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): February 10, 2010
FINANCIAL FEDERAL CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 001-14237 88-0244792
(State of (Commission File (I.R.S. Employer
incorporation) Number) Identification No.)
730 Third Avenue, New York, New York 10017
(Address of principal executive offices) (Zip Code)
(212) 599-8000
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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:
[X] 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 8.01. Other Events
This Form 8-K is being filed pursuant to a memorandum of
understanding regarding the settlement of certain litigation relating to
the Agreement and Plan of Merger, dated as of November 22, 2009, by and
between People's United Financial, Inc. ("People's United") and
Financial Federal Corporation ("Financial Federal").
Settlement of Certain Litigation
As previously disclosed on page 56 of the definitive proxy
statement/prospectus of Financial Federal, dated January 12, 2010,
included in People's United's Registration Statement on Form S-4, as
amended, under the heading "The Merger-Litigation Relating to the
Merger," an action captioned Edward Opton v. Financial Federal Corp. et
al. was filed in the First Judicial District Court of the State of
Nevada on behalf of a putative class of Financial Federal stockholders
against Financial Federal and its current directors.
The complaint alleges that Financial Federal and its directors
breached their fiduciary duties of loyalty, due care, independence,
candor, good faith and fair dealing by approving the merger. The
complaint seeks, among other things, an order enjoining the defendants
from proceeding with or consummating the merger, and other equitable
relief. Financial Federal and the individual defendants deny any
wrongdoing in connection with the proposed merger and maintain that they
diligently and scrupulously complied with any and all fiduciary and
other legal duties.
On February 10, 2010, the defendants entered into a memorandum of
understanding with the plaintiffs regarding the settlement of the Opton
action. In connection with the settlement contemplated by the memorandum
of understanding, Financial Federal has agreed to make certain
additional disclosures related to the proposed merger, which are
contained in this Form 8-K. The memorandum of understanding contemplates
that the parties will seek to enter into a stipulation of settlement.
The stipulation of settlement will be subject to customary
conditions, including court approval following notice to Financial
Federal's shareholders. In the event that the parties enter into a
stipulation of settlement, a hearing will be scheduled at which the
Court will consider the fairness, reasonableness, and adequacy of the
settlement. There can be no assurance that the parties will ultimately
enter into a stipulation of settlement or that the Court will approve
the settlement even if the parties were to enter into such stipulation.
In such event, the proposed settlement as contemplated by the memorandum
of understanding may be terminated.
2
SUPPLEMENT TO DEFINITIVE PROXY STATEMENT
The information set forth below supplements the proxy statement/prospectus
of Financial Federal dated January 12, 2010, and should be read in
conjunction with the proxy statement/prospectus, which should be read in
its entirety. Terms used below shall have the meanings set forth in the
proxy statement/prospectus (unless otherwise defined below).
Background of the Merger
------------------------
The following disclosure supplements the discussion on page 29 of the
proxy statement/prospectus concerning the June 2009 meeting between
Financial Federal management and KBW.
Management of Financial Federal has from time to time explored and
assessed various strategic options potentially available to Financial
Federal. As part of such assessment, management of Financial Federal
has met with representatives of investment banking firms from time to
time to discuss strategic options. Andrew Senchak, the President and
Vice Chairman of KBW, and Paul Sinsheimer knew one another, having been
previously introduced by Michael Zimmerman. The meeting in June of 2009
was requested by Mr. Senchak.
The following disclosure supplements the discussion on page 29 of the
proxy statement/prospectus concerning the determination by Financial
Federal and KBW to discontinue the process of contacting potential
buyers.
The well publicized financial difficulties, and possible bankruptcy, of
a large commercial leasing company in July of 2009 had a significant
chilling effect on the financial institution market, and contributed to
the decision to discontinue the process of contacting potential buyers.
Also, KBW reported that after contacting several financial institutions
there was no interest at that time.
The following disclosure supplements the discussion on page 30 of the
proxy statement/prospectus concerning the non-binding indication of
interest submitted to Financial Federal by People's United on September
21, 2009.
