- Amended tender offer statement by Third Party (SC TO-T/A)
28 May 2011 - 7:20AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
(Amendment No. 2)
Tender Offer Statement under Section 14(d)(1) or 13(e)(1) of the Securities
Exchange Act of 1934
CNA SURETY CORPORATION
Name of Subject Company (issuer))
SURETY ACQUSITION CORPORATION
(offeror)
a wholly owned subsidiary of
CONTINENTAL CASUALTY COMPANY
a wholly owned subsidiary of
THE CONTINENTAL CORPORATION
a wholly owned subsidiary of
CNA FINANCIAL CORPORATION
Names of Filing Persons (other person(s))
Common Stock, $0.01 Par Value Per Share
(Title of Class of Securities)
12612L1008
(CUSIP Number of Class of Securities)
Jonathan D. Kantor, Esq.
Executive Vice President, General Counsel and Secretary
CNA Financial Corporation
333 South Wabash Avenue
Chicago, Illinois 60604-4107
Telephone: (312) 822-5000
With a copy to:
Gary Horowitz, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017-3954
Telephone: (212) 455-2000
(Name, address, and telephone numbers of person authorized to receive notices and communications on behalf of filing persons)
Calculation of Filing Fee
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TRANSACTION VALUATION*
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AMOUNT OF FILING FEE**
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$466,255, 011
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$54,132.21
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*
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Estimated for purposes of calculating the amount of the filing fee
only. The calculation assumes the purchase of all outstanding shares
of common stock, par value $0.01 per share (the Shares), of CNA
Surety Corporation, a Delaware corporation, other than Shares owned by
CNA Financial Corporation (CNAF) and its subsidiaries, at a purchase
price of $26.55 per Share, net to the seller in cash. As of May 6,
2011, there were 44,986,541 Shares outstanding, of which 27,425,147
Shares are owned by subsidiaries of CNAF. As a result, this
calculation assumes the purchase of 17,561,394 Shares.
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**
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The amount of the filing fee is calculated in accordance with Rule
011 of the Securities Exchange Act of 1934, as amended, by
multiplying the transaction value by 0.00011610.
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þ
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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.
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Amount Previously Paid: $54,132.21
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Filing Party: CNA Financial Corporation
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Form or Registration No.: Schedule TO
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Date Filed: May 11, 2011
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o
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Check box if the filing relates solely to preliminary communications made before the
commencement of a tender offer.
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Check the appropriate boxes to designate any transactions to which this statement relates:
o
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third party tender offer subject to Rule 14d-1
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o
going-private transaction subject to Rule 13e-3
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issuer tender offer subject to Rule 13e-4
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amendment to Schedule 13D under Rule 13d-2
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Check the following box if the filing is a final amendment reporting the results of the tender
offer.
o
If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s)
relied upon:
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o
Rule 13e-4(i) (Cross-Border
Issuer Tender Offer
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o
Rule 14d-1(d) (Cross-Border Third
Party Tender Offer
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This Amendment No. 2 amends and supplements the Tender Offer Statement filed on Schedule TO (this
Schedule TO) which relates to the tender offer by Surety Acquisition Corporation (Purchaser), a
Delaware corporation and an indirect wholly-owned subsidiary of CNA Financial Corporation, a
Delaware corporation (CNA Financial), to purchase all the outstanding shares of common stock, par
value $0.01 per share (the Shares), of CNA Surety Corporation, a Delaware corporation (CNA
Surety), other than Shares owned by CNA Financial and its subsidiaries, at a purchase price of
$26.55 per Share, net to the seller in cash, without interest and less any applicable withholding
of taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated
May 11, 2011 (as may be amended or supplemented from time to time, the Offer to Purchase), a copy
of which is attached to this Schedule TO as Exhibit (a)(1)(i), and the related Letter of
Transmittal (as may be amended or supplemented from time to time, the Letter of Transmittal), a
copy of which is attached to this Schedule TO as Exhibit (a)(1)(ii) (which, as amended or
supplemented from time to time, together constitute the Offer).
