CII Financial Announces Agreement Regarding Exchange Offer For Convertible Subordinated Debentures

Apr 13, 2001, 01:00 ET from CII Financial, Inc.

    LAS VEGAS, April 13 /PRNewswire/ -- CII Financial, Inc. today announced
 that it has reached an agreement in principal with an unofficial committee
 representing certain holders of approximately $20 million principal amount of
 its 7 1/2% convertible subordinated debentures due September 15, 2001 (CUSIP
 No. 12551LAB7) in connection with its pending exchange offer for all
 $47,059,000 outstanding principal amount of the debentures.  The Company said
 that, in order to implement the agreement, it has extended the expiration date
 of the exchange offer and would amend the terms of the offer.
 
     The Company said the terms of the amended exchange offer would be as
 follows:
 
     --  The cash purchase price will be increased from $700 per $1,000
         principal amount to $739.12 per $1,000 principal amount, plus accrued
         interest.  The cash offer will be for up to a total of $27,059,000
         principal amount of old 7 1/2% subordinated debentures.
 
     --  The Company will offer to exchange the remaining $20,000,000 principal
         amount of old 71/2% subordinated debentures for new 9 1/2% senior
         debentures.
 
     --  The maturity of the new senior debentures will be shortened from
         March 31, 2005 to September 15, 2004.
 
     --  The covenants applicable to the new debentures will be expanded to
         include limitations on indebtedness, liens, restricted payments, sales
         of capital stock of subsidiaries and transactions with affiliates.
         The covenants will also include an excess cash flow offer, asset sale
         offer and change of control offer.
 
     --  In the event of a change of control of CII Financial, holders of the
         new 9 1/2% senior debentures will have the right to require the
         Company to repurchase their new debentures at 100% of the principal
         amount, plus a specified premium declining over time.  The repurchase
         premium will initially be 10%.
 
     CII Financial's Chief Executive Officer, Kathleen Marlon, commented, "We
 are pleased that we have been able to reach a consensual agreement with our
 principal bondholders and now expect to complete the exchange offer in the
 near future."
     Holders who elect cash will receive $739.12 in cash for each $1,000
 principal amount of their old 7 1/2% subordinated debentures accepted under
 the cash option, plus accrued and unpaid interest in cash.  If holders of more
 than $27,059,000 total principal amount of old 7 1/2% subordinated debentures
 elect to tender their debentures for cash, the Company will purchase a total
 of $27,059,000 principal amount of old 7 1/2% subordinated debentures for cash
 and the Company will exchange the balance of the tendered debentures for new
 9 1/2% senior debentures.  All holders who elect to receive cash will be
 treated equally in this process.  It will be a condition of the offer that at
 least $27,059,000 principal amount of old 7 1/2% subordinated debentures will
 be tendered for cash.
     Holders who elect new 9 1/2% senior debentures will receive $1,000
 principal amount of new 9 1/2% senior debentures for each $1,000 principal
 amount of their old 7 1/2% subordinated debentures, plus accrued and unpaid
 interest in cash.  It will be a condition of the offer that the Company will
 exchange no more than $20.0 million total principal amount of old 7 1/2%
 subordinated debentures for new 9 1/2% senior debentures.
     The Company expects to file an amended Registration Statement with the
 Securities and Exchange Commission reflecting the amended exchange offer on or
 about April 17, 2001.
     The expiration date for the exchange offer has been extended from
 11:59 p.m., New York City time, on April 12, 2001, to 11:59 p.m., New York
 City time, on April 30, 2001.  The Company said that, as of 11:59 p.m., New
 York City time, on April 12, 2001, it had received tenders from holders of
 $27,153,000 in aggregate principal amount of old 7 1/2% subordinated
 debentures.  It is a condition of the offer that the Company receives valid
 tenders of at least 90% of the aggregate outstanding principal amount of the
 old 7 1/2% subordinated debentures and approval from a majority of the banks
 on the Sierra Health Services, Inc. credit facility.
     Banc of America Securities LLC is the exclusive dealer manager for the
 offer.  D.F. King & Co., Inc. is the information agent and Wells Fargo
 Corporate Trust is the depositary.  Copies of the Preliminary Prospectus and
 Exchange Offer may be obtained by calling D.F. King at (800) 735-3591.
 Additional information concerning the terms and conditions of the offer may be
 obtained by contacting Banc of America Securities LLC at (888) 292-0070.
     CII Financial is a holding company primarily engaged in writing workers'
 compensation insurance in nine western and mid-western states through its
 wholly owned subsidiaries, California Indemnity Insurance Company, Commercial
 Casualty Insurance Company, Sierra Insurance Company of Texas and CII
 Insurance Company.  CII Financial is a wholly owned subsidiary of Sierra
 Health Services, Inc. (NYSE:   SIE), a diversified health care services company
 based in Las Vegas.
 