People's United's indication of interest from Philip Sherringham to Paul
Sinsheimer provided, among other things, that: "Although we have not yet
had an opportunity to discuss your ongoing role in the combined
organization, we look forward to discussing with you a significant
senior executive position in the combined company. Based on our initial
meeting, I strongly feel our operating philosophies and approaches to
business are fundamentally similar." This reflected People's United's
desire for an expanded management team to operate its leasing business in
the event the acquisition was completed.
The following disclosure supplements the discussion on page 30 of the
proxy statement/prospectus concerning the September 22, 2009 meeting of
the Financial Federal board of directors.
At the September 22, 2009 board meeting there was a discussion of, among
other things, current industry trends, including a discussion of the
continued lack of access by Financial Federal, and similarly situated
companies, to the capital or debt markets and its inability to borrow
additional funds to increase liquidity at competitive rates, along with
an overall decline in its lending activities.
The following disclosure supplements the discussion on page 31 of the
proxy statement/prospectus concerning Financial Federal's conclusion in
mid October 2009 that the chances of there being an agreement on price
was less likely.
In mid October 2009, after Financial Federal had concluded that the
chances of an agreement on price was less likely as a result of there
having been a downward revision to the price range set forth in
3
People's United's initial indication of interest that was relayed verbally
by Mr. Sherringham to Mr. Sinsheimer on October 16, 2009 and no
communication between the parties for a number of days, KBW communicated
with another financial institution that had previously been contacted by
KBW with respect to a potential business combination with Financial Federal.
Consistent with its procedures with other potential bidders, including
People's United, Financial Federal concluded that it would require an
indication of interest with a preliminary price range from this other
institution (in order to assess the seriousness and viability of its
interest) before it would be willing to provide competitively-sensitive and
other confidential information to this institution. The institution declined
to provide an indication of interest and accordingly Financial Federal
determined not to pursue further discussions with it.
The following disclosure supplements the discussion on pages 31-32 of
the proxy statement/prospectus concerning the November 20, 2009 meeting
of the Financial Federal board of directors.
The Financial Federal board, along with management and its advisors,
discussed whether there were any other potential buyers for Financial
Federal and what price such other buyers might be willing to pay to
acquire Financial Federal, and concluded that there were no other
reasonably likely potential buyers and that no such buyers, if they were
to appear, were likely to be willing to pay the same or a higher price
being offered by People's United at the time. The board also discussed
the possibility of remaining independent or waiting for a future date to
restart a sale process. The board ultimately concluded that proceeding
with the transaction with People's United was the superior alternative.
Opinion of Keefe, Bruyette & Woods, Inc., Financial Advisor to Financial
Federal
------------------------------------------------------------------------
The following disclosure supplements the discussion on page 38 of the
proxy statement/prospectus concerning the Financial Federal projections.
The Financial Federal projections that were used by KBW in certain of its
analyses were prepared by KBW based on publicly available First Call
consensus estimates, publicly available and confidential historical
financial information of Financial Federal and discussions with Financial
Federal's senior management.
The following disclosure supplements the discussion on pages 39-40 of
the proxy statement/prospectus concerning the selected transactions
analysis performed by KBW.
In its selected transactions analysis, KBW calculated the following implied
valuations for Financial Federal common stock: $26.20 per share based on
the median results of its receivables premium analysis; $31.41 per share
based on the median results of the tangible price/book value analysis;
$19.64 per share based on the median results of price/last twelve months
earnings per share analysis; and $26.35 per share based on the median
results of the 1-month premium analysis.
The following disclosure supplements the discussion on page 40 of the
proxy statement/prospectus concerning the discounted cash flow analysis
performed by KBW.
KBW performed a stand alone discounted cash flow analysis and other
material analyses that were presented to the Financial Federal board of
directors on November 22, 2009 in connection with its fairness opinion,
each of which is described in the proxy statement/prospectus. In
addition, in order to aid Financial Federal in its evaluation of its
strategic options and the negotiations with People's United, KBW
performed a discounted cash flow analysis merger scenario for the
proposed merger with People's United. The discounted cash flow analysis
4
merger scenario takes the stand alone discounted cash flow analysis and
adds the estimated value of the potential cost savings and other
adjustments resulting from the combination of Financial Federal and
People's United from the proposed merger.
