UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

 

Under the Securities Exchange Act of 1934
(Amendment No. 3)*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

(1)  Calculated based on the 9,598,808 aggregate number of common shares stated to be outstanding on May 1, 2013 by the Issuer in the Issuer’s Form 10-Q filed with the Securities and Exchange Commission on May 10, 2013.

 

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Introductory Statement

 

This Amendment No. 3 (this “Amendment”) amends the Schedule 13D initially filed by Catalina Holdings (Bermuda) Ltd (“Catalina”) on March 5, 2013 (the “Original Filing”), amended on July 29, 2013 (“Amendment No. 1”) and on August 6, 2013 (“Amendment No. 2”), relating to shares of the Common Stock, $0.01 par value per share (the “Common Shares”), of American Safety Insurance Holdings, Ltd. (“ASI”).  Information reported in the Original Filing, Amendment No. 1 and Amendment No. 2 remains in effect except to the extent that it is amended or superseded by information contained in this Amendment.

 

Item 4.

Purpose of Transaction

 

The disclosure in Item 4 of the Schedule 13D is hereby supplemented by adding the following:

 

On August 14, 2013, Catalina sent a further letter to the board of directors of ASI, offering a price of $30.75 per share in cash to acquire ASI.  A copy of the letter is attached hereto as Exhibit 99.3.

 

Item 7.	Material to be Filed as Exhibits
Item 7 of the Schedule 13D is hereby supplemented by adding the following:   Exhibit 99.3  Letter dated August 14, 2013 from Catalina to the board of directors of ASI.

 

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SIGNATURES

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: August 14, 2013

 

	Catalina Holdings (Bermuda) Ltd.
	By:	/s/ Campbell McBeath
		Name: Campbell McBeath
		Title: Group Treasurer

 

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INDEX TO EXHIBITS

 

Exhibit 99.3

Letter dated August 14, 2013 from Catalina to the board of directors of ASI.

 

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Exhibit 99.3

 

Cumberland House 1 Victoria Street, 7th Floor, Hamilton HM11, Bermuda   Tel +1 441 494 6350 Fax +1 441 494 6390

 

August 14, 2013

 

The Board of Directors

American Safety Insurance Holdings, Ltd.

31 Queen Street, 2nd Floor
Hamilton, Bermuda

 

Attn:       Stephen R. Crim

 

BY EMAIL

 

Dear Stephen:

 

We are disappointed by the Board’s continued disregard of its fiduciary responsibilities to obtain the best price available for shareholders.  If the Board had managed the sale auction of American Safety Insurance (“ASI” or the “Company”) properly, it would have realized that both Fairfax and Catalina intended to pay significantly more than our initial bids as demonstrated by the current bid levels.

 

The Board has further compounded a flawed auction process with a disregard of the best interests of shareholders by agreeing hastily to a significantly increased termination fee.  We note that, as described in the revised proxy statement, ASI held multiple conversations with Fairfax, while not one phone call was placed nor one email sent to Catalina during these negotiations to solicit a better offer or to notify us of ASI’s intent to increase the termination fee.  This was a shame for ASI’s shareholders because we were prepared to increase our offer again with a significantly lower termination fee.

 

Instead, we were surprised to learn that ASI has agreed to increase the termination fee to $13.4 million, or from 3.0% to 4.25% of equity value, which is clearly above standard termination fee levels for such a transaction involving two competing bidders.  The additional $4.2 million prevents Catalina from delivering approximately $0.40 per share of additional value to shareholders through a higher offer.

 

Nevertheless, we are still interested in acquiring ASI and submit a revised proposal to acquire 100% of the capital stock of ASI that we do not already own, for $30.75 per fully diluted share and on the same terms as outlined in our July 29 letter and the mark-up of the merger agreement submitted on August 6 (which maintains a market-based termination fee of $9.186 million as previously communicated to the Board in our prior offer).

 

We believe our current offer of 50 cents above Fairfax’s offer, with a lower termination fee, is clearly superior as evidenced by the fact that the Board solicited a revised proposal from Fairfax after we also topped their prior offer by 50 cents.

 

The Board’s willingness to take money from shareholders and put it in Fairfax’s pockets is shocking to us.  Overall, the $13.4 million termination fee will result in a reduction of value to shareholders in excess of $1.25 per share.  We note, if the Board had conducted the sale process of ASI in good faith, our current offer would be as high as $32.00 per share.

 

The terms of our proposal will remain open until the earlier of August 16, 2013 at 12:00 p.m. Eastern or the day when it is accepted by ASI or any representative thereof (“Termination Date”).  Post the Termination Date, no terms included in our Proposal will be valid unless otherwise communicated by Catalina.

 

Yours sincerely,

 

/s/ pp Keith Lyons
Chris Fagan
Chief Executive
Catalina Holdings (Bermuda) Ltd

 

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