SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 4, 2002
AMERICAN MEDICAL SECURITY GROUP, INC.
(Exact name of Registrant as specified in its charter)
Wisconsin 1-13154
(State of Incorporation) (Commission File Number)
39-1431799
(I.R.S. Employer Identification No.)
3100 AMS Boulevard, Green Bay, Wisconsin 54313
(Address of principal executive offices) (Zip Code)
(920) 661-1111
(Registrant's telephone number, including area code)
------------------
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
COMPLETION OF SECONDARY OFFERING BY BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
AND RELATED MATTERS
As previously announced, on June 4, 2002, Blue Cross & Blue Shield
United of Wisconsin ("BCBSUW"), a wholly owned subsidiary of Cobalt Corporation
("Cobalt"), completed the sale of 3,001,500 shares of American Medical Security
Group, Inc. (the "Company") common stock, no par value ("Common Stock"), in an
underwritten secondary offering. The public offering price was $18.00 per share.
The proceeds to BCBSUW, net of the underwriting discount of $1.06 per share,
were $50,845,410. The secondary offering was effected pursuant to an
Underwriting Agreement, dated May 29, 2002 (the "Underwriting Agreement"), among
the Company, BCBSUW and the Underwriters named therein, for whom CIBC World
Markets Corp., Robert W. Baird & Co. Incorporated and Stifel, Nicolaus &
Company, Incorporated acted as Representatives.
The secondary offering was made as agreed in the Stock Purchase
Agreement, dated as of March 19, 2002, among BCBSUW, Cobalt and the Company (the
"Stock Purchase Agreement"), under which the Company repurchased 1,400,000
shares of its Common Stock from BCBSUW at $13.00 per share on March 22, 2002,
and the Registration Rights Agreement between the Company and BCBSUW dated as of
September 1, 1998 (the "Registration Rights Agreement"). As contemplated by the
Stock Purchase Agreement, the underwriting discount was borne solely by BCBSUW;
fees and expenses for the secondary offering up to an aggregate of $650,000 will
be paid by the Company, and any expenses in excess of that amount will be borne
equally by the Company and BCBSUW.
Prior to the secondary offering, BCBSUW owned 4,909,525 shares of
Common Stock, or approximately 39.0% of the then outstanding shares of Common
Stock. After the offering, its ownership was reduced to 1,908,025 shares, or
approximately 15.1% of the 12,603,916 shares of Common Stock outstanding as of
June 4, 2002. In accordance with the terms of the Stock Purchase Agreement,
Thomas R. Hefty, Chairman of the Board and Chief Executive Officer of Cobalt and
Chairman of the Board and President of BCBSUW, who became a director of the
Company on March 22, 2002 as one of Cobalt/BCBSUW's two nominees designated
pursuant to the Stock Purchase Agreement, resigned as a director effective June
4, 2002, upon completion of the secondary offering. The Stock Purchase Agreement
required his resignation effective upon the date that Cobalt/BCBSUW owns less
than 20% of the then issued and outstanding shares of Common Stock. Under the
Stock Purchase Agreement, Cobalt is entitled to designate one nominee to the
Company's Board for so long as Cobalt/BCBSUW holds at least 10% of the issued
and outstanding shares of Common Stock. Kenneth L. Evason, Cobalt/BCBSUW's other
nominee who became a director of the Company pursuant to the Stock Purchase
Agreement on March 22, 2002, continues to be a member of the Company's Board of
Directors. Mr. Evason (or his successor) is obligated to resign effective
immediately upon the date that Cobalt/BCBSUW owns less than 10% of the then
issued and outstanding shares of Common Stock.
The Company is required by the Stock Purchase Agreement to amend its
shareholder rights agreement (the "Rights Agreement") upon consummation of the
secondary offering if Cobalt/BCBSUW owns more than 12% of the then issued and
outstanding shares of Common Stock. Such amendment is required to provide that
an "Acquiring Person" under the Rights Agreement (which is the triggering
provision of the "flip-in" provisions of the agreement) means any person
beneficially owning the lesser of (1) 20% of the outstanding shares of Common
Stock, or (2) the percentage (rounded up to the nearest whole number) of issued
and outstanding shares of Common Stock then held by Cobalt/BCBSUW. If, following
consummation of the secondary offering, Cobalt/BCBSUW's percentage ownership of
Common Stock decreases further, the Company has the right to amend the Rights
Agreement again to lower the definition of "Acquiring Person" to the percentage
of issued and outstanding shares of Common Stock then held by Cobalt/BCBSUW.