In the discounted cash flow analysis merger scenario, KBW utilized certain
assumptions provided by People's United reflecting: (i) a reduction of
funding costs by 180 basis points, (ii) a pre-tax restructuring charge
of $30 million, (iii) a pre-tax debt prepayment expense of $25 million
and (iv) a loan purchase accounting mark of $80 million.
The discounted cash flow analysis merger scenario contained a range of
implied values per share which ranged from $22.71 per share to $45.59
per share of Financial Federal common stock, assuming that 0% to 100% of
the present value of the potential synergies are added to the stand
alone range. Assuming that 50% of the present value of the potential
synergies from the merger are added to the discounted cash flow stand
alone analysis, the implied value range would be up to $35.42 per share.
Assuming that 100% of the present value of the potential synergies are
added to the stand alone range, the implied value would be up to $45.59
per share.
The discounted cash flow analysis merger scenario was not an analysis used
by KBW in its determination to deliver the fairness opinion attached as
Annex B to the proxy statement/prospectus.
The following disclosure supplements the discussion on page 40 of the
proxy statement/prospectus concerning the stand alone discounted cash
flow analysis performed by KBW.
KBW utilized, among other things, the following assumptions based on
publicly available First Call consensus estimates, publicly available and
confidential historical financial information of Financial Federal and
discussions with Financial Federal's senior management when performing its
stand alone discounted cash flow analysis: loan originations of $500 million
in 2010, rising to $1.2 billion by 2013; net charge-offs of 0.80% in 2010,
falling to 0.25% by 2012; and risk-adjusted net interest margin falling
from 6.92% in 2010 to 5.2% by 2014.
* * *
Additional Information About this Transaction
---------------------------------------------
In connection with the proposed merger, People's United filed with the
Securities and Exchange Commission (the "SEC") a Registration Statement
on Form S-4 on January 12, 2010 that includes a proxy statement of
Financial Federal that also constitutes a prospectus of People's United.
Financial Federal mailed the proxy statement/prospectus to its
shareholders on or about January 14, 2010. Investors and security
holders are urged to read the definitive proxy statement/prospectus
because it contains important information. You may obtain a free copy
of the definitive proxy statement/prospectus and other related documents
filed by People's United and Financial Federal with the SEC at the SEC's
website at www.sec.gov. The definitive proxy statement/prospectus and
the other documents may also be obtained for free by accessing People's
United website at www.peoples.com under the tab "Investor Relations" and
then under the heading "Financial Information" or by accessing Financial
Federal's website at www.financialfederal.com under the tab "Investor
Relations - SEC Filings".
5
Participants in this Transaction
--------------------------------
People's United, Financial Federal and their respective directors,
executive officers and certain other members of management and employees
may be soliciting proxies from Financial Federal stockholders in favor
of the merger. Information regarding the persons who may, under the
rules of the SEC, be considered participants in the solicitation of the
Financial Federal stockholders in connection with the proposed merger is
set forth in the definitive proxy statement/prospectus contained in the
Registration Statement on Form S-4 filed with the SEC by People's United
on January 12, 2010. You can find additional information about the
executive officers and directors of People's United in its Annual Report
on Form 10-K for the year ended December 31, 2008 and in its definitive
proxy statement filed with the SEC on March 25, 2009. You can find
additional information about Financial Federal's executive officers and
directors in its Annual Report on Form 10-K for the year ended July 31,
2009 and in its definitive proxy statement filed with the SEC on
November 5, 2009. You can obtain free copies of these documents from
People's United or Financial Federal using the contact information above.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy
any securities.
6
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.
FINANCIAL FEDERAL CORPORATION
-----------------------------
(Registrant)
By: /s/ Troy H. Geisser
-------------------------
Senior Vice President and
Secretary
February 10, 2010
-----------------
(Date)