     Statements in this news release that are not historical facts are forward-
 looking and based on management's projections, assumptions and estimates;
 actual results may vary materially.  Forward-looking statements are subject to
 certain risks and uncertainties, some of which may be found in the Preliminary
 Prospectus and Exchange Offer and other documents filed with the Securities
 and Exchange Commission and which are incorporated herein by reference.
 
     Additional Information and Where to Find It:
     CII Financial, Inc. has filed a Registration Statement with the Securities
 and Exchange Commission on Form S-4 registering the new debentures to be
 issued in the exchange offer.  The Registration Statement and the preliminary
 prospectus contained therein contain important information about CII
 Financial, the exchange offer and related matters. Security holders are urged
 to read the Registration Statement and the preliminary prospectus contained
 therein, CII Financial's Schedule TO and any other relevant documents filed by
 CII Financial with the SEC.
     The Registration Statement has not yet become effective.  The new
 debentures may not be sold and, although you may tender your old debentures,
 tenders may not be accepted prior to the time the Registration Statement
 becomes effective.  This shall not constitute an offer to sell or an offer to
 buy nor shall there be any sale of the new debentures in any State in which
 such offer, solicitation or sale would be unlawful.
     Security holders are able to obtain copies of the Registration Statement
 on Form S-4 and the preliminary prospectus, CII Financial's Schedule TO and
 any other relevant documents for free through the Web site maintained by the
 SEC at http://www.sec.gov.  In addition, these documents are available free of
 charge by contacting the Information Agent for the offer, D.F. King & Co., at
 (800) 735-3591.  If you have any questions about the offer, please call the
 Dealer Manager for the offer, Banc of America Securities LLC, at
 (888) 292-0070.
 
 

SOURCE CII Financial, Inc.
    LAS VEGAS, April 13 /PRNewswire/ -- CII Financial, Inc. today announced
 that it has reached an agreement in principal with an unofficial committee
 representing certain holders of approximately $20 million principal amount of
 its 7 1/2% convertible subordinated debentures due September 15, 2001 (CUSIP
 No. 12551LAB7) in connection with its pending exchange offer for all
 $47,059,000 outstanding principal amount of the debentures.  The Company said
 that, in order to implement the agreement, it has extended the expiration date
 of the exchange offer and would amend the terms of the offer.
 
     The Company said the terms of the amended exchange offer would be as
 follows:
 
     --  The cash purchase price will be increased from $700 per $1,000
         principal amount to $739.12 per $1,000 principal amount, plus accrued
         interest.  The cash offer will be for up to a total of $27,059,000
         principal amount of old 7 1/2% subordinated debentures.
 
     --  The Company will offer to exchange the remaining $20,000,000 principal
         amount of old 71/2% subordinated debentures for new 9 1/2% senior
         debentures.
 
     --  The maturity of the new senior debentures will be shortened from
         March 31, 2005 to September 15, 2004.
 
     --  The covenants applicable to the new debentures will be expanded to
         include limitations on indebtedness, liens, restricted payments, sales
         of capital stock of subsidiaries and transactions with affiliates.
         The covenants will also include an excess cash flow offer, asset sale
         offer and change of control offer.
 
     --  In the event of a change of control of CII Financial, holders of the
         new 9 1/2% senior debentures will have the right to require the
         Company to repurchase their new debentures at 100% of the principal
         amount, plus a specified premium declining over time.  The repurchase
         premium will initially be 10%.
 
