrative or regulatory authority or agency,
domestic or foreign, that would be required for the Company's acquisition or
ownership of Shares pursuant to the Offer. Should any such approval or other
action be required, the Company currently contemplates that it will seek such
approval or other action. The Company cannot predict whether it may determine
that it is required to delay the acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that the failure to
obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company intends to make all required
filings under the Exchange Act. The Company's obligation under the Offer to
accept Shares for payment is subject to certain conditions. See Section 6.
14. Allianz Asset Accumulation Plan
AAAP participants should receive an AAAP Tender Offer Instruction Form in the
materials sent to them on behalf of the trustee. AAAP participants who wish to
have the trustee tender any of or all Shares allocated to their respective
accounts ("AAAP Shares") should so indicate by completing, executing and
returning an AAAP Tender Offer Instruction Form to the trustee. AAAP
participants may not use the Letter of Transmittal to direct the trustee to
tender their respective AAAP Shares but must use the AAAP Tender Offer
Instruction Form. Under ERISA, the trustee may be obligated to take action and
make an independent decision irrespective of directions given by participants.
Accordingly, although instructions from participants are being solicited for the
trustee's information and will be given due consideration by it, the trustee is
not bound under ERISA by such instructions and thus may tender Shares or may not
tender Shares, as the case may be, contrary to such designations. Of course,
directions as to the subsequent reinvestment of the proceeds from the tendered
Shares will be followed by the trustee. AAAP Participants are urged to read the
AAAP Tender Offer Instruction Form and related materials carefully.
Neither the Company nor the Board makes any recommendation as to whether any
participant in the AAAP should tender any of or all their respective AAAP Shares
pursuant to the Offer. Each participant in the AAAP must make such participant's
own decision whether to tender AAAP Shares, and, if so, how many such Shares.
21
15. Extension of Tender Period; Termination; Amendments
The Company expressly reserves the right, in its sole discretion, at any time or
from time to time and regardless of whether or not any of the events set forth
in Section 6 shall have occurred or shall be deemed by the Company to have
occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of any Shares by giving oral or written
notice of such extension to the Depositary and making a public announcement
thereof. During any such extension, all Shares previously tendered and not
purchased or withdrawn will remain subject to the Offer, except to the extent
that such Shares may be withdrawn as set forth in Section 4. The Company also
expressly reserves the right, in its sole discretion, to terminate the Offer and
not accept for payment or pay for any Shares not theretofore accepted for
payment or paid for or, subject to applicable law, to postpone payment for
Shares upon the occurrence of any of the conditions specified in Section 6 or
otherwise by giving oral or written notice of such termination or postponement
to the Depositary and making a public announcement thereof. The Company's
reservation of the right to delay payment for Shares which it has accepted for
payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which
requires that the Company must pay the consideration offered or return the
Shares tendered promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, the Company further reserves the
right, in its sole discretion, and regardless of whether or not any of the
events set forth in Section 6 shall have occurred or shall be deemed by the
Company to have occurred, to amend the Offer in any respect (including, without
limitation, by decreasing or increasing the consideration offered in the Offer
to owners of Shares or by decreasing the number of Shares being sought in the
Offer) or to waive the limitation on the maximum number of Shares to be
purchased pursuant to the Offer. Amendments to the Offer may be made at any time
or from time to time effected by public announcement thereof, such announcement,
in the case of an extension, to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Any disclosure of a material change in the information published, sent or given
to shareholders will be disseminated promptly to shareholders in a manner
reasonably designed to inform shareholders of such change. Without limiting the
manner in which the Company may choose to make a public announcement pursuant to
or concerning the Offer, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Company will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated
under the Exchange Act. The minimum period during which an offer must remain
open following material changes in the terms of the offer or information
concerning the offer (other than a change in price or a change in percentage of
securities sought) will depend on the facts and circumstances then existing,
including the relative materiality of the changed terms or information. If (a)
the Company (i) increases or decreases the price at which Shares may be properly
tendered, (ii) increases the number of Shares being sought and such increase
exceeds 2% of the outstanding Shares or (iii) decreases the number of Shares
being sought, and (b) the Offer is scheduled to expire at any time earlier than
the expiration of a period ending on the tenth business day from and including
the date that notice of such increase or decrease is first published, sent or
given, the Offer will be extended until the expiration of such ten business day
period.
16. Fees and Expenses
First Chicago Trust Company of New York ("First Chicago") has been retained by
the Company as Depositary and Information Agent in connection with the Offer.
The Information Agent will assist shareholders who request assistance in
connection with the Offer and may request brokers, dealers and other nominee
shareholders to forward material relating to the Offer to beneficial owners for
which they act as nominees. First Chicago will receive reasonable and customary
22
compensation for its services in connection with the Offer and will be
reimbursed for reasonable expenses, including the reasonable fees and expenses
of counsel. The Company has agreed to indemnify First Chicago against certain
liabilities which could occur in connection with the Offer, including certain
liabilities under the Federal securities laws. First Chicago has not been
retained and is not authorized to make solicitations or recommendations in
connection with the Offer in its role as Depositary or Information Agent.
The Company will not pay any fees or commissions to any broker, dealer,
commercial bank, trust company or other person for soliciting Shares pursuant to
the Offer. The Company will, however, on request, reimburse such persons for
customary handling and mailing expenses incurred in forwarding materials in
respect of the Offer to the beneficial owners for which they act as nominees. No
broker, dealer, commercial bank or trust company has been authorized to act as
an agent for the Company for the purpose of the Offer. The Company will not pay
(or cause to be paid) any stock transfer taxes on its purchase of Shares
pursuant to the Offer, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
17. Miscellaneous
The Offer is not being made to, nor will the Company accept tenders from or on
behalf of, owners of Shares in any jurisdiction in which the making of the Offer
or its acceptance would not be in compliance with the laws of such jurisdiction.
