UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
American Medical Security Group, Inc.
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
027 44P 101
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(CUSIP Number)
Thomas R. Hefty
President and Chief Executive Officer
Cobalt Corporation
401 West Michigan Street
Milwaukee, Wisconsin 53203
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications)
March 22, 2002
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(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 which is the subject of this Schedule 13D, and is filing this
schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7(b) for other
parties to whom copies are to be sent.
SCHEDULE 13D
CUSIP No. 027 44P 101
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wisconsin United for Health Foundation, Inc.
Cobalt Corporation
Blue Cross & Blue Shield United of Wisconsin
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(SEE INSTRUCTIONS) (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Wisconsin United for Health Foundation, Inc. - Wisconsin
Cobalt Corporation - Wisconsin
Blue Cross & Blue Shield United of Wisconsin - Wisconsin
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7 SOLE VOTING POWER
NUMBER OF
Wisconsin United for Health Foundation, Inc. - 0
SHARES Cobalt Corporation - 0
Blue Cross & Blue Shield United of Wisconsin - 4,909,525
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY Wisconsin United for Health Foundation, Inc. - 0
Cobalt Corporation - 0
Blue Cross & Blue Shield United of Wisconsin - 0
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9 SOLE DISPOSITIVE POWER
EACH
Wisconsin United for Health Foundation, Inc. - 0
REPORTING Cobalt Corporation - 0
Blue Cross & Blue Shield United of Wisconsin - 4,909,525
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PERSON 10 SHARED DISPOSITIVE POWER
WITH Wisconsin United for Health Foundation, Inc. - 0
Cobalt Corporation - 0
Blue Cross & Blue Shield United of Wisconsin - 0
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11 AGGREGATE AMOUNT OF BENEFICIALLY OWNED BY EACH REPORTING PERSON
Wisconsin United for Health Foundation, Inc. - 4,909,525
Cobalt Corporation - 4,909,525
Blue Cross & Blue Shield United of Wisconsin - 4,909,525
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
39.1%
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14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
Wisconsin United for Health Foundation, Inc. - CO
Cobalt Corporation - CO
Blue Cross & Blue Shield United of Wisconsin - CO
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ITEM 1. Security and Issuer.
This statement on Schedule 13D (this "Schedule 13D") relates to the
shares of common stock, no par value per share ("Common Stock"), of American
Medical Security Group, Inc., a Wisconsin corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 3100 AMS Boulevard,
Green Bay, WI 54313.
ITEM 2. Identity and Background.
(a)-(c) This statement is being filed by
(i) Wisconsin United for Health Foundation, Inc.
(the "Foundation")
410 E. Doty Street, Madison, WI 53701
The Foundation is a Wisconsin social welfare
organization and a Wisconsin non-stock corporation.
(ii) Cobalt Corporation ("Cobalt")
401 West Michigan Street, Milwaukee, WI 53203
Cobalt is a publicly traded managed care company and
a Wisconsin corporation.
(iii) Blue Cross & Blue Shield United of Wisconsin
("BCBSUW")
401 West Michigan Street, Milwaukee, WI 53203
BCBSUW is an insurance company and a Wisconsin
corporation.
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(d) During the past five years, no member of the Group has been
convicted in a criminal proceeding.
(e) During the past five years, no member of the Group has been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. Source and Amount of Funds or Other Consideration.
The Foundation and Cobalt became beneficial owners of the Common Stock
in connection with the conversion of BCBSUW from a Wisconsin service insurance
corporation to a Wisconsin stock insurance corporation. BCBSUW previously owned
6,309,525 shares of Common Stock prior to the sale of shares of Common Stock by
BCBSUW to the Issuer described in Item 4 hereof, and subsequent to such sale
owns 4,909,525 shares of Common Stock. In connection with the conversion, Cobalt
became the owner of 100% of the issued and outstanding common stock of BCBSUW
and the Foundation became the owner of 77.5% of the issued and outstanding
common stock of Cobalt. Consequently, both the Foundation and Cobalt are deemed
to be beneficial owners of the 4,909,525 shares of Common Stock now owned by
BCBSUW.
