CII Financial Announces Revised Terms of Exchange Offer for Convertible Subordinated Debentures and Extension of Expiration Date

Apr 02, 2001, 01:00 ET from CII Financial, Inc.

    LAS VEGAS, April 2 /PRNewswire/ -- CII Financial, Inc. today announced the
 amendment of its pending exchange offer for all $47 million of its outstanding
 7 1/2% convertible subordinated debentures due September 15, 2001
 (CUSIP No. 12551LAB7).  Under the offer, holders can choose to exchange their
 old 7 1/2% junior subordinated debentures for either new senior debentures or
 cash.
     The Company said the revised terms of the offer consist of the following:
 
     -- The cash purchase price has been increased from $525 per $1,000
        principal amount to $700 per $1,000 principal amount, plus accrued
        interest.
 
     -- The funds available to finance the offer have been increased from
        $10,237,500 to $20,000,400.  As a result, the Company is now offering
        to buy a total of $28,572,000 principal amount of old 7 1/2%
        subordinated debentures, or 60.7%, for cash.
 
     -- The Company is offering to exchange the remaining $18,487,000 principal
        amount of old 7 1/2% subordinated debentures for new senior debentures.
 
     -- The interest rate on the new senior debentures has been increased from
        9% to 9 1/2%.  In addition, the maturity of the new senior debentures
        has been shortened from September 15, 2006 to March 31, 2005.
 
     -- The new 9 1/2% senior debentures will be senior indebtedness of
        CII Financial and will rank senior to all other indebtedness, including
        any remaining old 7 1/2% subordinated debentures.  The new 9 1/2%
        senior debentures will also rank senior to CII Financial's guaranty of
        the $135 million credit facility of the Company's parent, Sierra Health
        Services, Inc., subject to majority approval by the bank group.
 
     -- 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 5%.
 
     Under the amended offer, holders who elect cash will receive $700 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 $28.6 million total principal amount of old 7 1/2%
 subordinated debentures elect to sell their debentures for cash, the Company
 will purchase a total of $28.6 million 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 is a
 condition of the offer, as amended, that at least $28.6 million total
 principal amount of old 7 1/2% subordinated debentures be tendered for cash
     As a result of the revisions, 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 is a condition of
 the offer, as amended, that the Company will exchange no more than
 $18.5 million total principal amount of old 7 1/2% subordinated debentures for
 new 9 1/2% senior debentures.
     The expiration date for the exchange offer has been extended from
 5:00 p.m., New York City time, on April 2, 2001, to 11:59 p.m., New York City
 time, on April 12, 2001.  The Company filed an amended Registration Statement
 with the Securities and Exchange Commission on March 30, 2001.
     The Company said that, prior to revising the terms of the offer, it had
 received tenders from holders of $14,776,000 in aggregate principal amount of
 debentures as of 5:00 p.m., New York City time, on March 30, 2001.
     The complete terms of the offer, as amended, are contained in the amended
 Preliminary Prospectus and Exchange Offer dated March 30, 2001.
 
     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 2 /PRNewswire/ -- CII Financial, Inc. today announced the
 amendment of its pending exchange offer for all $47 million of its outstanding
 7 1/2% convertible subordinated debentures due September 15, 2001
 (CUSIP No. 12551LAB7).  Under the offer, holders can choose to exchange their
 old 7 1/2% junior subordinated debentures for either new senior debentures or
 cash.
     The Company said the revised terms of the offer consist of the following:
 
     -- The cash purchase price has been increased from $525 per $1,000
        principal amount to $700 per $1,000 principal amount, plus accrued
        interest.
 
     -- The funds available to finance the offer have been increased from
        $10,237,500 to $20,000,400.  As a result, the Company is now offering
        to buy a total of $28,572,000 principal amount of old 7 1/2%
        subordinated debentures, or 60.7%, for cash.
 
     -- The Company is offering to exchange the remaining $18,487,000 principal
        amount of old 7 1/2% subordinated debentures for new senior debentures.
 
     -- The interest rate on the new senior debentures has been increased from
        9% to 9 1/2%.  In addition, the maturity of the new senior debentures
        has been shortened from September 15, 2006 to March 31, 2005.
 
     -- The new 9 1/2% senior debentures will be senior indebtedness of
        CII Financial and will rank senior to all other indebtedness, including
        any remaining old 7 1/2% subordinated debentures.  The new 9 1/2%
        senior debentures will also rank senior to CII Financial's guaranty of
        the $135 million credit facility of the Company's parent, Sierra Health
        Services, Inc., subject to majority approval by the bank group.
 
     -- 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 5%.
 
     Under the amended offer, holders who elect cash will receive $700 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 $28.6 million total principal amount of old 7 1/2%
 subordinated debentures elect to sell their debentures for cash, the Company
 will purchase a total of $28.6 million 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 is a
 condition of the offer, as amended, that at least $28.6 million total
 principal amount of old 7 1/2% subordinated debentures be tendered for cash
     As a result of the revisions, 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 is a condition of
 the offer, as amended, that the Company will exchange no more than
 $18.5 million total principal amount of old 7 1/2% subordinated debentures for
 new 9 1/2% senior debentures.
     The expiration date for the exchange offer has been extended from
 5:00 p.m., New York City time, on April 2, 2001, to 11:59 p.m., New York City
 time, on April 12, 2001.  The Company filed an amended Registration Statement
 with the Securities and Exchange Commission on March 30, 2001.
     The Company said that, prior to revising the terms of the offer, it had
 received tenders from holders of $14,776,000 in aggregate principal amount of
 debentures as of 5:00 p.m., New York City time, on March 30, 2001.
     The complete terms of the offer, as amended, are contained in the amended
 Preliminary Prospectus and Exchange Offer dated March 30, 2001.
 
     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.