Items 1 through 9 and 11 of this Schedule TO are hereby amended and supplemented as follows:
1.
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The phrases stockholders of CNA Surety (other than CNA Financial and its affiliates) and
holders of Shares (other than CNA Financial and its affiliates) in the Offer to Purchase are
hereby replaced by the phrase unaffiliated stockholders of CNA
Surety in each of the
following locations:
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(i) the second paragraph of the cover page of the Offer to Purchase;
(ii) the disclosure on page 2 of the Offer to Purchase under the question What does the
board of directors of CNA Surety think of the offer?;
(iii) the first paragraph on page 8 of the Offer to Purchase;
(iv) the paragraph on page 14 of the Offer to Purchase under the heading The Recommendation
of the Special Committee; and
(v) the second paragraph on page 36 of the Offer to Purchase under the heading Transactions
and Arrangements Concerning the Shares.
2.
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The disclosure on page 9 of the Offer to Purchase under the heading Background is hereby
amended by:
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(i) Adding the following at the end of the first paragraph:
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In recent years, CNA Financials strategic objectives have focused on financial stability
and delivering improved levels of operating consistency so that CNA Financial could focus
even further on the execution of strategies to improve and grow its on-going core businesses.
In July 2010, subsidiaries of CNA Financial entered into an agreement to transfer the legacy
asbestos and environmental pollution liabilities of CNA Financial and its subsidiaries to
National Indemnity Company and the transaction was completed in August 2010. Through the
transaction, CNA Financial was able to eliminate a significant source of uncertainty to CNA
Financials business created by these legacy liabilities thereby allowing CNA Financial to
focus even further on growing its core businesses.
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(ii) Adding the following new paragraph prior to the third paragraph:
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During the month of October 2010, senior management of CNA Financial engaged in numerous
discussions internally and with its legal and financial advisors concerning the feasibility
of making a proposal to CNA Surety, the price at which such a proposal might be made and the
timing of making such a proposal in the event that CNA Financial determined that it was
desirable to make a proposal, but did not engage in any discussions with representatives of
CNA Surety concerning a proposal until the afternoon of October 29, 2010, as described in
more detail below.
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(iii) Adding the following sentence to the fourth paragraph as a new fourth sentence:
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The discussion that representatives of J.P. Morgan had with the board of directors of CNA
Financial on October 29, 2010 included an analysis of certain financial metrics based on
various hypothetical offer prices ranging from $19.15 to $25.00.
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3.
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The disclosure on page 13 of the Offer to Purchase under the heading Purpose of and Reasons
for the Offer; Plans for CNA Surety After the Offer and the Merger is hereby amended by:
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(i) Adding the following after the second sentence of the third paragraph:
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Although expanding its specialty franchise has been a strategic objective of CNA Financial
in recent years, its ability to do so has been constrained by general economic conditions and
the uncertainty facing CNA Financials business resulting from legacy liabilities. The
transfer of its legacy asbestos and environmental pollution liabilities to National Indemnity
Company in August 2010 eliminated a significant source of uncertainty and, coupled with
generally improving economic conditions, allowed CNA Financial to focus its resources more
directly on the expansion of its specialty franchise.
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(ii) Adding the following sentence at the end of the third paragraph:
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The other members of the CNA Financial Group did not make an independent determination to
pursue the acquisition of
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the Shares not already owned by subsidiaries of CNA Financial. Under an interpretation of the
going private rules of the SEC, such other members are nevertheless required to state their
reasons for undertaking the transaction at this time. To the extent that the other members
of the CNA Financial Group may be deemed to be undertaking the transaction, such other
members of the CNA Financial Group are doing so in order to support CNA Financials
determination to pursue the acquisition of the Shares.
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4.
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The first paragraph on page 2 of the Offer the Purchase and the paragraph on 51 of the Offer
to Purchase under the heading The Offer Section 9. Source and Amount of Funds are each
hereby amended by adding the following sentence at the end of each such paragraph:
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Because CCC has sufficient cash and cash equivalents on hand to purchase all shares of CNA
common stock validly tendered in the offer, which it will provide to Purchaser, there are no
alternative financing arrangements in place nor have any alternative financing plans been
made.
