As filed with the Securities and Exchange Commission on September 9, 2002
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE TO
(Amendment No. 1)
(RULE 14D-100)
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
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PENN TREATY AMERICAN CORPORATION
(Name of Subject Company)
PENN TREATY AMERICAN CORPORATION
(Issuer)
61/4% CONVERTIBLE SUBORDINATED NOTES DUE 2003
(Title of Class of Securities)
707 874 AC7
707 874 AA1
707 874 AB9
(CUSIP Number of Class of Securities)
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William W. Hunt
President and Chief Operating Officer
Penn Treaty American Corporation
3440 Lehigh Street
Allentown, Pennsylvania 18103
(610) 965-2222
(Name, address and telephone number of person
authorized to receive notices and
communications on behalf of Filing
Person)
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Copies to:
Justin P. Klein, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
(215) 665-8500
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Calculation Of Filing Fee
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Transaction Valuation* Amount Of Filing Fee**
$74,750,000 $6,877***
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* Estimated for the purposes of calculating the amount of the filing fee
only. The amount assumes the exchange of the entire aggregate principal
amount of 6 1/4% Convertible Subordinated Notes due 2003 (the "Subordinated
Notes") of Penn Treaty American Corporation ("Penn Treaty") for 6 1/4%
Convertible Notes due 2008 (the "Exchange Notes") issued by Penn Treaty.
Penn Treaty intends to issue up to $74,750,000 aggregate principal amount
of Exchange Notes in exchange for the entire outstanding aggregate
principal amount of the Subordinated Notes. Based on the August 26, 2002
value of the outstanding Subordinated Notes, the transaction value is equal
to $74,750,000.
** The amount of the filing fee is calculated in accordance with Rule 0-11 of
the Securities Exchange Act of 1934, as amended.
*** Previously paid.
[ ] 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.
AMOUNT PREVIOUSLY PAID: Not applicable.
FILING PARTY: Not applicable.
FORM OR REGISTRATION NO.: Not applicable.
DATE FILED: Not applicable.
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] Third-party tender offer subject to Rule 14d-1.
[x] Issuer tender offer subject to Rule 13e-4.
[ ] Going-private transaction subject to Rule 13e-3.
[ ] Amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
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Introductory Statement
This Amendment No.1 amends and supplements the Tender Offer Statement on
Schedule TO (the "Statement") filed by Penn Treaty American Corporation ("Penn
Treaty") with the Securities and Exchange Commission on August 28, 2002, in
connection with its offer to exchange up to $74,750,000 aggregate principal
amount of 6 1/4% Convertible Subordinated Notes due 2003 of Penn Treaty, or such
lesser principal amount as is properly tendered and not withdrawn, for 6 1/4%
Convertible Subordinated Notes due 2008 upon the terms and subject to the
conditions set forth in the Offering Circular, dated August 28, 2002, and in the
related Letter of Transmittal, copies of which were attached to the Statement as
Exhibits (a)(1) and (a)(2), respectively.
Item 12. Exhibits
Item 12 of this Statement is hereby amended to add a reference to Exhibit
99.(a)(10), which is attached as an exhibit hereto.
EXHIBIT NUMBER DESCRIPTION
99.(a)(10) Press Release dated September 9, 2002.*
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* Filed herewith.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Amendment No. 1 to the Statement is true,
complete and correct.
PENN TREATY AMERICAN CORPORATION
Dated: September 9, 2002 By: /s/ William W. Hunt
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William W. Hunt
President and
Chief Operating Officer
EXHIBITS
EXHIBIT NUMBER DESCRIPTION
99.(a)(10) Press Release dated September 9, 2002.*
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* Filed herewith.
EXHIBIT 99.(A)(10)
PENN TREATY AMERICAN CORPORATION INITIATES DEBT EXCHANGE OFFER
Allentown, PA, September 9, 2002 - Penn Treaty American Corporation (NYSE - PTA)
today announced that on August 28, 2002 it commenced an offer to exchange its
outstanding $74,750,000 convertible notes due 2003 (the "Subordinated Notes")
for a like amount of mandatory convertible notes due 2008 ("the Exchange
Notes"). In connection with the exchange offer, the Company has filed the
required documents with the Securities and Exchange Commission.
The Exchange Notes provide several significant benefits to current holders of
the Subordinated Notes, including:
o A maturity date extended until 2008, with two years of call protection;
o Seniority to any Subordinated Notes that remain outstanding after the
exchange is completed;
o The Exchange Notes are convertible into shares of the Company's stock at a
price of $5.31 per share, compared to a conversion price of $28.44 per
share for the Subordinated Notes.
The following table compares the primary terms of the existing Subordinated
Notes and the Exchange Notes that will be issued and outstanding following
completion of the exchange offer.