The Company is not aware of any jurisdiction where the making of the Offer or
the tender of Shares would not be in compliance with applicable law. If the
Company becomes aware of any jurisdiction where the making of the Offer or the
tender of Shares is not in compliance with any applicable law, the Company will
make a good faith effort to comply with such law. If, after such good faith
effort, the Company cannot comply with such law, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares
residing in such jurisdiction.
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
December 4, 1995
23
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or such shareholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
The Depositary and the Information Agent for the Offer is:
First Chicago Trust Company of New York
Facsimile Transmission:
(For Eligible Institutions Only)
201-222-4720
or
201-222-4721
By Mail: By Hand or Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
Suite 4660 - FA Suite 4680 - FA
P.O. Box 2559 14 Wall Street - 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005
For Information:
1-800-438-0057
- --------------------------------------------------------------------------------
Any questions or requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent. Shareholders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
- --------------------------------------------------------------------------------
24
Exhibit 99(a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Pursuant to the Offer to Purchase
Dated December 4, 1995
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 2, 1996, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To: FIRST CHICAGO TRUST COMPANY OF NEW YORK, Depositary
By Mail: By Hand or Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
Suite 4660 - FA Suite 4680 - FA
P.O. Box 2559 14 Wall Street - 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005
Delivery of this instrument to an address other than those shown above or
transmission of instructions to a facsimile number other than those listed above
does not constitute a valid delivery.
This Letter of Transmittal is to be used only if (a) certificates for
Shares (as defined below) are to be delivered with it or (b) Shares are being
delivered by book-entry transfer to the account maintained by the Depositary at
The Depository Trust Company ("DTC"), the Midwest Securities Trust Company
("MSTC") or the Philadelphia Depository Trust Company ("PDTC") (collectively,
the "Book-Entry Transfer Facilities") as set forth in Section 3 of the Offer to
Purchase (as defined below).
Shareholders whose stock certificates are not immediately available (or who
cannot follow the procedure for book-entry transfer on a timely basis) or who
cannot transmit this Letter of Transmittal and all other required documents to
the Depositary before the Expiration Date (as defined in Section 1 of the Offer
to Purchase) may nevertheless tender their Shares according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
A shareholder owning beneficially as of the close of business on November
27, 1995 and who continues to own beneficially until the Expiration Date an
aggregate of fewer than 100 Shares, and who satisfies the other requirements set
forth in Instruction 7, may have all such Shares purchased before proration, if
any, of the purchase of other Shares pursuant to the Offer.
Delivery of the Letter of Transmittal and the other required documents to
one of the Book-Entry Transfer Facilities does not constitute delivery to the
Depositary.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(See Instructions 3 and 4)
- --------------------------------------------------------------------------------
Name(s) and Address(es)
of Registered Holder(s)
(Please fill in exactly as name(s) Shares Tendered
appear(s) on certificate(s)) (Attach additional list if necessary)
- --------------------------------------------------------------------------------
Number of
Shares Number of
Certificate Represented by Shares
Number(s)* Certificate(s)* Tendered**
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Total Shares
- --------------------------------------------------------------------------------
* Need not be completed if Shares are delivered by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered.
See Instruction 4.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
[_] DTC [_] MSTC [_] PDTC
Account Number:
-----------------------------------------------------------
Transaction Code Number:
--------------------------------------------------
[_] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of the Tendering Shareholder(s):
----------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------
Name of Institution Which Guaranteed Delivery:
----------------------------
Check Box of Applicable Book-Entry Transfer Facility and Give Account
Number if Delivered By Book-Entry Transfer:
[_] DTC [_] MSTC [_] PDTC
Account Number:
-----------------------------------------------------------
Transaction Code Number:
--------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Fund American Enterprises Holdings, Inc.,
a Delaware corporation (the "Company"), the above-described shares of Common
Stock, par value $1.00 per share, of the Company ("Shares"), at a price of
$71.00 per Share (the "Purchase Price"), net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
December 4, 1995 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to all the Shares
tendered hereby, or orders the registration of such Shares delivered by
book-entry transfer, that are purchased pursuant to the Offer and hereby
irrevocably constitutes and appoints the depositary for the Offer (the
"Depositary") the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to:
(a) deliver certificates for such Shares, or transfer ownership of such
Shares on the account books maintained by any of the Book-Entry
Transfer Facilities, together, in any such case, with all accompanying
evidence of transfer and authenticity, to or upon the order of the
Company, upon receipt by the Depositary, as the undersigned's agent, of
the Purchase Price with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer of
such Shares on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares, all in accordance with the terms of the
Offer.
The undersigned hereby represents and warrants that:
(a) the undersigned "owns" the Shares tendered hereby within the meaning of
Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, and has full power and authority to validly tender, sell,
assign and transfer the Shares tendered hereby;
(b) the tender of Shares by the undersigned complies with Rule 14e-4;
(c) when and to the extent the Company accepts the Shares for purchase, the
Company will acquire good, marketable and unencumbered title thereto,
free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to their
sale or transfer, and not subject to any adverse claim;
(d) on request, the undersigned will execute and deliver any additional
documents the Depositary or the Company deems necessary or desirable to
complete the assignment, transfer and purchase of the Shares tendered
hereby; and
(e) the undersigned has read and agrees to all the terms of the Offer.
The undersigned understands that all Shares properly tendered and not
withdrawn will be purchased at $71.00 per Share (or such other price that may be
set forth in an amendment to the Offer), net to the seller in cash, upon the
terms and subject to the conditions of the Offer, including the proration
provisions thereof and that the Company will return all other Shares, including
Shares not purchased because of proration.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may not
be required to accept for payment any of the Shares tendered herewith or may
accept for payment, pro rata with Shares tendered by other shareholders, fewer
than all the Shares tendered herewith.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated on the Offer, this tender is irrevocable.
Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the aggregate Purchase Price and/or return or issue the
certificate(s) evidencing any Shares not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered". Similarly, unless otherwise indicated under "Special Delivery
Instructions", please mail the check for the aggregate Purchase Price and/or the
certificate(s) evidencing any Shares not tendered or not accepted for payment
(and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered". In the
event that both the "Special Delivery Instructions" and the "Special Payment
Instructions" are completed, please issue the check for the aggregate Purchase
Price and/or issue or return the certificate(s) evidencing any Shares not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or certificate(s) to, the person or persons so indicated. In the case of
book-entry delivery of Shares, please credit the account maintained at the
Book-Entry Transfer Facility indicated above with any Shares not accepted for
payment. The undersigned recognizes that the Company has no obligation pursuant
to the "Special Payment Instructions" to transfer any Shares from the name(s) of
the registered holder(s) thereof if the Company does not accept for payment any
of the Shares so tendered.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
- --------------------------------------------------------------------------------
ODD LOTS
(See Instruction 7)
To be completed ONLY if Shares are being tendered by or on behalf of a
person who beneficially owned as of the close of business on November 27, 1995,
and who will continue to own beneficially until the Expiration Date an aggregate
of fewer than 100 Shares.
The undersigned either (check one box):
[_] was the beneficial owner as of the close of business on November 27,
1995, and will continue to be the beneficial owner until the
Expiration Date of an aggregate of fewer than 100 Shares, and is
tendering all such Shares, or
[_] is an "Eligible Institution" (as defined in Instruction 1) that (i) is
tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner and (ii) believes, based upon
representations made to it by each such beneficial owner, that each
such beneficial owner beneficially owned as of the close of business
on November 27, 1995, and will continue to own beneficially until the
Expiration Date an aggregate of fewer than 100 Shares, and is
tendering all such Shares.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4 and 9)
To be completed ONLY if the check for the aggregate Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are to be
mailed to someone other than the undersigned or to the undersigned at an address
other than that shown below the undersigned's signature.
Mail [_] check and/or [_] certificates to:
Name
---------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 5, 6, 8 and 9)
To be completed ONLY if the check for the aggregate Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned.
Issue any [_] check and/or [_] certificates to:
Name
---------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
(See Instructions 1 and 5)
(Please complete Substitute Form W-9 below)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
Name(s)
------------------------------------------------------------------------
(Please Print)
Capacity (full title)
----------------------------------------------------------
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
-------------------------------------------------
Taxpayer Identification Number
-------------------------------------------------
(See Instruction 11)
Dated:
-------------------------------------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title.
See Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature
-----------------------------------------------------------
Name
---------------------------------------------------------------------------
(Please Print)
Title
--------------------------------------------------------------------------
Name of Firm
-------------------------------------------------------------------
Address
------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
-------------------------------------------------
Dated:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary with such
shareholder's correct taxpayer identification number ("TIN") on the Substitute
Form W-9 below. If the Depositary is not provided with the correct TIN, the
Internal Revenue Service may subject the shareholder or other payee to a $50
penalty. In addition, payments that are made to such shareholder or other payee
with respect to Shares purchased pursuant to the Offer may be subject to 31%
backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of the Substitute Form W-9. In order for a foreign individual to qualify as
an exempt recipient, the shareholder must submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for more
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments to be made to the shareholder or other payee. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 2 is checked,
the shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary.
What Number to Give the Depositary
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the certificates evidencing the Shares. If the Shares are
registered in more than one name or are not registered in the name of the actual
owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Social security number(s)
Part 1 - PLEASE PROVIDE YOUR TIN / /
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY -------------------------
FORM W-9 BY SIGNING AND DATING BELOW OR
Employer identification
number(s)
/
-------------------------
-------------------------------------------------------------
Part 2 -
Awaiting TIN [_]
Payer's Request CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I CERTIFY
for Taxpayer THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE,
Identification CORRECT AND COMPLETE.
Number (TIN)
Name
---------------------------------------------------------
(Please print)
Address
------------------------------------------------------
-------------------------------------------------------------
(Including zip code)
-------------------------------------------------------------
----------------------------------------- ---------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand
that, notwithstanding that I have checked the box in Part 2 (and completed this
Certificate of Awaiting Taxpayer Identification Number), all reportable payments
made to me before the time I provide the Depositary with a properly-certified
taxpayer identification number will be subject to a 31% backup withholding tax.
- ------------------------------------------ -------------------------------
Signature Date
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations, and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each such entity being hereinafter referred to as
an "Eligible Institution"). Signatures on this Letter of Transmittal need not be
guaranteed if (a) this Letter of Transmittal is signed by the registered owner
of the Shares (which term, for purposes of this document, shall include any
participant in one of the Book-Entry Transfer Facilities whose name appears on a
security position listing as the owner of Shares) tendered herewith and such
owner has not completed either of the boxes entitled "Special Payment
Instructions" or "Special Delivery Instructions" on this Letter of Transmittal
or (b) such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be used only if (a) certificates
are to be forwarded with it to the Depositary or (b) delivery of Shares is to be
made by book-entry transfer pursuant to the procedure set forth in Section 3 of
the Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer of all Shares delivered electronically
into the Depositary's account at one of the Book-Entry Transfer Facilities,
together in each case with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal before the Expiration Date (as defined in the Offer to
Purchase). Delivery of documents to one of the Book-Entry Transfer Facilities
does not constitute delivery to the Depositary.
Shareholders whose certificates are not immediately available (or who
cannot follow the procedures for book-entry transfer on a timely basis) or who
cannot transmit this Letter of Transmittal and all other required documents to
reach the Depositary before the Expiration Date, may nevertheless tender their
Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of
the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made
by or through an Eligible Institution, (b) the Depositary must receive (by hand,
mail or facsimile transmission), before the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form the Company has provided with the Offer to Purchase and (c) the
certificates for all tendered Shares in proper form for transfer (or
confirmation of a book-entry transfer of all such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within five New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of
the Offer to Purchase.
