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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)*
Financial Security Assurance Holdings Ltd.
________________________________________________________________________________
(Name of Issuer)
Common Stock, par value $.01 per share
________________________________________________________________________________
(Title of Class of Securities)
31769P 10 0
_____________________________
(CUSIP Number)
Michael S. Paquette, Vice President and Controller
Fund American Enterprises Holdings, Inc.,
80 South Main Street, Hanover, NH 03755
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 17, 1996
_____________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(b)(3) or (4), check
the following box / /.
Check the following box if a fee is being paid with the statement /X/.
(A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1; and
(2) has filed no amendment subsequent thereto reporting beneficial
ownership of five percent or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties to
whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 31769P 10 0 Page 2 of 34 Pages
________________________ _____________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fund American Enterprises Holdings, Inc.
IRS Identification No.: 94-2708455
________________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
________________________________________________________________________________
3. SEC USE ONLY
________________________________________________________________________________
4. SOURCE OF FUNDS
WC
________________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
________________________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 1,000,000
OWNED BY
EACH
REPORTING 8. SHARED VOTING POWER
PERSON
WITH 7,020,807*
________________________________________________________________________________
9. SOLE DISPOSITIVE POWER
1,000,000
________________________________________________________________________________
10. SHARED DISPOSITIVE POWER
7,020,807*
________________________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,020,807 shares*
________________________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
Not Applicable
________________________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.9%
________________________________________________________________________________
14. TYPE OF REPORTING PERSON*
HC, CO
________________________________________________________________________________
* The reporting person owns of record 1,000,000 shares, and
beneficially owns (through affiliates) 2,460,200 shares, of common
stock of Financial Security Assurance Holdings Ltd. The amounts
shown in rows (8), (10), (11) and (13) also include (i) 1,893,940
shares subject to an option and voting trust, (ii) 666,667 shares
subject to an option and (iii) 2,000,000 shares of Series A
Convertible Redeemable Preferred Stock of Financial Security
Assurance Holdings Ltd., convertible at the option of the holder
thereof into Financial Security Assurance Holdings Ltd. common stock,
in each case as further described herein.
SCHEDULE 13D
CUSIP No. 31769P 10 0 Page 3 of 34 Pages
________________________ _____________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
White Mountains Holdings, Inc.
IRS Identification No.: 02-0477315
________________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
________________________________________________________________________________
3. SEC USE ONLY
________________________________________________________________________________
4. SOURCE OF FUNDS
Not Applicable
________________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /
/
________________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New Hampshire
________________________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
__________________________________________________________________
EACH
REPORTING 8. SHARED VOTING POWER
PERSON
WITH 7,020,807*
________________________________________________________________________________
9. SOLE DISPOSITIVE POWER
0
________________________________________________________________________________
10. SHARED DISPOSITIVE POWER
7,020,807*
________________________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,020,807 shares*
________________________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
________________________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.7%
________________________________________________________________________________
14. TYPE OF REPORTING PERSON*
HC, CO
________________________________________________________________________________
* The reporting person owns of record 2,328,600 shares, and
beneficially owns (through affiliates) 131,600 shares, of common
stock of Financial Security Assurance Holdings Ltd. The amounts
shown in rows (8), (10), (11) and (13) also include (i) 1,893,940
shares subject to an option and voting trust, (ii) 666,667 shares
subject to an option and (iii) 2,000,000 shares of Series A
Convertible Redeemable Preferred Stock of Financial Security
Assurance Holdings Ltd., convertible at the option of the holder
thereof into Financial Security Assurance Holdings Ltd. common stock,
in each case as further described herein.
SCHEDULE 13D
CUSIP No. 31769P 10 0 Page 4 of 34 Pages
________________________ _____________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charter Indemnity Company
IRS Identification No.: 75-1636168
________________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
________________________________________________________________________________
3. SEC USE ONLY
________________________________________________________________________________
4. SOURCE OF FUNDS
Not Applicable
________________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
________________________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH
REPORTING 8. SHARED VOTING POWER
PERSON
WITH 82,000
________________________________________________________________________________
9. SOLE DISPOSITIVE POWER
0
________________________________________________________________________________
10. SHARED DISPOSITIVE POWER
82,000
________________________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
82,000 shares
________________________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
________________________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
00.3%
________________________________________________________________________________
14. TYPE OF REPORTING PERSON*
IC, CO
________________________________________________________________________________
SCHEDULE 13D
CUSIP No. 31769P 10 0 Page 5 of 34 Pages
________________________ _____________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Valley Insurance Company
IRS Identification No.: 94-2906362
________________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
________________________________________________________________________________
3. SEC USE ONLY
________________________________________________________________________________
4. SOURCE OF FUNDS
Not Applicable
________________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
California
________________________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH
REPORTING 8. SHARED VOTING POWER
PERSON
WITH 29,000
________________________________________________________________________________
9. SOLE DISPOSITIVE POWER
0
________________________________________________________________________________
10. SHARED DISPOSITIVE POWER
29,000
________________________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
29,000 shares
________________________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
________________________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
00.1%
________________________________________________________________________________
14. TYPE OF REPORTING PERSON*
IC, CO
________________________________________________________________________________
SCHEDULE 13D
CUSIP No. 31769P 10 0 Page 6 of 34 Pages
________________________ ______________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
White Mountains Insurance Company
IRS Identification No.: 02-0478119
________________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
________________________________________________________________________________
3. SEC USE ONLY
________________________________________________________________________________
4. SOURCE OF FUNDS
Not Applicable
________________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New Hampshire
________________________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH
REPORTING 8. SHARED VOTING POWER
PERSON
WITH 20,600
________________________________________________________________________________
9. SOLE DISPOSITIVE POWER
0
________________________________________________________________________________
10. SHARED DISPOSITIVE POWER
20,600
________________________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
20,600 shares
________________________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
________________________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
00.1%
________________________________________________________________________________
14. TYPE OF REPORTING PERSON*
IC, CO
________________________________________________________________________________
This Amendment No. 5 amends, supplements and restates a
Schedule 13D dated May 13, 1994, as amended by Amendment No. 1 dated
September 2, 1994, Amendment No. 2 dated September 14, 1994, Amendment
No. 3 dated January 17, 1995 and Amendment No. 4 dated November 13, 1995
(as so amended, the "Schedule 13D"), filed with the Securities and
Exchange Commission by Fund American Enterprises Holdings, Inc., a
Delaware corporation ("Fund American"), with respect to the Common
Stock, par value $.01 per share ("Common Stock"), of Financial Security
Assurance Holdings Ltd., a New York corporation (the "Issuer").
