SCPIE Holdings Letter to Stockholders Refutes Stilwell's Statements
February 27 2008 - 8:30AM
Business Wire
SCPIE Holdings Inc. (NYSE:SKP), a major provider of healthcare
liability insurance, today announced the mailing of a letter to its
stockholders, reiterating the SCPIE Board�s continuing support of
The Doctors Company all-cash offer of $28 per share, and refuting
many of the statements made by Joe Stilwell in several recent
letters to SCPIE stockholders. Additionally, the Company reminds
stockholders that a special stockholder meeting is scheduled for
March 26, 2008. The Company has sent out proxy materials including
a WHITE proxy card, and encourages all stockholders to vote FOR�the
transaction. Dated February 27, 2008, and signed by Mitchell S.
Karlan MD, Chairman of the SCPIE Holdings Board of Directors, the
letter � in its entirety � is as follows: Let me begin by
expressing my sincere apologies for sending you yet another piece
of correspondence. I know all of the back-and-forth that has been
going on may seem confusing, but I feel that we must set the record
straight for the benefit of all of our stockholders. All the
qualifiers and veiled language in the world won�t change the fact
that there is no offer from American Physicians Capital, Inc.
(ACAP) of East Lansing, Michigan, on the table or that the one that
was on the table in October of last year lacked certainty both of
closing and valuation. Stilwell continues to try to mislead you in
an effort to get you to line up with his preference for a
transaction with a company on the board of which he and his lawyer
sit and in whose stock he has significantly more money at stake �
you can draw your own conclusions, but let us point out a few facts
for you to consider: � Stilwell would have you believe that the
�spot� price of ACAP�s stock today is a relevant data point. It is
not. He further wants you to believe that the thinly traded stock
of this Michigan company, which has been affected by its recently
announced stock buyback programs, could have had a value higher
than $28 per share under the terms of their offer last October.
What he fails to point out is that it just as easily could have
been valued at well less than $28 per share at the time of the
closing of the transaction. � Stilwell also isn�t telling you that,
under its proposal, the Michigan company would have needed to run
the printing presses and create millions and millions of new shares
of its stock to give you in exchange for your SCPIE stock. He fails
to mention that, at some point, running the printing presses does
not create wealth � it just makes ACAP�s shares worth less and
less. � Stilwell also isn�t telling you that the Michigan company�s
shareholders would have had a veto right over the Michigan
company�s ill-advised deal, and could have prevented the dilution
that would have been wrought by the millions of new shares the
Michigan company would need to issue. � As for continuity of
service, The Doctors Company has made its commitment clear that all
agreements including premium rates, coverage terms, limits of
liability and retirement �tail� vesting will be honored. The
Doctors Company has also assured us that it will staff a
full-service office in Los Angeles, and that it intends to continue
to provide California doctors the high level of service that SCPIE
insureds have enjoyed for more than 30 years. Stilwell would have
you believe that he can make the same commitment on behalf of ACAP,
but does he have the authority to do so? � Finally, and arguably
most important, we believe we would have lost considerable business
had we entered into a transaction with an out-of-state insurer with
a less-than-stellar A.M. Best rating. This loss of business would
have given the Michigan company the opportunity to abandon its
proposal and seek to renegotiate for a lower price � to your
detriment! Where would we be then? Your Board was not willing to
take that chance. Ask yourself, what is Stilwell really trying to
accomplish by raising tax issues in every single piece of
correspondence � does he think deferred taxes are the same as no
taxes? We all know better than that unfortunately. In fact, with
capital gains rates at their lowest in 75 years, who knows how high
they may go under a new political administration. Maybe the bottom
line is the fact that Stilwell has millions invested in the
Michigan company, stands to gain more for his investment in that
company than he does in SCPIE, and therefore would rather boost the
value of ACAP with our successful franchise? So, please consider,
which would you rather have? $28 OF CASH PER SHARE or a
non-existent offer of thinly traded stock in a Michigan company,
virtually unknown to California insureds, with little or no revenue
growth and no experience in the competitive California market.
Please vote FOR the merger proposal by telephone, Internet or mail
today. We ask you to ignore Stilwell�s GOLD cards and reject his
self-serving attempt to force your SCPIE to merge with the company
from Michigan with which he is affiliated. Additional Information
and Where to Find It On January 30, 2008, SCPIE filed a definitive
proxy statement with the Securities and Exchange Commission (SEC)
in connection with its proposed acquisition by The Doctors Company.
The proxy statement has been mailed to SCPIE�s stockholders, who
are urged to read the proxy statement and other relevant materials
filed with the SEC because they contain important information about
the acquisition. Investors and security holders may obtain free
copies of these documents and other documents filed with the SEC at
the SEC�s website at www.sec.gov. In addition, investors and
security holders may obtain free copies of the documents filed with
the SEC by SCPIE at the Investors/Media section on its corporate
website at www.scpie.com. SCPIE�s executive officers and directors
may be participants in the solicitation of proxies from SCPIE
stockholders with respect to the acquisition. Information about
SCPIE�s executive officers and directors, and their ownership of
SCPIE Holdings common stock, is set forth in the definitive proxy
statement SCPIE filed with the SEC on January 30, 2008, and in the
reports filed by the executive officers and directors under Section
16 of the Securities Exchange Act of 1934, as amended, since such
date. Additional information regarding the direct and indirect
interests of SCPIE�s executive officers and directors in the
acquisition is in the definitive proxy statement.
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