The method of delivery of all documents, including stock certificates, the
Letter of Transmittal and any other required documents, is at the election and
risk of the tendering shareholder. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
a facsimile thereof), each tendering shareholder waives any right to receive any
notice of the acceptance of such shareholder's tender.
3. Inadequate Space. If the space provided in the box entitled "Description
of Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares should be listed on a separate signed schedule and attached to this
Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to shareholders
who deliver Shares by book-entry transfer). If fewer than all the Shares
evidenced by any certificate delivered to the Depositary are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered". If such Shares are purchased, a new certificate for the
remainder of the Shares evidenced by the old certificate(s) will be sent to and
in the name of the registered holder(s) (unless otherwise specified by such
holder(s) having completed either of the boxes entitled "Special Delivery
Instructions" or "Special Payment Instructions" on this Letter of Transmittal)
as soon as practicable following the expiration or termination of the Offer. All
Shares represented by the certificate(s) listed and delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers; and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered herewith, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificates without any change
whatsoever.
(b) If any of the Shares tendered herewith are registered in the names of
two or more joint owners, each such owner must sign this Letter of Transmittal.
(c) If any of the Shares tendered herewith are registered in different
names on different certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations of certificates.
(d) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered herewith, no endorsements of certificates or separate stock
powers are required unless payment is to be made and/or certificates for Shares
not tendered or not purchased are to be issued to a person other than the
registered holder(s). If this Letter of Transmittal is signed by a person other
than the registered holder(s) of the Shares tendered herewith, however, the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case, signed exactly as the name(s) of the registered holder(s) appear on
the certificates for such Shares. Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing and proper evidence
satisfactory to the Company of the authority of such person so to act must be
submitted.
6. Stock Transfer Taxes. The Company will pay any stock transfer taxes with
respect to the transfer and sale of Shares to it or its order pursuant to the
Offer. If, however, payment of the aggregate Purchase Price is to be made to, or
certificates for Shares not tendered or accepted for purchase are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such person) payable on
account of the transfer to such person will be deducted from the aggregate
purchase price unless satisfactory evidence of payment of such taxes or
exemption therefrom is submitted.
7. Odd Lots. As described in Sections 1 and 2 of the Offer to Purchase, if
the number of Shares properly tendered and not withdrawn before the Expiration
Date is greater than 500,000 (or such greater number of Shares as the Company
may elect to purchase pursuant to the Offer), the Company, upon the terms and
subject to the conditions of the Offer, will accept Shares for purchase first
from all Shares properly tendered and not withdrawn before the Expiration Date
by any shareholder who beneficially owned as of the close of business on
November 27, 1995, and who continued to own beneficially until the Expiration
Date an aggregate of fewer than 100 Shares, who tendered all Shares beneficially
owned by such person (partial tenders of Shares will not qualify for this
preference) and who completes the box captioned "Odd Lots" in this Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery. This
preference will not be available unless the box above entitled "Odd Lots" is
completed.
8. Irregularities. All questions as to the number of Shares to be accepted
and the validity, form, eligibility (including time of receipt) and acceptance
for payment of any tender of Shares will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all parties.
The Company reserves the absolute right to reject any or all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Offer (except as provided
in Section 6 of the Offer to Purchase) and any defect or irregularity in the
tender of any particular Shares. The Company's interpretation of the terms and
conditions of the Offer (including these instructions) shall be final and
binding on all parties. No tender of Shares will be deemed properly made until
all defects or irregularities have been cured or waived. None of the Company,
the Depositary, the Information Agent or any other person is or will be
obligated to give notice of any defects or irregularities in tenders, and none
of them will incur any liability for failure to give any such notice.
9. Special Payment and Delivery Instructions. If the check for the
aggregate Purchase Price of any Shares purchased is to be issued to, or any
Shares not tendered or not purchased are to be returned in the name of, a person
other than the person(s) signing this Letter of Transmittal or if the check or
any certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that shown
in the box entitled "Descriptions of Shares Tendered", the boxes entitled
"Special Payment Instructions" and/or "Special Delivery Instructions" on this
Letter of Transmittal should be completed.
10. Request for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase, this Letter of Transmittal or the
Notice of Guaranteed Delivery may be directed to the Information Agent at its
addresses or telephone number set forth below.
11. Substitute Form W-9. Except as provided above under "Important Tax
Information", each tendering shareholder is required to provide the Depositary
with a correct TIN on Substitute Form W-9 which is provided under "Important Tax
Information" above. Failure to provide the information on the form may subject
the tendering shareholder to a $50 penalty and a 31% Federal back-up withholding
tax may be imposed on the payments made to the shareholder or other payee with
respect to Shares purchased pursuant to the Offer.
12. Foreign Shareholder Withholding. Foreign shareholders should note that
the 30% U.S. withholding tax generally applicable to corporate distributions
should not apply to the proceeds payable pursuant to the Offer, unless such
proceeds are treated as a dividend under the rules described in "Gain or Loss
Recognition" in Section 11 of the Offer to Purchase. (However, as indicated
above under "Important Tax Information", Federal backup withholding tax may be
applicable).
13. Allianz Asset Accumulation Plan. Participants in the Allianz Asset
Accumulation Plan (the "AAAP") who wish to have the trustee of the AAAP tender
Shares allocated to their accounts should so indicate by completing, executing
and returning to the trustee the instruction form for AAAP participants included
in the notices sent on behalf of the trustee of the AAAP. Participants in the
AAAP may not use the Letter of Transmittal to direct the trustee of the AAAP to
tender Shares allocated to such shareholders under the AAAP, but must use the
separate instruction form sent to them. See Sections 3 and 14 of the Offer to
Purchase.