Item 1. Security and Issuer.
___________________
The class of equity securities to which this Amendment
No. 5 relates is the Common Stock of the Issuer. The address of the
principal executive offices of the Issuer is 350 Park Avenue, New
York, New York 10022.
Item 2. Identity and Background.
_______________________
The persons filing this Amendment No. 5 are Fund
American, White Mountains Holdings, Inc., a New Hampshire corporation
("White Mountains"), Charter Indemnity Company, a Texas insurance
corporation ("Charter"), Valley Insurance Company, a California
insurance corporation ("Valley"), and White Mountains Insurance
Company, a New Hampshire insurance corporation ("WMIC" and,
collectively together with Fund American, White Mountains, Charter
and Valley, the "Reporting Persons"). White Mountains,
Charter, Valley and WMIC are each direct or indirect wholly owned
subsidiaries of Fund American.
Fund American and White Mountains are financial services
holding companies, and WMIC is a property and casualty insurance
company. The principal business and office address of each of Fund
American, White Mountains and WMIC is 80 South Main Street, Hanover,
New Hampshire 03755.
Charter and Valley are each property and casualty
insurance companies. The principal business and office address of
Charter is 12001 North Central Expressway, Dallas, Texas 75222-3687.
The principal business and office address of Valley is 2450 14th
Avenue S.E., Albany, Oregon 97321.
Information with respect to each executive officer and
director of each of the Reporting Persons, including each such
officer's and director's name, residence or business address, present
principal occupation or employment and the name, principal business
and address of any corporation or other organization in which such
employment is conducted, and citizenship, is set forth in Annex A
attached to this Amendment No. 5, which Annex A is incorporated
herein by reference.
None of the Reporting Persons nor, to the knowledge of
the Reporting Persons, any executive officer or director of any of
the Reporting Persons has, during the last five years, (i) been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a
result of such proceedings was or is subject to a judgment, decree or
final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
_________________________________________________
The amount of funds used by Fund American in making the
purchase of the Common Shares described in Item 4 below consisted of
$40,000,000 in cash. The amount of funds used by Fund American in
making the purchase of the U S WEST Preferred Stock, the USWCC
Options and the FSAH Preferred Stock described in Item 4 below
consisted of $50,700,000 in cash. The amount of funds used by Fund
American in making the purchases of additional shares of Common Stock
on January 17, 1995, January 27, 1995 and June 17, 1996, as described
in Item 4 below, consisted of $2,473,800, $3,135,000 and $26,500,000,
respectively, in cash. The source of all such funds was current
assets of Fund American. No part of any such funds was represented
by funds or other consideration borrowed or otherwise obtained for
the purpose of acquiring, holding, trading or voting such securities.
As further described in Item 4 below, Fund American has
caused all of the foregoing securities (other than the shares of
Common Stock purchased on June 17, 1996) to be transferred to the
other Reporting Persons.
Item 4. Purpose of Transaction.
______________________
On May 13, 1994, Fund American purchased 2,000,000 shares
of Common Stock (the "Common Shares") from U S WEST Capital
Corporation, a Colorado corporation ("USWCC") and a wholly owned
subsidiary of U S WEST, Inc., a Colorado corporation ("U S WEST"),
pursuant to a Securities Purchase Agreement dated April 10, 1994, as
amended pursuant to an Amendment to Securities Purchase Agreement
dated May 6, 1994 (collectively, as so amended, the "Securities
Purchase Agreement"), among Fund American, U S WEST, USWCC, and the
Issuer. A copy of the Securities Purchase Agreement, together with
the exhibits and schedules thereto, is attached as Exhibit A to the
Schedule 13D and is incorporated herein by reference; all
descriptions of the Securities Purchase Agreement (or any provisions
thereof) set forth herein are summaries only and are qualified in
their entirety by reference to the full text of the Securities
Purchase Agreement contained in Exhibit A to the Schedule 13D.