ITEM 4. Purpose of Transaction.
General. On March 22, 2002 (the "Closing Date"), BCBSUW sold 1,400,000
shares of Common Stock to the Issuer for $13.00 per share, or an aggregate
purchase price of $18,200,000. The purchase and sale was consummated pursuant to
the terms of a Stock Purchase Agreement, dated as of March 19, 2002, by and
among Cobalt, BCBSUW and the Issuer (the "Agreement"). As part of the Agreement,
BCBSUW agreed to withdraw its notice of its intent to nominate directors at the
Issuer's next annual meeting of shareholders. The Agreement is filed as an
exhibit to this Amendment to Schedule13D and is incorporated herein by
reference.
Board Representation. In addition to the purchase and sale of the
shares, pursuant to the Agreement the Issuer appointed Thomas R. Hefty and
Kenneth L. Evason to become directors of the Issuer, effective on March 22,
2002. Mr. Hefty was appointed to the class of directors whose terms expire at
the Issuer's second annual meeting of shareholders following the Closing Date,
and Mr. Evason was appointed to the class of directors whose terms expire at the
Issuer's third annual meeting of shareholders following the Closing Date.
The Agreement also provides that Cobalt and BCBSUW will be entitled to
designate (i) two nominees to the Issuer's Board of Directors (the "Board") for
so long as BCBSUW beneficially owns 20% or more of the then outstanding shares
of Common Stock and (ii) one nominee to the Board for so long as BCBSUW
beneficially owns 10% or more, but less than 20%, of the then issued and
outstanding shares of Common Stock. In each case, such nominee(s) must be
reasonably acceptable to the Issuer, and the Issuer will use its best efforts to
take all action
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necessary so that such BCBSUW nominees will be nominated for election or
re-election to the Board, as the case may be. If BCBSUW at any time beneficially
owns less than 10% of the then issued and outstanding shares of Common Stock,
then BCBSUW will not be entitled to designate any directors to the Board, and
BCBSUW will cause each BCBSUW-nominated director to immediately resign from the
Board. Mr. Hefty (or his successor) will resign effective upon date that BCBSUW
owns less than 20% of the then issued and outstanding shares of Common Stock and
Mr. Evason (or his successor) will resign effective immediately upon the date
that BCBSUW owns less than 10% of the then issued and outstanding shares of
Common Stock.
Certain Agreements. In addition to the Board representation rights
described above, and subject to the right of BCBSUW and Cobalt to earlier
terminate such covenants as described below under "Right to Terminate Certain
Covenants," the Agreement provides that, for so long as BCBSUW shall have at
least one BCBSUW-nominated director on the Board, Cobalt and BCBSUW will not,
and will cause their respective directors, officers, affiliates and, on their
behalf, representatives, agents and advisors not to, directly or indirectly:
o purchase, offer to purchase or otherwise acquire or offer or agree to
acquire any shares of Common Stock or other securities of the Issuer which
are entitled to vote generally for the election of directors, or any
securities which are convertible or exchangeable into or exercisable for
any securities of the Issuer which are entitled to vote generally for the
election of directors (the Common Stock, together with such other
securities, are referred to herein as "Voting Securities");
o (i) (a) make, or in any way participate, directly or indirectly, in any
solicitation of proxies or consents, (b) seek to advise, encourage or
influence any person with respect to the voting of any Voting Securities,
or (c) initiate, propose or otherwise solicit shareholders of the Issuer,
in each case for (1) the election of persons to the Board or (2) the
approval of shareholder proposals; or (ii) induce or attempt to induce any
other person to initiate any such solicitation or otherwise communicate
with the Issuer's shareholders pursuant to Rule 14a-2(a) or (b) under the
Securities Exchange Act of 1934, as amended;
o without the prior consent of the Issuer, seek, propose, or make any
statement that is critical of management of the Issuer or reasonably likely
to be publicly disclosed with respect to, certain extraordinary corporate
transactions involving the Issuer;
o call or seek to have called any meeting of the shareholders of the Issuer;
o otherwise act to control or seek to control or influence or seek to
influence the management, Board or policies of the Issuer (other than with
respect to their Board representation rights under the Agreement), or make
any statement that is critical of any of the persons nominated by the Board
for election as directors of the Issuer;