Facsimile copies of this Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or such shareholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
The Depositary and the Information Agent for the Offer is:
First Chicago Trust Company of New York
By Mail: By Hand or Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
Suite 4660 - FA Suite 4680 - FA
P.O. Box 2559 14 Wall Street - 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005
For Information:
1-800-438-0057
- --------------------------------------------------------------------------------
Any questions or requests for assistance or for additional copies of the Offer
to Purchase, this Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent. Shareholders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
- --------------------------------------------------------------------------------
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
This form or a facsimile hereof must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of Common Stock, par value $1.00 per share
("Shares"), of Fund American Enterprises Holdings, Inc., a Delaware
corporation (the "Company"), are not immediately available; or
(b) the procedure for book-entry transfer (set forth in Section 3 of the
Company's Offer to Purchase dated December 4, 1995 (the "Offer to
Purchase")) cannot be followed on a timely basis; or
(c) time will not permit the Letter of Transmittal and all other required
documents to be delivered to the depositary for the Offer (the
"Depositary") before the Expiration Date (as defined in Section 1 of
the Offer to Purchase).
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
To: FIRST CHICAGO TRUST COMPANY OF NEW YORK, Depositary
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
(For Eligible Institutions only)
Tenders & Exchanges Tenders & Exchanges
Suite 4660 - FA (201) 222-4720 Suite 4680 - FA
P.O. Box 2559 or 14 Wall Street - 8th Floor
Jersey City, NJ 07303-2559 (201) 222-4721 New York, NY 10005
To Confirm Receipt of
Notice of Guaranteed Delivery:
(201) 222-4707
Delivery of this instrument to an address other than as set forth above or
transmission of instructions to a facsimile number other than the ones listed
above will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
(as defined in the Offer to Purchase) under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, at a price of $71.00 per
Share (or such other price set forth in an amendment to the Offer referred to
below), net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and the related Letter of Transmittal (which
together constitute the "Offer"), receipt of which is hereby acknowledged,
_____________ Shares pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
- --------------------------------------------------------------------------------
ODD LOTS
(See Instruction 7 of the Letter of Transmittal)
To be completed ONLY if Shares are being tendered by or on behalf of a person
who beneficially owned as of the close of business on November 27, 1995, and who
will continue to own beneficially until the Expiration Date an aggregate of
fewer than 100 Shares.
The undersigned either (check one box):
[_] was the beneficial owner as of the close of business on November 27, 1995,
and will continue to be the beneficial owner until the Expiration Date of
an aggregate of fewer than 100 Shares, and is tendering all such Shares,
or
[_] is an "Eligible Institution" that (i) is tendering, for the beneficial
owners thereof, Shares with respect to which it is the record owner, and
(ii) believes, based upon representations made to it by each such
beneficial owner, that each such beneficial owner beneficially owned as of
the close of business on November 27, 1995, and will continue to own
beneficially until the Expiration Date an aggregate of fewer than 100
Shares, and is tendering all such Shares.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No. of Shares tendered
________________________________________________________________________________
Certificate Nos. (if available):
________________________________________________________________________________
If Shares will be delivered by book-entry transfer:
Name of Tendering Institution: _________________________________________________
________________________________________________________________________________
Account No. ____________________________________________________________________
at:
[_] The Depository Trust Company
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust Company
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
________________________________________________________________________________
(Signature(s))
________________________________________________________________________________
(Signature(s))
________________________________________________________________________________
(Name(s)) (Please Print)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Zip Code)
________________________________________________________________________________
(Area Code and Telephone No.)
- --------------------------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an "Eligible Institution", guarantees that (a) the above
named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended, (b) such tender of
Shares complies with Rule 14e-4 and (c) the Depositary will receive either the
stock certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company, in any such case
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and any other required documents, all within five New York
Stock Exchange trading days after the date of execution of this notice.
- --------------------------------------------------------------------------------
Name of Firm: ___________________________ Address: ___________________________
_________________________________________ ____________________________________
Authorized Signature Zip Code
Area Code and
Name: ___________________________________ Telephone No: ______________________
Please Print
Title: __________________________________ Dated: _____________________________
- --------------------------------------------------------------------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL
- -------------
Fund
American
- -------------
John J. Byrne
Chairman
December 4, 1995
Dear Fellow Shareholder:
Fund American is offering to purchase up to 500,000 shares of its Common Stock
from shareholders at a cash price of $71.00 per share. This tender is being
offered to provide shareholders with added liquidity. We recognize that our
Common Stock is not widely held, not regularly followed by analysts and is
thinly traded. This tender, if fully subscribed, will exhaust the Company's
remaining authorization to repurchase its Common Stock.
The offer is explained in detail in the enclosed Offer to Purchase and Letter of
Transmittal. If you want to tender your shares, the instructions for tendering
shares are also explained in detail in the enclosed materials. I encourage you
to read these materials carefully before making any decision with respect to the
offer.
Neither the Company nor its Board of Directors makes any recommendation as to
whether any shareholder should tender any or all of such shareholder's shares
pursuant to the offer. Each shareholder must make such shareholder's own
decision whether to tender shares and, if so, how many shares to tender.
Any questions you have about the offer should be directed to First Chicago Trust
Company of New York, the Information Agent, at 1-800-438-0057.
Respectfully submitted,
John J. Byrne
Chairman
Fund American Enterprises Holdings, Inc.
The 1820 House / Main Street
Norwich VT 05055
(802)649-3633
(802)649-2240(FAX)
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Offer to Purchase for Cash
Up to 500,000 Shares of its Common Stock
At $71.00 Net Per Share
December 4, 1995
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Fund American Enterprises Holdings, Inc., a Delaware corporation (the
"Company"), has appointed us to act as Information Agent in connection with its
offer pursuant to which the Company is inviting its shareholders to tender
shares of its Common Stock, par value $1.00 per share ("Shares"), at a price of
$71.00 per Share (such price, or any other price set forth in an amendment to
the Offer to Purchase referred to below, being the "Purchase Price"), net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 4, 1995 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which together constitute the "Offer"). We
enclose herewith the materials listed below relating to the Offer.