The Common Shares were purchased by Fund American for
investment purposes at a cash purchase price of $20.00 per share, or
an aggregate purchase price of $40,000,000, in connection with, and
at the consummation of, an initial public offering of Common Stock
(the "IPO"). The per share purchase price paid by Fund American for
such shares was equal to the initial public offering price per share
of Common Stock sold in the IPO.
In connection with the IPO, Fund American entered into a
registration rights agreement dated May 13, 1994 with USWCC and the
Issuer (the "Registration Rights Agreement"). A copy of the
Registration Rights Agreement is attached as Exhibit B to the
Schedule 13D and is incorporated herein by reference. Under the
Registration Rights Agreement, Fund American and USWCC each have the
right, upon demand at any time during the ten-year period following
the consummation of the IPO, to require the Issuer to register for
offering and sale any and all shares of Common Stock
beneficially owned by Fund American or USWCC, as the case may be
(including, without limitation, the Common Shares, and the shares subject
to purchase under the USWCC Options and the FSAH Preferred Stock, each
as described below). Fund American and USWCC are each entitled
thereunder to four such demand registrations (but not more than one
in any three-month period). Each of Fund American and USWCC also has
"piggyback" rights to include its shares of Common Stock in any
registration of Common Stock for any public offering proposed by the
Issuer. The Issuer has agreed thereunder to indemnify Fund American
and USWCC for certain liabilities (including, without limitation,
liabilities under the Securities Act of 1933, as amended (the
"Securities Act")) in connection with sales of securities pursuant to
registration statements prepared under the Registration Rights
Agreement.
In connection with the IPO, Fund American also entered
into two "lock-up" letter agreements with the underwriters of the IPO
(copies of which are attached as Exhibit C to the Schedule 13D and
are incorporated herein), which expired on November 2, 1994.
Pursuant to the Securities Purchase Agreement, Mr. John
J. Byrne, the Chairman and Chief Executive Officer of Fund American,
was appointed the Chairman of the Board of Directors of the Issuer,
effective upon the consummation of the IPO, and Mr. K. Thomas Kemp,
the Executive Vice President of Fund American, and Mr. Allan L.
Waters, the Senior Vice President and Chief Financial Officer of Fund
American, were appointed to serve as directors of the Issuer on
August 11, 1994.
On September 2, 1994, pursuant to the Securities Purchase
Agreement, Fund American acquired (i) from U S WEST, 50,000 shares
of a class of Series B Cumulative Redeemable Preferred Stock of U S WEST
(collectively, the "U S WEST Preferred Stock"), (ii) from USWCC, a
five-year option (the "Five-Year Option") to purchase up to 666,667
shares of Common Stock from USWCC at a purchase price of $23.50 per
share (subject to anti-dilutive adjustment) at any time from November
13, 1994 until May 13, 1999, and a ten-year option (the "Ten-Year
Option" and, collectively with the Five-Year Option, the "USWCC
Options") to purchase up to 1,893,940 shares (subject to reduction
under certain circumstances) of Common Stock from USWCC at a purchase
price of $26.40 per share (subject to anti-dilutive adjustment) at
any time until September 2, 2004, and (iii) from the Issuer,
2,000,000 shares of the Issuer's non-dividend paying Series A
Convertible Redeemable Preferred Stock, par value $.01 per share
(collectively, the "FSAH Preferred Stock"), convertible, at the
option of the holder on or after November 13, 1994, upon payment of a
conversion price of $29.65 per share, into an equal number of shares
of Common Stock (subject, in the case of each of the conversion price
and the number of underlying shares, to anti-dilutive adjustment).
Fund American acquired the foregoing securities for an aggregate
purchase price of $50,700,000, consisting of $50,000,000 paid for the
U S WEST Preferred Stock and the USWCC Options, together, and
$700,000 paid for the FSAH Preferred Stock.
Copies of (i) the U S WEST charter amendment relating to
the U S WEST Preferred Stock, (ii) the Five-Year Option, (iii) the
Ten-Year Option and (iv) the Issuer's charter amendment relating to
the FSAH Preferred Stock are attached as Exhibits E through H,
respectively, to the Schedule 13D and are incorporated herein by
reference.
The U S WEST Preferred Stock entitles the holder thereof
to cumulative quarterly dividends at the rate of $65.00 per annum per
share (subject to certain adjustments), and is subject to mandatory
redemption on September 2, 2004 out of legally available funds of U S
WEST at a redemption price of $1000.00 per share plus accrued and
unpaid dividends. U S WEST has the right, at its option, to redeem
all or any portion of the shares of U S WEST Preferred Stock, from
and after September 2, 1999 at specified redemption prices.
The FSAH Preferred Stock votes, together with the Common
Stock as a single class, on all matters upon which the holders of
Common Stock are entitled to vote, with each share of FSAH Preferred
Stock being entitled to vote the number of shares of Common Stock
into which it is then convertible. The holder of the FSAH Preferred
Stock is not entitled to receive dividends or other distributions of
any kind payable to shareholders of the Issuer, except that, in the
event of the liquidation, dissolution or the winding up of the
Issuer, the holder will be entitled to receive out of the assets of
the Issuer available therefor, before any distribution or payment is
made to the holders of Common Stock or to any other class of capital
stock of the Issuer ranking junior to the FSAH Preferred Stock,
liquidation payments in the amount of $0.35 per share. The FSAH
Preferred Stock is subject to mandatory redemption on May 13, 2004 at
a redemption price of $0.35 per share, and is not transferable except
to a majority-owned subsidiary of Fund American.
