UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): October 23, 2006
Alleghany Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-9371 51-0283071
(Commission File Number) (IRS Employer Identification No.)
7 Times Square Tower, 17th Floor
New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 752-1356
----------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On October 23, 2006, Alleghany Corporation (the "Company") entered into a
three-year unsecured credit agreement (the "Credit Agreement") with a bank
syndicate, providing commitments for revolving credit loans in an aggregate
principal amount of up to $200.0 million and scheduled to expire on October 23,
2009 unless extended as described below. Borrowings under the Credit Agreement
will be available for working capital and general corporate purposes. Under the
Credit Agreement, Wachovia Bank, National Association serves as administrative
agent for the banks. The Credit Agreement replaced a three-year unsecured credit
agreement with a bank syndicate which was scheduled to expire by its terms on
July 27, 2007. Capitalized terms used but not defined herein have the meanings
ascribed thereto in the Credit Agreement.
At the Company's option, borrowings under the Credit Agreement will bear
interest at either (x) the higher of (i) the administrative agent's prime
commercial lending rate or (ii) the federal funds rate plus 0.5 percent, or (y)
the London Interbank Overnight Rate plus a margin (currently 50 basis points)
based on the Company's Standard & Poors and/or Moody's rating. The Credit
Agreement requires that all loans shall be repaid in full no later than the
Maturity Date, or October 23, 2009, although the Company may request up to two
one-year extensions of the Maturity Date subject to meeting certain conditions
and upon agreement of the Lenders. The Credit Agreement charges the Company a
commitment fee of 1/8th of 1 percent per annum of the unused commitment.
The Credit Agreement contains representations, warranties and covenants
customary for bank loan facilities of this nature. In this regard, the Credit
Agreement (i) requires the Company to, among other things, maintain Tangible Net
Worth of not less than approximately $1.8 billion, maintain a ratio of Total
Indebtedness to Total Capitalization as of the last day of each fiscal quarter
of not greater than 0.25 to 1.0, limit the amount of certain other indebtedness
and maintain certain levels of unrestricted liquid assets, and (ii) contains
restrictions with respect to mortgaging or pledging any of the Company's assets
and the Company's consolidation or merger with any other corporation. In
addition, at any time when a Default or Event of Default has occurred and is
continuing, the Credit Agreement prohibits the Company from paying any dividend
or making any other distribution of any nature (cash, securities other than
common stock of the Company, assets or otherwise), and from making any payment
(whether in cash, securities or other property) on any class of Capital Stock of
the Company, and further prohibits any redemption, purchase, retirement,
acquisition, cancellation, termination, or distribution by the Company in
respect of any of the foregoing.
Under the Credit Agreement, an Event of Default is defined as (a) a failure
to pay any principal or interest on any of the Loans or other Obligations under
the Credit Agreement within designated time periods; (b) a breach of any
representation or warranty made in the Credit Agreement; (c) a failure to comply
with certain specified covenants, conditions or agreements; (d) a failure to
comply with any other conditions, covenants or agreements within 15 days after
knowledge or written notice of such failure; (e) the occurrence of certain
bankruptcy, insolvency or reorganization events; (f) the occurrence
of certain money judgments in excess of $5.0 million; (g) the acceleration of
the maturity of any indebtedness of the Company or any Subsidiary in an amount
exceeding $5.0 million ("Material Indebtedness"), or failure by the Company or
any Subsidiary to pay any Material Indebtedness when due or payable, or the
failure by the Company or any Subsidiary to comply with conditions, covenants or
agreements in any agreement or instrument relating to Material Indebtedness
which causes, or permits the holder of such Material Indebtedness to cause, the
acceleration of such indebtedness; (h) the occurrence of certain events
constituting a Change of Control of the Company; or (i) the issuance of any
orders of conservation or supervision in respect of any Material Insurance
Subsidiary. If an Event of Default occurs, then, to the extent permitted in the
Credit Agreement, the Lenders may terminate the Commitments, accelerate the
repayment of any outstanding loans and exercise all rights and remedies
available to such Lenders under the Credit Agreement and applicable law.
The foregoing description of the Credit Agreement does not purport to be a
complete statement of the parties' rights and obligations under the Credit
Agreement and the transactions contemplated thereby. The foregoing description
is qualified in its entirety by reference to the Credit Agreement, a copy of
which is attached hereto as Exhibit 10.1(a) and is incorporated herein by
reference. Certain of the Lenders and their affiliates have in the past
performed, and may in the future from time to time perform, investment banking,
financial advisory, lending and/or commercial banking services, or other
services to the Company and its subsidiaries, for which they have received, and
may in the future receive, customary compensation and expense reimbursement.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
On October 23, 2006, in connection with the entry by the Company into the
Credit Agreement described under Item 1.01 above, the Company terminated its
three-year unsecured credit agreement (the "Prior Credit Agreement") with a bank
syndicate which was effective July 28, 2004 and which was scheduled to expire by
its terms on July 27, 2007. As with the Credit Agreement described under Item
1.01 above, the Prior Credit Agreement provided commitments for revolving credit
loans in an aggregate principal amount of up to $200.0 million. No amounts were
outstanding under the Prior Credit Agreement at the time of its termination, and
the Company did not incur any early termination penalties or pay any fees
related to its early termination of the Prior Credit Agreement.
Wachovia Bank, National Association, the administrative agent for the
Credit Agreement described under Item 1.01 above, also served as administrative
agent for the banks under the Prior Credit Agreement. Under the Prior Credit
Agreement, at the Company's option, borrowings bore interest at either (x) the
higher of (i) the administrative agent's prime commercial lending rate or (ii)
the federal funds rate plus 0.5% or (y) the London Interbank Overnight Rate plus
a margin based on the Company's Standard & Poors and/or Moody's rating. In
addition, under the Prior Credit Agreement, (i) the Company was charged a
commitment fee of 1/4 of 1 percent per annum of the unused commitment, (ii) the
Company was required, among other things, to maintain
tangible net worth of not less than $1.19 billion, limit the amount of certain
other indebtedness, and maintain certain levels of unrestricted liquid assets,
and (iii) the Company was subject to certain restrictions with respect to
mortgaging or pledging any of its assets and its consolidation or merger with
any other corporation.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF REGISTRANT.
The information included under Item 1.01 hereof is incorporated by
reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
10.1(a) Credit Agreement, dated as of October 23, 2006, among the Company, the
banks which are signatories thereto and Wachovia Bank, National
Association as administrative agent for the banks (the "Credit
Agreement").
10.1(b) List of Contents of Exhibits and Schedules to the Credit Agreement.
The Company agrees to furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and Exchange Commission upon
request.
SIGNATURES
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 hereunto duly authorized.
ALLEGHANY CORPORATION
Date: October 25, 2006 By: /s/ Jerry G. Borrelli
------------------------------------
Name: Jerry G. Borrelli
Title: Vice President
Index to Exhibits
Exhibit
Number Exhibit Description
------- -------------------
10.1(a) Credit Agreement, dated as of October 23, 2006, among the Company, the
banks which are signatories thereto and Wachovia Bank, National
Association as administrative agent for the banks (the "Credit
Agreement").
10.1(b) List of Contents of Exhibits and Schedules to the Credit Agreement.
The Company agrees to furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and Exchange Commission upon
request.