All Shares properly tendered and not withdrawn will be purchased at the Purchase
Price, net to the seller in cash, upon the terms and subject to the conditions
of the Offer, including the proration provisions described therein. The Company
reserves the right, in its sole discretion, to purchase more than 500,000 Shares
pursuant to the Offer. The Offer is not conditioned upon any minimum number of
Shares being validly tendered. The Offer is, however, subject to certain other
conditions. See Section 6 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold Shares
registered in your name or in the name of your nominee, we are enclosing the
following documents:
(1) Offer to Purchase dated December 4, 1995;
(2) Letter of Transmittal for your use and for the information of your clients
(together with "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9");
(3) Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available (or the procedure for
book-entry transfer cannot be followed on a timely basis) or time will not
permit the Letter of Transmittal and all other required documents to reach
the depositary for the Offer (the "Depositary") before the Expiration Date
(as defined in the Offer to Purchase);
(4) Letter to Clients which may be sent to your clients for whose accounts you
hold Shares registered in your name (or in the name of your nominee), with
space provided for obtaining such clients' instructions with regard to the
Offer;
(5) Letter from John J. Byrne, Chairman, President and Chief Executive Officer
of the Company, dated Decermber 4, 1995, to shareholders of the Company;
and
(6) Return envelope addressed to First Chicago Trust Company of New York, as
Depositary.
PLEASE BRING THE OFFER TO THE ATTENTION OF YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 2, 1996, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or other persons for
soliciting tenders of Shares pursuant to the Offer. The Company will, however,
upon request, reimburse you for customary mailing and handling expenses incurred
by you in forwarding any of the enclosed materials to your clients. The Company
will pay any stock transfer taxes with respect to the transfer and sale of
Shares to it or its order pursuant to the Offer, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly completed
Letter of Transmittal and any other required documents should be sent to the
Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made even
though stock certificates are not immediately available (or the procedure for
book-entry transfer cannot be followed on a timely basis) or time will not
permit the Letter of Transmittal and all other required documents to reach the
Depositary before the Expiration Date, if such tenders are made by or through an
"Eligible Institution" (as defined in the Offer to Purchase). Certificates for
Shares so tendered in proper form for transfer (or a confirmation of a book-
entry transfer of such Shares into the Depositary's account at one of the "Book-
Entry Transfer Facilities" described in the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and any other documents required by the Letter of Transmittal, must be
received by the Depositary within five New York Stock Exchange trading days
after the date of execution of a properly completed and duly executed Notice of
Guaranteed Delivery.
Any questions you have or requests for additional copies of the enclosed
material may be directed to the undersigned at 1-800-438-0057.
Very truly yours,
First Chicago Trust Company of New York
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE COMPANY, THE DEPOSITARY OR THE INFORMATION
AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
MATERIAL ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER, OTHER THAN THE
MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY CONTAINED IN SUCH
MATERIAL.
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Offer to Purchase for Cash
Up to 500,000 Shares of its Common Stock
At $71.00 Net Per Share
To Our Clients: December 4, 1995
Enclosed for your consideration are the Offer to Purchase dated December 4,
1995, and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by Fund American Enterprises Holdings,
Inc., a Delaware corporation (the "Company"), pursuant to which the Company is
inviting its shareholders to tender shares of its Common Stock, par value $1.00
per share ("Shares"), at a price of $71.00 per Share (such price, or any other
price set forth in an amendment to the Offer to Purchase referred to below being
the "Purchase Price"), net to the seller in cash, upon the terms and subject to
the conditions of the Offer.
All Shares properly tendered and not withdrawn will be purchased at the Purchase
Price, net to the seller in cash, upon the terms and subject to the conditions
of the Offer, including the proration provisions thereof. All Shares not
purchased pursuant to the Offer, including Shares not purchased because of
proration, will be returned to the tendering shareholders at the Company's
expense as promptly as practicable following the Expiration Date (as defined in
Section 1 of the Offer to Purchase). The Company reserves the right, in its sole
discretion, to purchase more than 500,000 Shares pursuant to the Offer. See
Section 1 of the Offer to Purchase.
We are the holder of record of Shares held for your account. As such, we are the
only ones who can tender your Shares, and then only pursuant to your
instructions. The Letter of Transmittal is for your information only and cannot
be used by you to tender Shares we hold for your account.
Please instruct us as to whether you wish us to tender any of or all the Shares
we hold for your account upon the terms and subject to the conditions of the
Offer.
We call your attention to the following:
1. You may tender any portion of or all your Shares as indicated in the
attached instruction form.
2. The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions. See
Section 6 of the Offer to Purchase.
3. The Offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on Tuesday, January 2, 1996, unless the Offer
is extended.
4. The Offer is for 500,000 Shares, representing approximately 6.6% of the
Shares outstanding as of December 1, 1995, and approximately 5.8% of the
sum of the Shares then outstanding and all Shares which may be issued upon
the exercise of outstanding employee stock options and warrants as of such
date.
5. Tendering shareholders will not be obligated to pay any brokerage
commissions, solicitation fees, or, subject to Instruction 6 of the Letter
of Transmittal, any stock transfer taxes with respect to the transfer and
sale of Shares to the Company pursuant to the Offer.
6. If you owned beneficially as of the close of business on November 27, 1995,
and will continue to own beneficially until the Expiration Date (as defined
in the Offer to Purchase), an aggregate of fewer than 100 Shares and you
are tendering all such Shares and do not withdraw such Shares before the
Expiration Date and complete the box captioned "Odd Lots" in the attached
instruction form, the Company, upon the terms and subject to the conditions
of the Offer, will accept all such Shares for purchase before proration, if
any, of the purchase of other Shares tendered.