Concurrently with the foregoing purchase of U S WEST
Preferred Stock, USWCC Options and FSAH Preferred Stock on September
2, 1994, Fund American entered into a voting trust agreement (the
"Voting Trust Agreement") with USWCC and The First National Bank of
Chicago, as voting trustee thereunder (the "Voting Trustee"). A copy
of the Voting Trust Agreement is attached as Exhibit I to the
Schedule 13D and is incorporated herein by reference. Under the
Voting Trust Agreement, the 1,893,940 shares of Common Stock
deliverable upon the exercise in full of the Ten-Year Option were
deposited by USWCC into a voting trust administered by the Voting
Trustee, and Fund American has the right to direct the voting of such
1,893,940 shares prior to the exercise of the Ten-Year Option. USWCC
further agreed under the Voting Trust Agreement to deposit certain
additional shares into the voting trust under certain specified
circumstances. The Voting Trust Agreement will terminate on
September 2, 2004, or earlier under certain circumstances.
In addition, on September 2, 1994, Fund American entered
into a shareholders' agreement with USWCC and the Issuer, (the
"Shareholders Agreement"). A copy of the Shareholders Agreement is
attached as Exhibit J to the Schedule 13D, and is incorporated herein
by reference. Under the Shareholders Agreement, (i) Fund American
and USWCC agreed to use their best efforts to cause the Board of
Directors of the Issuer to consist of eleven directors, including
seven designees of Fund American (four of whom must be approved by
USWCC), the President/Chief Executive Officer of the Issuer, two
independent directors (within the meaning of the New York Stock
Exchange rules), and one senior employee of The Tokio
Marine and Fire Insurance Co., Ltd. (so long as such entity has the right
to designate a director under its stockholders agreement with USWCC),
and (ii) from and after the election of directors at the 1996 annual
meeting of shareholders of the Issuer, Fund American and USWCC have
agreed to use their best efforts to cause the Board of Directors of
the Issuer to consist of eleven directors, including seven designees
of Fund American of whom USWCC must approve a number determined (in
accordance with the table appearing on page 4 of the Shareholders
Agreement) on the basis of the relative "voting power" held by Fund
American and by USWCC on the date of nomination of such directors.
For purposes of the Shareholders Agreement, "voting power" means the
number of shares of Common Stock which a party and its subsidiaries
own outright or have the power to vote (excluding, in the case of
Fund American, the FSAH Preferred Stock and the votes relating
thereto).
Fund American and USWCC have agreed under the
Shareholders Agreement to use their best efforts to cause Mr. Byrne,
as a designee of Fund American not requiring approval of USWCC, to be
Chairman of the Board of Directors of the Issuer, so long as he is
able to serve. During the term of the Shareholders Agreement, Fund
American and USWCC are required to vote all voting securities of the
Issuer over which they exercise voting control in favor of the
election of all persons nominated as provided in such agreement.
The Shareholders Agreement prohibits the sale or other
transfer of any shares of Common Stock beneficially owned by Fund
American (except to a majority owned subsidiary of Fund American),
without the prior written consent of USWCC, until May 13, 1997.
Such consent is not required if the number of shares of Common Stock
owned by USWCC (excluding those shares deliverable upon exercise of the
Ten-Year Option) is less than 20% of the number of shares of Common
Stock then outstanding.
The Shareholders Agreement will terminate upon the
earliest to occur of (i) the cessation of the existence of the
Issuer, (ii) September 2, 1999, (iii) the written agreement of Fund
American and USWCC therefor, (iv) the sale, disposition or other
transfer of shares of Common Stock by USWCC that causes USWCC
immediately thereafter to own outright (excluding shares of Common
Stock deliverable upon exercise of the Ten-Year Option) less than 15%
of the outstanding shares of Common Stock, or (v) such time as USWCC,
Fund American and their permitted transferees own less than 50% of
the outstanding shares of Common Stock.
Pursuant to the Securities Purchase Agreement, U S WEST
agreed to guarantee the performance by USWCC of its obligations
thereunder and under all other instruments and agreements entered
into pursuant thereto, including the USWCC Options. USWCC is,
however, permitted to assign its obligations under the Five-Year
Option under certain circumstances, in which case such guarantee of
U S WEST will no longer apply.
Under the Securities Purchase Agreement, during the
period from September 2, 1994 until November 13, 1995, Fund American
had (i) a right of first offer with respect to any proposed sale by
USWCC of Common Stock (or securities convertible into or exchangeable
for Common Stock) to any third party and (ii) a call right to
purchase from USWCC up to 9,000,000 shares of
Common Stock. Such right of first offer and call right each expired on
November 13, 1995 without being exercised.
On January 17, 1995, Fund American purchased 130,200
shares of Common Stock at a price of $19.00 per share, or an
aggregate purchase price of $2,473,800, in an open market
transaction.
On January 27, 1995, Fund American purchased 165,000
shares of Common Stock at a price of $19.00 per share, or an
aggregate purchase price of $3,135,000, in an open market
transaction.