o seek representation on the Board, or seek the removal of any member of the
Board or a change in the composition or size of the Board (other than with
respect to their Board representation rights under the Agreement);
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o make any publicly disclosed proposal, comment, statement or communication,
or make any proposal, comment, statement or communication in a manner that
would require any public disclosure by the Issuer, BCBSUW, Cobalt or any
other person, or enter into any discussion with any person, regarding any
of the foregoing; or
o have any discussions or communications, or enter into any arrangements,
understandings or agreements (whether written or oral) with, or advise,
finance, assist, encourage or act in concert with, any other person in
connection with any of the foregoing or make any investment in any person
for the purpose of engaging in any of the foregoing, or take any action
inconsistent with the foregoing.
Voting. BCBSUW and Cobalt also agreed that, until the date on which
BCBSUW beneficially owns less than 10% of the then issued and outstanding shares
of Common Stock and each BCBSUW-nominated director shall have resigned from the
Board, all of the additional shares of Common Stock beneficially owned by BCBSUW
("Additional Shares") will be present, in person or by proxy, at all meetings of
shareholders of the Issuer at which directors will be elected in order to
participate in a quorum at such meetings, and will be voted on the election of
directors at any such meeting in favor of each of the nominees recommended by
the Board. Notwithstanding the foregoing, (i) BCBSUW may vote Additional Shares
as it determines, in its sole discretion, on any matter other than the election
of directors, and (ii) BCBSUW may vote Additional Shares as it determines, in
its sole discretion, on the election of directors in the event that the Issuer
shall then be in material breach of its obligations under Section 6.01 of the
Agreement.
Right to Terminate Certain Covenants. Notwithstanding anything to the
contrary contained in the Agreement, BCBSUW has the right, effective at any time
after December 31, 2002, upon thirty (30) days' prior written notice to the
Issuer, to terminate the covenants and agreements set forth in Sections 4.01 and
4.02 of the Agreement and described above under "Certain Agreements" (other than
certain covenants and agreements with respect to the election of directors,
which may not be terminated in any case until after December 31, 2003). However,
if the Issuer is at any time in material breach of the Agreement, BCBSUW has the
right at any time after the date of the Agreement, upon thirty (30) days' prior
written notice to the Issuer, to terminate the covenants and agreements set
forth in Sections 4.01 and 4.02 of the Agreement and described above under
"Certain Agreements" (other than those covenants which may not be terminated in
any case until after December 31, 2003). Additionally, in the event of any
termination of such covenants under the provisions described in this paragraph,
each BCBSUW-nominated director then serving as a director on the Board will
resign from the Board, effective immediately on the date on which such notice of
termination is given, and BCBSUW's rights to continued Board representation
under the Agreement will terminate.
Secondary Sale. Cobalt, BCBSUW and the Issuer further agreed to
promptly cooperate to prepare and file with the SEC a registration statement to
effect the registration and sale of at least 3,000,000 Additional Shares, with
the exact number of Additional Shares to be sold to be as many Additional Shares
as the underwriters in such offering advise may be sold therein (the
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"Secondary Sale"), and to cause such registration statement to become effective
under the Securities Act of 1933, as amended, as expeditiously as possible
following the date of the Agreement. The parties further agreed to use
commercially reasonable efforts to complete the Secondary Sale as promptly as
reasonably practicable on commercially reasonable terms, mutually acceptable to
the parties. The registration of Additional Shares will generally be conducted
pursuant to the terms and conditions of the Registration Rights Agreement by and
between BCBSUW and the Issuer dated as of September 1, 1998. Except for all
underwriters' discounts, fees and commissions related to the Secondary Sale,
which will be borne exclusively by BCBSUW, all reasonable out-of-pocket fees and
expenses associated with the registration up to an aggregate of $650,000 will be
borne by the Issuer, and any such expenses incurred in excess of $650,000 will
be borne equally by the Issuer and BCBSUW.