If you wish to have us tender any of or all your Shares, please so instruct us
by completing, executing and returning to us the attached instruction form. An
envelope to return your instruction form to us is enclosed. If you authorize us
to tender your Shares, we will tender all such Shares unless you specify
otherwise on the instruction form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT
A TENDER ON YOUR BEHALF BEFORE THE EXPIRATION DATE. THE OFFER, PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
TUESDAY, JANUARY, 2, 1996, UNLESS THE OFFER IS EXTENDED.
As described in Section 1 of the Offer to Purchase and subject to matters
described therein, if the number of Shares properly tendered and not withdrawn
before the Expiration Date is greater than 500,000 Shares (or such greater
number of Shares as the Company may elect to purchase pursuant to the Offer),
the Company, upon the terms and subject to the conditions of the Offer, will
accept Shares for purchase in the following order of priority:
(a) first, all Shares properly tendered and not withdrawn before the Expiration
Date by any shareholder who owned beneficially as of the close of business
on November 27, 1995, and who continues to own beneficially until the
Expiration Date an aggregate of fewer than 100 Shares and who tenders all
Shares beneficially owned by such shareholder (partial tenders will not
qualify for this preference); and
(b) then, after purchase of all the foregoing Shares, all other Shares properly
tendered and not withdrawn before the Expiration Date on a pro rata basis,
if necessary (with adjustments to avoid purchases of fractional Shares).
The Offer is not being made to, nor will the Company accept tenders from or on
behalf of, owners of Shares residing in any jurisdiction in which the making of
the Offer or its acceptance would not be in compliance with the laws of such
jurisdiction.
Instructions
With Respect to the
Offer to Purchase for Cash
Up to 500,000 Shares of Common Stock
of
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to
Purchase dated December 4, 1995, and the related Letter of Transmittal (which
together constitute the "Offer"), in connection with the Offer by Fund American
Enterprises Holdings, Inc., a Delaware corporation (the "Company"), to purchase
for cash up to 500,000 shares of its Common Stock, par value $1.00 per share
("Shares"), at a price of $71.00 per Share (or such other price that may be set
forth in an amendment to the Offer), net to the seller in cash, upon the terms
and subject to the conditions of the Offer.
The undersigned hereby instruct(s) you to tender to the Company the number of
Shares indicated below or, if no number is indicated, all Shares you hold for
the account of the undersigned, upon the terms and subject to the conditions of
the Offer.
Aggregate number of Shares to be tendered by you for the account of the
undersigned:*
__________ Shares
*Unless otherwise indicated, all the Shares held for the account of the
undersigned will be tendered.
--------------------------------------------------------------
ODD LOTS
[_] By checking this box, the undersigned represents that
the undersigned beneficially owned as of the close of
business on November 27, 1995, and will continue to own
beneficially until the Expiration Date an aggregate of fewer
than 100 Shares, and is tendering all such Shares.
--------------------------------------------------------------
--------------------------------------------------------------
SIGNATURE BOX
Signature(s) _______________________________________________
____________________________________________________________
Dated ______________________________________________________
Name(s) and Address(es) ____________________________________
(Please Print)
____________________________________________________________
Area Code and Telephone Number
Taxpayer Identification or
Social Security Number______________________________________
--------------------------------------------------------------
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated December 4, 1995, and the related Letter of Transmittal, and is not
being made to (nor will tenders be accepted from or on behalf of) holders
of Shares residing in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
by
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Up to 500,000 Shares of Its Common Stock At
$71.00 Net Per Share
Fund American Enterprises Holdings, Inc., a Delaware corporation (the
"Company"), is inviting its shareholders to tender shares of its Common Stock,
par value $1.00 per share ("Shares"), to the Company, at $71.00 per Share, net
to the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated December 4, 1995 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which together constitute the "Offer"). For
purposes of the Offer, the Company shall be deemed to have accepted for payment
(and thereby purchased), subject to proration, Shares which are tendered and not
withdrawn when, as and if the Company gives oral or written notice to the
Depositary of the Company's acceptance of such Shares for payment pursuant to
the Offer. The Company reserves the right, in its sole discretion, to purchase
more than 500,000 Shares pursuant to the Offer.
The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions. See
Section 6 of the Offer to Purchase.
---------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY,
JANUARY 2, 1996, UNLESS THE OFFER IS EXTENDED.
---------------------------------------------------------------
Neither the Company nor its Board of Directors makes any recommendation as
to whether any shareholder should tender any or all of such shareholder's Shares
pursuant to the Offer. Each shareholder must make such shareholder's own
decision whether to tender Shares and, if so, how many Shares to tender.
The Company reserves the right, in its sole discretion, at any time or from
time to time, to extend the period of time during which the Offer is open by
giving oral or written notice of such extension to the Depositary and making a
public announcement thereof. See Sections 1 and 15 of the Offer to Purchase.
If the number of Shares properly tendered and not withdrawn before 12:00
midnight, New York City time, on Tuesday, January 2, 1996, or the latest time
and date at which the Offer, if extended by the Company, shall expire (the
"Expiration Date"), is greater than 500,000 Shares (or such greater number of
Shares as the Company may elect to purchase pursuant to the Offer), the Company,
upon the terms and subject to the conditions of the Offer, will accept Shares
for purchase in the following order of priority: (a) first, all Shares properly
tendered and not withdrawn before the Expiration Date by any shareholder who
beneficially owned as of the close of business on November 27, 1995, and who
continues to own beneficially until the Expiration Date an aggregate of fewer
than 100 Shares and who: (1) tenders all Shares beneficially owned by such
shareholder (partial tenders will not qualify for this preference), and (2)
completes the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery; and (b) then, after purchase
of all the foregoing Shares, all other Shares properly tendered and not
withdrawn before the Expiration Date on a pro rata basis, if necessary (with
adjustments to avoid purchases of fractional Shares).
Except as otherwise provided in Section 4 of the Offer to Purchase, a
tender of Shares pursuant to the Offer is irrevocable. Shares tendered pursuant
to the Offer may be withdrawn at any time before the Expiration Date and, unless
theretofore accepted for payment by the Company, after 12:00 midnight, New York
City time, on Tuesday, January 30, 1996. See Section 4 of the Offer to Purchase.