On or about December 26, 1995, Fund American made a
capital contribution to White Mountains of the USWCC Options, the
FSAH Preferred Stock and 2,460,200 shares of Common Stock, and White
Mountains in turn caused (i) 82,000 of such shares of Common Stock to
be transferred to Charter, (ii) 29,000 of such shares of Common Stock
to be transferred to Valley and (iii) 20,600 of such shares of Common
Stock to be transferred to WMIC.
On June 17, 1996, Fund American purchased 1,000,000
shares of Common Stock from USWCC at a price of $26.50 per share, or
an aggregate purchase price of $26,500,000, in a privately negotiated
transaction.
Except as set forth above, Fund American has no plans or
proposals which relate to or would result in:
(a) the acquisition by any person of additional
securities of the Issuer, or the disposition of securities of the
Issuer;
(b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Issuer or
any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of
the Issuer or any of its subsidiaries;
(d) any change in the present board or directors or
management of the Issuer, including any plans or proposals
to change the number or term of directors or to fill any
existing vacancies on the board;
(e) any material change in the present capitalization or
dividend policy of the Issuer;
(f) any other material change in the Issuer's business
or corporate structure;
(g) changes in the Issuer's charter, by-laws or
instruments corresponding thereto or other actions which may
impede the acquisition of control of the Issuer by any person;
(h) causing a class of securities of the Issuer to be
delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a
registered national securities association;
(i) a class of equity securities of the Issuer becoming
eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
____________________________________
(a) The Issuer has informed the Reporting Persons that
30,254,270 shares of Common Stock were outstanding on June 12,
1996. After giving effect to the conversion in full of the FSAH Preferred
Stock, 32,254,270 shares of Common Stock would have been outstanding
on such date, based on the foregoing information furnished by the
Issuer.
As of the date of this Amendment No. 5, Fund American
owns of record 1,000,000 shares of Common Stock and beneficially
owns, through the other Reporting Persons, 2,460,200 shares of Common
Stock and has the right to acquire beneficial ownership of (i)
1,893,940 shares of Common Stock pursuant to the Ten-Year Option,
(ii) 666,667 shares of Common Stock pursuant to the Five-Year Option,
and (iii) 2,000,000 shares of Common Stock upon conversion of the
FSAH Preferred Stock. Accordingly, as of the date hereof, Fund
American beneficially owns an aggregate of 8,020,807 shares of Common
Stock.
As of the date of this Amendment No. 5, White Mountains
owns of record 2,328,600 shares of Common Stock and beneficially
owns, through Charter, Valley and WMIC, 131,600 shares of Common
Stock and has the right to acquire the aforesaid numbers of shares of
Common Stock pursuant to the USWCC Options and upon conversion of the
FSAH Preferred Stock. Accordingly, as of the date hereof, White
Mountains beneficially owns an aggregate of 7,020,807 shares of
Common Stock.
As of the date of this Amendment No. 5, Charter, Valley
and WMIC own of record and beneficially 82,000, 29,000, and 20,600
shares of Common Stock, respectively.
Assuming that the Ten-Year Option and the Five-Year
Option are exercised in full, and the FSAH Preferred Stock is
converted in full, (i) such 8,020,807 shares beneficially owned by
Fund American represent approximately 24.9% (and the 2,460,200 shares
beneficially owned by Fund American through the other Reporting
Persons represents approximately 7.6%), (ii) such 7,020,807 shares
beneficially owned by White Mountains represent approximately 21.7%
(and the 131,600 shares beneficially owned by White Mountains through
Charter, Valley and WMIC represents approximately 0.4%) and (iii)
such 82,000, 29,000, and 20,600 shares of Common Stock beneficially
owned by Charter, Valley and WMIC, respectively, each represent less
than 1.0%, of the 32,254,270 shares of the Issuer's Common Stock
which would then be outstanding as aforesaid.
Assuming that the Ten-Year Option and the Five-Year
Option are exercised in full, and that none of the shares of the FSAH
Preferred Stock is converted, Fund American will beneficially own
6,020,807 shares and White Mountains will beneficially own 5,020,807
shares (in each case excluding the 2,000,000 shares issuable upon
conversion of the FSAH Preferred Stock in full) of the Issuer's
Common Stock. Such 6,020,807 shares represent approximately 19.9%,
and such 5,020,807 shares represent approximately 16.6%, and the
aforesaid numbers of shares beneficially owned by Charter, Valley and
WMIC, respectively, each represent less than 1.0%, of the 30,254,270
shares of the Issuer's Common Stock outstanding as aforesaid.
As of the date of this Amendment, the following persons
listed on Annex A to the Schedule 13D beneficially own the following
number of shares of Common Stock:
John J. Byrne 35,000 shares
Allan L. Waters 2,000 shares
K. Thomas Kemp 1,600 shares
Such numbers of shares each represent less than 1% of the outstanding
shares of Common Stock.
Except as set forth above, neither Fund American nor, to
its knowledge, any person listed on Annex A to the Schedule 13D
beneficially own any shares of Common Stock.
