Zenith Announces Commencement of Consent Solicitation
May 17 2010 - 8:14AM
Business Wire
Zenith National Insurance Corp. (NYSE: ZNT) (“Zenith”) announced
today the commencement of a consent solicitation relating to the
8.55% Capital Securities (Liquidation Amount of $1,000 per Capital
Security) (the “Capital Securities”) of Zenith National Insurance
Capital Trust I (the “Trust”), which holds as its sole assets, the
8.55% Subordinated Deferrable Interest Debentures due 2028 (the
“Debentures”) of Zenith.
As of May 14, 2010, there was $75,000,000 in aggregate
liquidation amount of Capital Securities issued and outstanding,
$16,500,000 in aggregate liquidation amount of which was held by
the Company and its affiliates. In accordance with the Declaration
of Trust, Capital Securities that are owned by the Company or its
affiliates will not be entitled to consent and will be treated for
the purposes of this consent solicitation as if they were not
outstanding. Therefore, for purposes of providing and calculating
consents in connection with the consent solicitation, $58,500,000
in aggregate liquidation amount of Capital Securities shall be
deemed outstanding and eligible to provide consent.
As previously reported, on February 17, 2010, Fairfax Financial
Holdings Limited (“Fairfax”) and Zenith National Insurance Corp.
(“Zenith”) entered into a merger agreement pursuant to which
Fairfax will acquire all of the outstanding shares of Zenith’s
common stock, which Fairfax does not currently own, for $38 per
share in cash. At a special meeting on April 29, 2010, Zenith’s
stockholders voted overwhelmingly in favor of Zenith’s acquisition
by Fairfax. The transaction is subject to the approval by the
California Department of Insurance and the satisfaction or waiver
of other customary closing conditions. The transaction is expected
to close in the second quarter of 2010.
Zenith is seeking to obtain the consent of the holders of the
Capital Securities, to permit an amendment to the reporting
covenants of the indenture governing the Debentures. The proposed
amendments would allow Zenith to provide annual audited,
consolidated financial statements for Zenith and its subsidiaries
prepared in accordance with Generally Accepted Accounting
Principles in the United States; and quarterly unaudited financial
statements prepared in a consistent manner. The foregoing financial
statements would be provided to holders of the Capital Securities
in lieu of the reports Zenith currently files with the Securities
and Exchange Commission and which are provided to holders of the
Capital Securities under the existing indenture. If the acquisition
of Zenith by Fairfax closes, Zenith will become an indirect wholly
owned subsidiary of Fairfax and Zenith intends to suspend its
reporting obligations under the Securities Exchange Act and,
following the successful completion of the consent solicitation,
will cease filing reports with the Securities and Exchange
Commission. If the requisite consents are not obtained or the other
conditions to the consent solicitation are not satisfied or waived,
including the merger with Fairfax, Zenith will continue to provide
the reports that are required to be delivered under the existing
indenture to holders of the Capital Securities.
The consent solicitation requires consents from holders of at
least a majority in aggregate liquidation amount outstanding of the
Capital Securities and will expire at 5:00 p.m., Eastern time, on
May 26, 2010, unless earlier terminated or extended (the
“Expiration Time”).
Subject to the terms and conditions of the consent solicitation,
Zenith will make a cash payment of $2.00 per $1,000 liquidation
amount of Capital Securities for which the holder has validly
delivered (and not validly revoked) a consent prior to the
Expiration Time. Zenith will not be obligated to make any payments
if the requisite consents are not obtained prior to the Expiration
Time or the other conditions to the consent solicitation are not
satisfied or waived, including the completion of the merger with
Fairfax.
For a complete statement of the terms and conditions of the
consent solicitation, holders of the Capital Securities should
refer to the consent solicitation statement, dated as of May 17,
2010, which is being sent to all holders of the Capital
Securities.
The Solicitation Agent in connection with the consent
solicitation is BofA Merrill Lynch. Questions regarding the consent
solicitation may be directed to BofA Merrill Lynch, Attention: Debt
Advisory Services at (888) 292-0070 (toll free) or (980) 388-4603
(collect). D. F. King & Co., Inc. is serving as
Tabulation Agent in connection with the consent solicitation.
Requests for assistance in delivering consents or for additional
copies of the consent solicitation statement should be directed to
the Tabulation Agent at (800) 967-4612 (toll free) or 212-269-5550
(banks and brokers).
This announcement is not an offer to purchase, a solicitation of
an offer to purchase, or a solicitation of consents with respect to
any securities. The consent solicitation is being made solely by
the consent solicitation statement and is subject to the terms and
conditions stated therein. Zenith reserves the right to modify the
consent solicitation statement or to terminate the consent
solicitation.
About Zenith
Zenith National Insurance Corp., a Delaware corporation
incorporated in 1971, is a holding company engaged, through its
wholly owned subsidiaries, Zenith Insurance Company and ZNAT
Insurance Company, in the workers’ compensation insurance business,
nationally.
Cautionary Statement Regarding Forward-Looking
Statements
The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements if accompanied by
meaningful cautionary statements identifying important factors that
could cause actual results to differ materially from those
discussed. Statements containing words such as expect, anticipate,
believe, estimate, likely or similar words that are used herein or
in other written or oral information conveyed by or on behalf of
Zenith are intended to identify forward-looking statements.
Forward-looking statements are made based upon management’s current
expectations and beliefs concerning future developments and their
potential effects on Zenith. Such forward-looking statements are
not guarantees of future events. Actual results may differ
materially from those contemplated by the forward-looking
statements due to, among others, the following factors: (i)
litigation with respect to the merger could delay or prevent the
closing of the merger; (ii) the parties may be unable to obtain
governmental and regulatory approvals required for the merger, or
required governmental and regulatory approvals may delay the merger
or result in the imposition of conditions that could cause the
parties to abandon the merger; (iii) the parties may be unable to
complete the merger because, among other reasons, conditions to the
closing of the merger may not be satisfied or waived; (iv) possible
disruptions from the merger may make it more difficult to maintain
business and operational relationships; (v) developments beyond the
parties’ control, including but not limited to, changes in domestic
or global economic conditions, competitive conditions and consumer
preferences, adverse weather conditions or natural disasters,
health concerns, international, political or military developments
and technological developments; and (vi) the “risk factors”
and other factors referred to in Zenith’s reports filed with or
furnished to the Securities and Exchange Commission. There can be
no assurance that other factors not currently anticipated by Zenith
will not materially and adversely affect future events. Investors
and stockholders are cautioned not to place undue reliance on any
forward-looking statements made by or on behalf of Zenith.
Forward-looking statements speak only as of the date they are made.
Zenith does not undertake any obligation to update or revise any
forward-looking statement.
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