As previously mentioned, upon completion of the secondary offering,
BCBSUW's ownership was reduced to 15.1%. Thus, in accordance with the provisions
of the Stock Purchase Agreement, the Company executed an Amendment to Rights
Agreement, dated as of June 4, 2002, with the Rights Agent to provide that an
"Acquiring Person" under the Rights Agreement means any person who or which,
together with all of its affiliates and associates, shall become the beneficial
owner of such number of shares of Common Stock as is equal to 16% of the shares
of Common Stock of the Company then outstanding.
2
The Stock Purchase Agreement also contains certain standstill
provisions and voting agreements that continue in effect for so long as
Cobalt/BCBSUW has any nominee on the Company's Board of Directors, subject to
the right of Cobalt/BCBSUW to terminate such voting agreements and standstill
provisions as provided in the Stock Purchase Agreement.
The secondary offering constitutes an exercise of the first of the two
demand registration rights granted to BCBSUW pursuant to the Registration Rights
Agreement.
The foregoing description of the Underwriting Agreement, the Stock
Purchase Agreement, the Registration Rights Agreement and the Amendment to
Rights Agreement is qualified in its entirety by reference to the full text of
such agreements, copies of which are filed or incorporated by reference as
exhibits to this report and incorporated herein by this reference. Additional
information concerning these agreements, the secondary offering and related
matters is contained in the Company's Proxy Statement, dated April 26, 2002, for
its Annual Meeting of Shareholders on June 18, 2002, and in Post-Effective
Amendment No. 1 to the Company's Registration Statement on Form S-3 (No.
333-86660) filed with the Securities and Exchange Commission on May 24, 2002,
and the related Prospectus, dated May 29, 2002, filed with the Commission on May
30, 2002.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
See the Exhibit Index following the Signature page of this
report, which is incorporated herein by reference.
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN MEDICAL SECURITY GROUP, INC.
Dated: June 19, 2002 /s/ Timothy J. Moore
--------------------------------------
Senior Vice President of Corporate
Affairs, Secretary & General Counsel
4
AMERICAN MEDICAL SECURIY GROUP, INC.
(the "Registrant")
(Commission File No. 1-13154)
EXHIBIT INDEX
TO
FORM 8-K CURRENT REPORT
Date of Report: June 4, 2002
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO HEREWITH
1 Underwriting Agreement (See
Exhibit 10.4 below)
4.4(a) Rights Agreement, dated as of Exhibit 1 to the
August 9, 2001, between the Registrant's Registration
Registrant and Firstar Bank, Statement on Form 8-A
N.A., as Rights Agent (the filed August 14, 2001, and
"Rights Agreement"), including Exhibit 4 to the
the form of Rights Certificate Registrant's Current Report
attached as Exhibit B thereto on Form 8-K dated August 9,
2001, and filed on August
14, 2001
4.4(b) Amendment dated as of February Exhibit 4.1 to the
1, 2002 to the Rights Agreement Registrant's Form 8-K
February 1, 2002 (the "2/1/02
8-K")
4.4(c) Appointment and Assumption Exhibit 4.2 to the 2/1/02 8-K
Agreement dated December 17,
2001, between the Registrant
and Firstar Bank, N.A.,
appointing LaSalle Bank, N.A.
as Rights Agent for the Rights
Agreement
4.4(d) Amendment to Rights Agreement X
dated as of June 4, 2002
10.1 Registration Rights Agreement Exhibit 10.19 to the
between the Registrant and Blue Registrant's Form 10-K for
Cross & Blue Shield United of the year ended December 31,
Wisconsin dated as of September 1998
1, 1998
10.2 Agreement dated February 1, Exhibit 10.1 to the 2/1/02 8-K
2002, among the Registrant,
Cobalt Corporation and Blue
Cross & Blue Shield United of
Wisconsin concerning the
Rights Agreement
10.3 Stock Purchase Agreement, Exhibit 10 to the Registrant's
dated as of March 19, 2002, Form 8-K dated March 19, 2002
among Blue Cross & Blue
Shield United of Wisconsin,
Cobalt Corporation and the
Registrant
EI-1
EXHIBIT DESCRIPTION INCORPORATED HEREIN FILED
NUMBER BY REFERENCE TO HEREWITH
10.4 Underwriting Agreement,
dated May 29, 2002 among the X
Registrant, Blue Cross & Blue
Shield United of Wisconsin
and the Underwriters named
on Schedule I thereto
EI-2