(b) Fund American has the sole power to vote and to
direct the vote of, and sole power to dispose and direct the
disposition of, 1,000,000 shares of Common Stock. Fund American
shares the power to vote or to direct the vote of, and shares the
power to dispose or to direct the disposition of, the remaining
7,020,807 shares of Common Stock specified in paragraph (a)
immediately above as beneficially owned by Fund American, with the
other Reporting Persons, in each case to the extent that any such
other Reporting Person also has beneficial ownership of any such
shares of Common Stock as described in paragraph (a) immediately
above.
As stated above, as of the date of this Amendment No. 5,
such shares beneficially owned by Fund American and White Mountains
include (i) 1,893,940 shares of which Fund American and White
Mountains together have the right to acquire beneficial ownership
pursuant to the Ten-Year Option (and which Fund American has the
right, under the Voting Trust Agreement, to direct the vote of prior
to the exercise of the Ten-Year Option), (ii) 666,667 shares of which
Fund American and White Mountains together have the right to acquire
beneficial ownership pursuant to the Five-Year Option, and (iii)
2,000,000 shares of which Fund American and White
Mountains together have the right to acquire beneficial ownership
upon conversion of the FSAH Preferred Stock.
Each of Mr. Byrne, Mr. Kemp and Mr. Waters has the sole
power to vote or to direct the vote of, and the sole power to dispose
or direct the disposition of, the shares of Common Stock specified in
paragraph (a) immediately above as beneficially owned by him.
(c) As further described in Item 4 above, Fund American
purchased (i) the Common Shares from USWCC on May 13, 1994, (ii)
130,200 shares of Common Stock at a price of $19.00 per share in an
open market transaction on January 17, 1995, (iii) 165,000 shares of
Common Stock at a price of $19.00 per share in an open market
transaction on January 27, 1995, and (iv) 1,000,000 shares of Common
Stock from USWCC at a price of $26.50 per share in a privately
negotiated transaction on June 17, 1996. As further described in
Item 4 above, subsequent thereto, Fund American caused the Common
Shares and the 295,200 shares of Common Stock purchased on January
17, 1995 to be contributed to the other Reporting Persons.
Mr. Byrne acquired (i) 10,000 shares of Common Stock on
May 13, 1994 at the initial public offering price of $20.00 per share
directly from an underwriter of the IPO, (ii) 4,000 shares of Common
Stock on August 18, 1994 in an open market transaction at a price of
$21.00 per share, and an additional 1,000 shares of Common Stock on
the same date in an open market transaction at a price of $20.75 per
share, and (iii) 20,000 shares of Common Stock on
February 1, 1996 in an open market transaction at a price of $24.63
per share.
Mr. Waters acquired his 2,000 shares of Common Stock, on
May 13, 1994 at the initial public offering price of $20.00 per share
directly from an underwriter of the IPO. Mr. Kemp acquired his 1,600
shares of Common Stock in open market transactions in 1995.
(d) No other person is known by any of the Reporting
Persons to have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, any
shares of Common Stock beneficially owned by the Reporting Persons or
the aforesaid shares of Common Stock purchased by Messrs. Byrne, Kemp
or Waters.
(e) Not applicable.
Item 1. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of
the Issuer.
___________________________________________
Pursuant to a letter agreement dated February 2, 1994
between USWCC and Fund American (the "Confidentiality Agreement"),
USWCC and the Issuer made available to Fund American and its
representatives certain information concerning the Issuer and its
subsidiaries, and Fund American agreed, subject to certain conditions
set forth in the Confidentiality Agreement, to keep such information
confidential. A copy of the Confidentiality Agreement is attached as
Exhibit D to the Schedule 13D and is incorporated herein by reference.
Fund American retained the financial advisory services of
Lehman Brothers Inc. in connection with the transactions pursuant to
the Securities Purchase Agreement described in the Schedule 13D. In
consideration for such services, Fund American paid to Lehman
Brothers Inc. an agreed upon fee.
Other than as described above (including, without
limitation, under Item 4 above), none of the Reporting Persons nor,
to the knowledge of the Reporting Persons, any executive officer or
director of any of the Reporting Persons has any contracts,
arrangements, understandings or relationships (legal or otherwise)
with each other or with any other person with respect to any securities
of the Issuer, including but not limited to transfer or voting of any
securities of the Issuer, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits
or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
________________________________
Annex A Directors and Executive Officers of the Reporting
Persons
Exhibit A-1 Securities Purchase Agreement dated April 10, 1994
among Fund American Enterprises Holdings, Inc., U S
WEST, Inc., U S WEST Capital Corporation and Financial
Security Assurance Holdings Ltd.
Exhibit A-2 Amendment to Securities Purchase Agreement dated May 6,
1994 among Fund American Enterprises Holdings, Inc., U S
WEST, Inc., U S WEST Capital Corporation and Financial
Security Assurance Holdings Ltd.
Exhibit B Registration Rights Agreement dated May 13, 1994
among Financial Security Assurance Holdings Ltd.,
Fund American Enterprises Holdings, Inc. and U S WEST
Capital Corporation
Exhibit C Letter agreements, each dated May 13, 1994, between
Fund American Enterprises Holdings, Inc. and the U.S. and
international representatives of the several underwriters
identified therein
Exhibit D Confidentiality letter agreement dated February 2,
1994 between U S WEST Capital Corporation and Fund American
Enterprises Holdings, Inc.