The Subordinated Notes The Exchange Notes
Issue..............................6 1/4% convertible Subordinated Notes 6 1/4% convertible Subordinated Notes
Issuer.............................Penn Treaty American Corporation Penn Treaty American Corporation
Security...........................Unsecured Unsecured
Issue Date.........................November 26, 1996 Upon completion of the exchange offer
Conversion.........................Convertible until maturity at a rate Convertible until maturity at a rate of
of 35.1617 shares of common stock 188.3239 shares of common stock per
per $1,000 principal amount, subject $1,000 principal amount, subject to
to adjustment adjustment
Principal Outstanding Amount.......$74,750,000 $74,750,000
Coupon.............................6 1/4% 6 1/4%
Maturity...........................December 1, 2003 October 15, 2008
Interest Payments..................In cash, semi-annually on each June In cash, semi-annually, on each October
1 and December 1 15 and April 15
Mandatory Conversion...............None If the average closing price of the
Company's common stock for any 15
consecutive trading days beginning on
or after October 15, 2004 is at least
10% greater than the conversion price
($5.84) of the Exchange Notes and the
Company has sufficient shares of common
stock available for issuance, then
holders of the Exchange Notes are
required to convert their Exchange
Notes into common stock at a conversion
price of $5.31.
Optional Redemption................Redeemable on or after December 1, Redeemable on or after October 15, 2004
2001 at price equal to the 101.04% at a price equal to the principal
of the principal amount plus accrued amount plus accrued and unpaid interest
and unpaid interest thereon and on thereon
or after December 1, 2002 at a price
equal to principal amount plus
accrued and unpaid interest thereon
Ranking; Subordination.............The Subordinated Notes rank junior The Exchange Notes rank senior to the
to the Exchange Notes and all other Subordinated Notes and junior to all
Senior Indebtedness, as defined in Senior Indebtedness, as defined in the
the Subordinated Note indenture Exchange Note indenture
Covenants..........................The Company is not restricted from The Company is not restricted from
incurring additional indebtedness incurring additional indebtedness
senior to the indebtedness evidenced senior to the indebtedness evidenced by
by the Subordinated Notes the Exchange Notes
Judgment Defaults..................Final judgments or decrees entered Final judgments or decrees entered into
into by a court of competent by a court of competent jurisdiction
jurisdiction against us, which have against us, which have not been
not been vacated, discharged, vacated, discharged, satisfied or
satisfied or stayed pending appeal stayed pending appeal within 60 days of
within 60 days of entry, involving entry, involving liabilities of $25
liabilities of $10 million or more million or more after deducting the
after deducting the portion of such portion of such liabilities accepted by
liabilities accepted by an insurance an insurance company
company
The Company, through its wholly owned direct and indirect subsidiaries, Penn
Treaty Network America Insurance Company, American Network Insurance Company,
American Independent Network Insurance Company of New York, Penn Treaty
(Bermuda), Ltd., United Insurance Group Agency, Inc., Network Insurance Senior
Health Division and Senior Financial Consultants Company, is primarily engaged
in the underwriting, marketing and sale of individual and group accident and
health insurance products, principally covering long-term nursing home and home
health care.
Certain statements made by the Company - in this press release - may be
considered forward-looking. Although the Company believes that its expectations
are based upon reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results of the
Company's operations will not differ materially from its expectations. Factors
which could cause actual results to differ from expectations include, among
others, the current Subordinated Note holders choosing not to exchange their
Subordinated Notes, the Company's ability to comply with the Corrective Action
Plan, the Florida Consent Order, the orders or directives of other states in
which the Company does business or any special provisions imposed by states in
connection with the resumption of writing business, the Company's ability to
eventually commute its reinsurance agreement and to recapture its reinsured
policies and accumulated experience account balance, whether its Corrective
Action Plan will be accepted and approved by all states, the Company's ability
to meet its future risk-based capital goals, the adverse financial impact of
suspending new business sales, the Company's ability to raise adequate capital
to meet the requirements of anticipated growth and the cost associated with
recommencing new business sales, liquidity needs and debt obligations, the
adequacy of the Company's loss reserves and the recoverability of its
unamortized deferred policy acquisition cost asset, the Company's ability to
sell insurance products in certain states, the Company's ability to resume
generating new business in all states, the Company's ability to comply with
government regulations and the requirements which may be imposed by state
regulators as a result of the Company's capital and surplus levels, the ability
of senior citizens to purchase the Company's products in light of the increasing
costs of health care, the ability of the Company to retain its current
policyholder base, the ability of the Company to defend itself against adverse
litigation, and the Company's ability to recapture, expand and retain its
network of productive independent agents, especially in light of the suspension
of new business. For additional information, please refer to the Company's
reports filed with the Securities and Exchange Commission.