For a withdrawal to be effective, the Depositary must timely receive (at
one of its addresses set forth on the back cover of the Offer to Purchase) a
written or facsimile transmission notice of withdrawal. Any notice of withdrawal
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and, if different from the name of the
person who tendered the Shares, the name of the registered owner of such Shares.
If the certificates have been delivered or otherwise identified to the
Depositary, then, prior to the release of such certificates, the tendering
shareholder must also submit the serial numbers shown on the particular
certificates evidencing such Shares and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution (as defined in Section
3 of the Offer to Purchase) (except in the case of Shares tendered by an
Eligible Institution). If Shares have been delivered pursuant to the procedure
for book-entry transfer set forth in Section 3 of the Offer to Purchase, the
notice of withdrawal must specify the name and number of the account at the
applicable Book-Entry Transfer Facility (as defined in Section 3 of the Offer to
Purchase) to be credited with the withdrawn Shares and otherwise comply with the
procedures of such facility. A withdrawal of a tender of Shares may not be
rescinded and Shares properly withdrawn shall thereafter be deemed to be not
validly tendered for purposes of the Offer. Withdrawn Shares, however, may be
retendered before the Expiration Date by again following any of the procedures
described in Section 3 of the Offer to Purchase.
The Offer to Purchase and the Letter of Transmittal contain important
information that should be read before any decision is made with respect to the
Offer. These documents are being mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
The information required to be disclosed by Rule 13e-4(d)(1) of the General
Rules and Regulations under the Securities Exchange Act of 1934 is contained in
the Offer to Purchase and is incorporated herein by reference.
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone number set forth below. Requests for copies
of the Offer to Purchase, Letter of Transmittal, Notice of Guaranteed Delivery
or other tender offer materials may be directed to the Information Agent and
such copies will be furnished promptly at the Company's expense. Shareholders
may also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer.
The Depositary and the Information Agent for the Offer is:
First Chicago Trust Company of New York
P.O. Box 2559, STE 4660 - FA
Jersey City, New Jersey 07303-2559
1-800-438-0057
Requests for materials may be telecopied to
201-222-4720
or
201-222-4721
December 4, 1995
- --------
Fund PRESS
American RELEASE
- --------
CONTACT: Terry Baxter
802-649-2640
FUND AMERICAN ANNOUNCES CASH TENDER OFFER
FOR UP TO 500,000 SHARES AT $71.00 NET
NORWICH, Vermont, November 28, 1995 - The Board of Directors of Fund American
Enterprises Holdings, Inc. has approved a cash tender offer to purchase up to
500,000 shares of its common stock at a price of $71.00 net per share. The
tender offer is expected to commence on Friday, December 1, 1995.
The Company's common stock closed yesterday on the New York Stock Exchange at
$66.25 per share.
The Offer will not be conditioned upon any minimum number of shares being
tendered. The Offer will be, however, subject to certain customary conditions.
If the Offer commences December 1st, the proration period and withdrawal rights
are expected to expire at 12:00 midnight, New York City time, on Friday,
December 29, 1995 unless the Offer is extended.
Neither the Company nor its Board of Directors makes any recommendations as to
whether any shareholder should participate in the Offer.
Fund American Enterprises Holdings, Inc.
The 1820 House / Main Street
Norwich VT 05055
(802)649-3633
(800)649-2240(FAX)
- --------
Fund PRESS
American RELEASE
- --------
CONTACT: Terry Baxter
802-649-2640
FUND AMERICAN REVISES COMMENCEMENT DATE
OF CASH TENDER OFFER FOR UP TO 500,000 SHARES
AT $71.00 NET
NORWICH, Vermont, November 29, 1995 - The Board of Directors of Fund American
Enterprises Holdings, Inc. announced yesterday that it has approved a cash
tender offer to purchase up to 500,000 shares of its common stock at a price of
$71.00 net per share. The tender offer period has been revised and is now
expected to commence on Monday, December 4, 1995 rather than Friday, December 1,
1995 as previously reported.
The Offer will not be conditioned upon any minimum number of shares being
tendered. The Offer will be, however, subject to certain customary conditions.
If the Offer commences December 4th, the proration period and withdrawal rights
are expected to expire at 12:00 midnight, New York City time, on Tuesday,
January 2, 1996 unless the Offer is extended.
Neither the Company nor its Board of Directors makes any recommendations as to
whether any shareholder should participate in the Offer.
Fund American Enterprises Holdings, Inc.
The 1820 House / Main Street
Norwich VT 05055
(802)649-3633
(802)649-2240(FAX)
- --------
Fund PRESS
American RELEASE
- --------
CONTACT: Terry Baxter
802-649-2640
FUND AMERICAN COMMENCES CASH TENDER OFFER
FOR UP TO 500,000 SHARES AT $71.00 NET
NORWICH, Vermont, December 4, 1995 - Fund American Enterprises Holdings, Inc.
today commenced its previously announced cash tender offer to purchase up to
500,000 shares of its common stock at a price of $71.00 per share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 4, 1995, and the related Letter of Transmittal
(which together constitute the "Offer").
The Offer is not conditioned upon any minimum number of shares being tendered.
The Offer is, however, subject to certain customary conditions. The Offer,
proration period and withdrawal rights are scheduled to expire at 12:00
midnight, New York City time, on Tuesday, January 2, 1996 unless the Offer is
extended. The Company has reserved the right to purchase more than 500,000
shares in the Offer.
First Chicago Trust Company of New York is the Information Agent for the Offer
and can be reached at 1-800-438-0057.
None of the Company, its Board of Directors or the Information Agent makes any
recommendation as to whether any shareholder should participate in the Offer.
Fund American Enterprises Holdings, Inc.
The 1820 House / Main Street
Norwich VT 05055
(802)649-3633
(802)649-2240(FAX)