Exhibit E Certificate of Designations of Series B Cumulative
Redeemable Preferred Stock, $1.00 par value, of U S WEST,
Inc., as filed with the Colorado Secretary of State on
September 1, 1994
Exhibit F Option Certificate A-1 for Purchase of 666,667
shares of Common Stock of Financial Security Assurance
Holdings Ltd. dated September 2, 1994
Exhibit G Option Certificate B-1 for Purchase of 1,893,940
shares of Common Stock of Financial Security Assurance
Holdings Ltd. dated September 2, 1994
Exhibit H Certificate of Amendment of the Amended and
Restated Certificate of Incorporation of Financial
Security Assurance Holdings Ltd. establishing the Series A
Convertible Redeemable Preferred Stock, $0.01 par value,
of Financial Security Assurance Holdings Ltd., as filed by
the New York Department of State on May 16, 1994
Exhibit I Voting Agreement dated September 2, 1994 among Fund
American Enterprises Holdings, Inc., U S WEST Capital
Corporation and The First National Bank of Chicago
Exhibit J Shareholders' Agreement dated September 2, 1994
among Financial Security Assurance Holdings Ltd., U S WEST
Capital Corporation and Fund American Enterprises Holdings,
Inc.
Exhibit K Joint Filing Agreement among the Reporting Persons
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
Amendment is true, complete and correct.
Date: June 24, 1996 FUND AMERICAN ENTERPRISES
HOLDINGS, INC.
By: /s/ Michael S. Paquette
___________________________
Michael S. Paquette
Vice President
WHITE MOUNTAINS HOLDINGS, INC.
By: /s/ Michael S. Paquette
___________________________
Michael S. Paquette
Vice President
CHARTER INDEMNITY COMPANY
By: /s/ Daniel A. Post
________________________
Daniel A. Post
President
VALLEY INSURANCE COMPANY
By: /s/ Daniel A. Post
________________________
Daniel A. Post
President
WHITE MOUNTAINS INSURANCE COMPANY
By: /s/ Michael S. Paquette
________________________
Michael S. Paquette
Vice President
ANNEX A
Following is a list of the directors and executive officers of
Fund American Enterprises Holdings, Inc. ("Fund American"), Charter
Indemnity Company ("Charter"), White Mountains Holdings, Inc. ("White
Mountains"), White Mountains Insurance Company ("WMIC") and Valley
Insurance Company ("Valley") setting forth the business address and
present principal occupation or employment (and the name, principal
business and address of any corporation or organization in which such
employment is conducted) of each such person. Each such person is a
citizen of the United States of America.
Present
Name and Principal Occupation
Business Address Office or Employment
- ---------------------- --------------- --------------------
Fund American
Dennis P. Beaulieu Corporate Secretary Corporate Secretary
Fund American Enterprises of Fund American; of Fund American
Holdings, Inc. Vice President,
80 South Main Street Secretary and
Hanover, NH 03755 Director of White
Mountains; Secretary,
Treasurer and Director
of WMIC
John J. Byrne Chairman of the Chairman of the Board,
Fund American Enterprises Board, President & President & Chief
Holdings, Inc. Chief Executive Executive Officer of
80 South Main Street Officer of Fund Fund American
Hanover, NH 03755 American; Chairman
of the Board of
White Mountains
Howard L. Clark Director of Fund Retired
200 Park Avenue American
Suite 4501
New York, NY 10166
Howard L. Clark, Jr. Director of Fund Vice Chairman of
Lehman Brothers Holdings American Lehman Brothers
Inc. Holdings Inc.
American Express Tower
New York, NY 10128
Robert P. Cochran Director of Fund President & Chief
Financial Security American and Executive Officer of
Assurance Holdings Ltd. White Mountains Financial Security
350 Park Avenue Assurance Holdings
New York, NY 10022 Ltd.
George J. Gillespie, III Director of Fund Partner in Cravath,
Cravath, Swaine & Moore American Swaine & Moore
825 Eighth Avenue
New York, NY 10019
K. Thomas Kemp Executive Vice Executive Vice
Fund American Enterprises President of Fund President of
Holdings, Inc. American; Chief Fund American
80 South Main Street Executive Officer,
Hanover, NH 03755 President and
Director of White
Mountains; Chairman
of the Board of
Charter, Valley and
WMIC
Gordon S. Macklin Director of Fund Chairman of White
8212 Burning Tree Road American River Corporation
Bethesda, MD 20817
Michael S. Paquette Vice President & Vice President &
Fund American Enterprises Controller of Fund Controller of Fund
Holdings, Inc. American, White American
80 South Main Street Mountains and WMIC;
Hanover, NH 03755 Director of White
Mountains and WMIC
Allan L. Waters Senior Vice Senior Vice President &
Fund American Enterprises President & Chief Chief Financial Officer
Holdings, Inc. Financial Officer of of Fund American
80 South Main Street Fund American and
Hanover, NH 03755 White Mountains;
Director of White
Mountains and WMIC
Arthur Zankel Director of Fund Co-Managing Partner
First Manhattan Co. American First Manhattan Co.
437 Madison Ave.
New York, NY 10022
White Mountains
Terry L. Baxter President and President and
Fund American Secretary of Fund Secretary of Fund
Enterprises, Inc. American Enterprises American Enterprises,
The 1820 House Inc.; Director of Inc.