     CII Financial's Chief Executive Officer, Kathleen Marlon, commented, "We
 are pleased that we have been able to reach a consensual agreement with our
 principal bondholders and now expect to complete the exchange offer in the
 near future."
     Holders who elect cash will receive $739.12 in cash for each $1,000
 principal amount of their old 7 1/2% subordinated debentures accepted under
 the cash option, plus accrued and unpaid interest in cash.  If holders of more
 than $27,059,000 total principal amount of old 7 1/2% subordinated debentures
 elect to tender their debentures for cash, the Company will purchase a total
 of $27,059,000 principal amount of old 7 1/2% subordinated debentures for cash
 and the Company will exchange the balance of the tendered debentures for new
 9 1/2% senior debentures.  All holders who elect to receive cash will be
 treated equally in this process.  It will be a condition of the offer that at
 least $27,059,000 principal amount of old 7 1/2% subordinated debentures will
 be tendered for cash.
     Holders who elect new 9 1/2% senior debentures will receive $1,000
 principal amount of new 9 1/2% senior debentures for each $1,000 principal
 amount of their old 7 1/2% subordinated debentures, plus accrued and unpaid
 interest in cash.  It will be a condition of the offer that the Company will
 exchange no more than $20.0 million total principal amount of old 7 1/2%
 subordinated debentures for new 9 1/2% senior debentures.
     The Company expects to file an amended Registration Statement with the
 Securities and Exchange Commission reflecting the amended exchange offer on or
 about April 17, 2001.
     The expiration date for the exchange offer has been extended from
 11:59 p.m., New York City time, on April 12, 2001, to 11:59 p.m., New York
 City time, on April 30, 2001.  The Company said that, as of 11:59 p.m., New
 York City time, on April 12, 2001, it had received tenders from holders of
 $27,153,000 in aggregate principal amount of old 7 1/2% subordinated
 debentures.  It is a condition of the offer that the Company receives valid
 tenders of at least 90% of the aggregate outstanding principal amount of the
 old 7 1/2% subordinated debentures and approval from a majority of the banks
 on the Sierra Health Services, Inc. credit facility.
     Banc of America Securities LLC is the exclusive dealer manager for the
 offer.  D.F. King & Co., Inc. is the information agent and Wells Fargo
 Corporate Trust is the depositary.  Copies of the Preliminary Prospectus and
 Exchange Offer may be obtained by calling D.F. King at (800) 735-3591.
 Additional information concerning the terms and conditions of the offer may be
 obtained by contacting Banc of America Securities LLC at (888) 292-0070.
     CII Financial is a holding company primarily engaged in writing workers'
 compensation insurance in nine western and mid-western states through its
 wholly owned subsidiaries, California Indemnity Insurance Company, Commercial
 Casualty Insurance Company, Sierra Insurance Company of Texas and CII
 Insurance Company.  CII Financial is a wholly owned subsidiary of Sierra
 Health Services, Inc. (NYSE:   SIE), a diversified health care services company
 based in Las Vegas.
 
     Statements in this news release that are not historical facts are forward-
 looking and based on management's projections, assumptions and estimates;
 actual results may vary materially.  Forward-looking statements are subject to
 certain risks and uncertainties, some of which may be found in the Preliminary
 Prospectus and Exchange Offer and other documents filed with the Securities
 and Exchange Commission and which are incorporated herein by reference.
 
     Additional Information and Where to Find It:
     CII Financial, Inc. has filed a Registration Statement with the Securities
 and Exchange Commission on Form S-4 registering the new debentures to be
 issued in the exchange offer.  The Registration Statement and the preliminary
 prospectus contained therein contain important information about CII
 Financial, the exchange offer and related matters. Security holders are urged
 to read the Registration Statement and the preliminary prospectus contained
 therein, CII Financial's Schedule TO and any other relevant documents filed by
 CII Financial with the SEC.
     The Registration Statement has not yet become effective.  The new
 debentures may not be sold and, although you may tender your old debentures,
 tenders may not be accepted prior to the time the Registration Statement
 becomes effective.  This shall not constitute an offer to sell or an offer to
 buy nor shall there be any sale of the new debentures in any State in which
 such offer, solicitation or sale would be unlawful.
     Security holders are able to obtain copies of the Registration Statement
 on Form S-4 and the preliminary prospectus, CII Financial's Schedule TO and
 any other relevant documents for free through the Web site maintained by the
 SEC at http://www.sec.gov.  In addition, these documents are available free of
 charge by contacting the Information Agent for the offer, D.F. King & Co., at
 (800) 735-3591.  If you have any questions about the offer, please call the
 Dealer Manager for the offer, Banc of America Securities LLC, at
 (888) 292-0070.
 
 SOURCE  CII Financial, Inc.