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5.
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The first sentence of the last paragraph on page 52 of the Offer to Purchase under the
heading Conditions to the Offer is hereby amended and restated in its entirety to read as
follows:
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The foregoing conditions are for the benefit of CNA Financial and Purchaser and must be
satisfied or waived prior to the expiration of the Offer and, except for the majority of the
minority condition which is non-waivable, may be waived by CNA Financial and Purchaser in
whole or in part at any time and from time to time prior to the expiration of the Offer in
the sole discretion of CNA Financial or Purchaser, in each case,
subject to the applicable rules and regulations of the SEC.
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6.
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The disclosure on page 55 of the Offer to Purchase under the heading Certain Legal Matters;
Regulatory Approvals is hereby amended by adding the following at the end of such section and
Section a(5) of Item 11 of the Schedule TO is hereby amended in its entirety to read as
follows:
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"
Litigation.
On May 16, 2011, a putative class action lawsuit captioned
CapGrowth Partners
v. John F. Welch
,
et al.,
No. 11CH17746, was filed by a purported stockholder of CNA Surety
in the Circuit Court of Cook County, Illinois (the CapGrowth Action). The complaint filed
in the CapGrowth Action names CNA Financial, CNA Surety and the members of the board of
directors of CNA Surety as defendants and alleges that the members of the board of directors
of CNA Surety breached and/or aided and abetted the other members of the board of directors
of CNA Surety in breaching their fiduciary duties by acting to cause or facilitate the merger
agreement entered into on April 20, 2011 among CNA Financial, CNA Surety and Purchaser. The
complaint also alleges that CNA Financial aided and abetted the members of the board of
directors of CNA Surety in breaching their fiduciary duties and coerced the members of the
board of directors of CNA Surety to accept CNA Financials proposal, and is coercing
CapGrowth Partners and CNA Suretys stockholders to accept the Offer. The complaint seeks
compensatory and rescissory damages.
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On May 27, 2011, the parties to the CapGrowth Action entered into an agreement in principle
to settle such putative class action lawsuit. The agreement in principle is set forth in a
Memorandum of Understanding (MOU) executed by counsel for defendants and class plaintiff in
the CapGrowth Action. The parties have agreed to enter into a stipulation of settlement as
soon as practicable. The basic terms of the settlement, which is subject to court approval,
include that (1) the defendants have denied, and continue to deny, that any of them has
committed or has threatened to commit, or aided and abetted any other person in the
commission or threatened commission of, any wrongdoing, violation of law or breach of duty;
(2) CNA Surety has agreed to make the additional disclosures set forth in Amendment No. 3 to
the Schedule 14D-9; (3) the CapGrowth Action will be conditionally certified, for settlement
purposes only, as a class action; and (4) the class plaintiff will dismiss its claims and
provide releases to the defendants as specified in the MOU. The settlement is conditioned
upon, among other things, definitive documentation and court approval, the dismissal of the
CapGrowth Action, and the successful consummation of the Offer and the Merger.
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Signature.
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
Dated: May 27, 2011
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SURETY ACQUISITION CORPORATION
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By:
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/s/ Jonathan D. Kantor
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Jonathan D. Kantor
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Executive Vice President, General Counsel and
Secretary
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CNA FINANCIAL CORPORATION
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By:
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/s/ Jonathan D. Kantor
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Jonathan D. Kantor
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Executive Vice President, General Counsel and
Secretary
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CONTINENTAL CASUALTY COMPANY
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By:
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/s/ Jonathan D. Kantor
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Jonathan D. Kantor
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Executive Vice President, General Counsel and
Secretary
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THE CONTINENTAL CORPORATION
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By:
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/s/ Jonathan D. Kantor
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Jonathan D. Kantor
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Executive Vice President, General Counsel and
Secretary
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