Main Street White Mountains and
Norwich, VT 05055 WMIC
Dennis P. Beaulieu
(see above) (see above) (see above)
John J. Byrne
(see above) (see above) (see above)
Patrick M. Byrne Director of White Chairman, Chief
Centricut, LLC Mountains Executive Officer
Two Technology Drive and President of
Suite Three Centricut, LLC
Lebanon, NH 03784
Robert P. Cochran
(see above) (see above) (see above)
Morgan W. Davis Senior Vice President and Chief
White Mountains President, Chief
Insurance Company Operating Officer
80 South Main Street and Director of
Hanover, NH 03755 White Mountains;
President and Chief
Executive Officer of
WMIC; Director of
Charter, WMIC and
Valley
Robert P. Keller Director of White President and Chief
White Mountains Mountains Executive Officer of
Holdings, Inc. SDN Bancorp, Inc.
80 South Main Street
Hanover, NH 03755
K. Thomas Kemp
(see above) (see above) (see above)
Phil D. Koerner Director of White Chairman and Chief
National Grange Mutual Mountains Executive Officer of
Insurance Company National Grange Mutual
55 West Street Insurance Company
P.O. Box 2300
Keene, NH 03431
Michael S. Paquette
(see above) (see above) (see above)
Daniel A. Post Director of White President and Chief
Valley Insurance Mountains; President Executive Officer of
Company and Chief Executive Valley
2450 14th Ave. S.E. Officer of Charter
Albany, OR 97321 and Valley; Director
of Charter and Valley
Allan L. Waters (see above) (see above)
(see above)
Charter
Carey D. Benson Senior Vice Senior Vice President
Charter Indemnity President, Chief and Chief Operating
Company Operating Officer Officer of Charter
12001 North Central and Director of
Expressway, Charter
Suite 1300
Dallas, TX 75243
Richard L. Cantrell Vice President and Vice President and
Charter Indemnity Assistant Secretary Assistant Secretary
Company of Charter of Charter
12001 North Central
Expressway,
Suite 1300
Dallas, TX 75243
Donald G. Carnahan Vice President and Vice President and
Charter Indemnity Treasurer of Charter Treasurer of Charter
Company
12001 North Central
Expressway,
Suite 1300
Dallas, TX 75243
Morgan W. Davis
(see above) (see above) (see above)
Kenneth R. Hisel Senior Vice Senior Vice
Valley Insurance President of President of
Company Valley; Director Valley
2450 14th Ave. S.E. of Charter and
Albany, OR 97321 Valley
K. Thomas Kemp
(see above) (see above) (see above)
Philip L. Kloeck Senior Vice Senior Vice
Valley Insurance President and President and
Company Secretary of Secretary of
2450 14th Ave. S.E. Valley; Director Valley
Albany, OR 97321 of Charter and
Valley
Stuart E. Olson Senior Vice Executive Vice
Valley Insurance President and President, Chief
Company Secretary of Operating Officer,
2450 14th Ave. S.E. Charter; Chief Financial
Albany, OR 97321 Executive Vice Officer and Treasurer
President, Chief of Valley
Financial Officer
and Treasurer of
Valley; Director
of Charter and
Valley
Daniel A. Post
(see above) (see above) (see above)
Valley
Morgan W. Davis
(see above) (see above) (see above)
Kenneth R. Hisel
(see above) (see above) (see above)
K. Thomas Kemp
(see above) (see above) (see above)
A. Joseph Kinville Senior Vice Senior Vice
Valley Insurance President of President of
Company Valley Valley
2450 14th Ave. S.E.
Albany, OR 97321
Philip L. Kloeck
(see above) (see above) (see above)
Stuart E. Olson
(see above) (see above) (see above)
Daniel A. Post
(see above) (see above) (see above)
WMIC
Terry L. Baxter
(see above) (see above) (see above)
Dennis P. Beaulieu
(see above) (see above) (see above)
Morgan W. Davis
(see above) (see above) (see above)
K. Thomas Kemp
(see above) (see above) (see above)
Michael S. Paquette
(see above) (see above) (see above)
Allan L. Waters
(see above) (see above) (see above)
Exhibit K
Joint Filing Agreement
The undersigned parties hereby agree that the Schedule 13D filed
herewith (and any amendments thereto) relating to the securities of
Financial Security Assurance Holdings Ltd. is being filed jointly with
the Securities and Exchange Commission pursuant to Section 13-d-1(f)
on behalf of each such person.
Dated: June 24, 1996
FUND AMERICAN ENTERPRISES
HOLDINGS, INC.
By: /s/ Michael S. Paquette
-----------------------
Name: Michael S. Paquette
Title: Vice President
WHITE MOUNTAINS HOLDINGS, INC.
By: /s/ Michael S. Paquette
--------------------------
Name: Michael S. Paquette
Title: Vice President
CHARTER INDEMNITY COMPANY
By: /s/ Daniel A. Post
---------------------------
Name: Daniel A. Post
Title: President
VALLEY INSURANCE COMPANY
By: /s/ Daniel A. Post
--------------------------
Name: Daniel A. Post
Title: President
WHITE MOUNTAINS INSURANCE COMPANY
By: /s/ Michael S. Paquette
----------------------------
Name: Michael S. Paquette
Title: Vice President