Rights Agreement Amendment. If upon consummation of the Secondary Sale
BCBSUW owns more than 12% of the then issued and outstanding shares of Common
Stock, the Issuer will execute an amendment to the Rights Agreement between the
Issuer and Firstar Bank, N.A., dated as of August 9, 2001, as amended (the
"Rights Agreement"), which will provide that the definition of "Acquiring
Person" thereunder will be amended to mean any person beneficially owning such
percentage of issued and outstanding shares of Common Stock as is equal to the
lesser of (i) 20% of the issued and outstanding shares of Common Stock or (ii)
the percentage (rounded up to the nearest whole number) of the then issued and
outstanding shares of Common Stock beneficially owned by BCBSUW immediately upon
consummation of the Secondary Sale.
The Foundation is not a party to and did not participate in the
negotiation of the Agreement. The Foundation is not responsible for the
completeness or accuracy of the information contained herein regarding Cobalt or
BCBSUW, and has no reason to believe that such information is inaccurate.
ITEM 5. Interests in Securities of the Company.
(a) Each member of the Group is deemed to be the beneficial owner of
the 4,909,525 shares of Common Stock owned by BCBSUW which represents
39.1% of the issued and outstanding Common Stock.
(b) (i) Number of shares as to which the Foundation has:
sole voting power - 0
shared voting power - 0
sole dispositive power - 0
shared dispositive power - 0
(ii) Number of shares as to which Cobalt has:
sole voting power - 0
shared voting power - 0
sole dispositive power - 0
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shared dispositive power - 0
(iii) Number of shares as to which BCBSUW has:
sole voting power - 4,909,525
shared voting power - 0
sole dispositive power - 4,909,525
shared dispositive power - 0
(c) No member of the Group has made any transaction in the Common
Stock during the past sixty days except as reported in Item 4
hereof. Reference is made to the information set forth in Item
4 hereof, which information is incorporated by reference
herein in response to this Item.
(d) Not applicable.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Company.
Cobalt and BCBSUW entered into the Agreement with the Issuer which
contains certain voting and other obligations and restrictions with respect to
the shares of Common Stock owned by BCBSUW, as more fully described in Item 4
hereof. Reference is made to the information set forth in Item 4 hereof, which
information is incorporated by reference herein in response to this Item.
ITEM 7. Material to be Filed as Exhibits.
Exhibit 1 Stock Purchase Agreement, dated as of March 19, 2002, among
BCBSUW, Cobalt and the Issuer (incorporated by reference to Cobalt's Current
Report on Form 8-K, filed March 26, 2002).
Exhibit 2 Press Release, dated March 19, 2002, issued by the Issuer and
Cobalt (incorporated by reference to Cobalt's Current Report on Form 8-K, filed
March 26, 2002).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
WISCONSIN UNITED FOR HEALTH
FOUNDATION, INC.
By: /s/ Ben Brancel
---------------------------------
Ben Brancel
President
COBALT CORPORATION
By: /s/ Thomas R. Hefty
---------------------------------
Thomas R. Hefty
Chief Executive Officer
BLUE CROSS & BLUE SHIELD UNITED
OF WISCONSIN
By: /s/ Stephen E. Bablitch
---------------------------------
Stephen E. Bablitch
Senior Vice President and
General Counsel
Dated: March 29, 2002
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