penntreatyform8k.htm
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): April 28, 2009
Penn Treaty American
Corporation
(Exact
name of registrant as specified in its charter)
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Pennsylvania
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001-14681
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23-1664166
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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2500 Legacy Drive
Suite 130, Frisco, Texas 75034
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(Address
of Principal Executive
Offices) (Zip
Code)
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Registrant’s
telephone number, including area code: (469) 362-1214
3440
Lehigh Street, Allentown, Pennsylvania 18103
(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:
[ ]
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 April
28, 2009, Penn Treaty American Corporation (the “Company”) closed on a
Termination and Limited Release Agreement (the “Release”) and a $5,000,000
Limited Recourse Secured Promissory Note (the “New Note”) with LTC Global, Inc.,
a Nevada corporation (“LTC Global”) and, in connection therewith, a Security
Agreement with ACSIA Long Term Care, Inc., an affiliate of LTC
Global.
The
agreements were entered into in connection with a Stock Purchase Agreement and
related agreements with LTC Global dated as of November 5, 2008, whereby the
Company sold all of the issued and outstanding shares of capital stock (the
“Shares”) of its wholly-owned subsidiary, United Insurance Group Agency, Inc.
(“UIG”), to LTC Global.
Pursuant
to the Stock Purchase Agreement, LTC Global purchased the Shares for $14.25
million (the “Purchase Price”), with $10.25 million of the Purchase Price
payable pursuant to the terms of a promissory note (the “Original Note”) payable
upon the earlier of (i) 120 days from November 5, 2008 or (ii) the completion of
certain executed commission assignments. Certain amounts were paid
upon the completion of certain commission assignments, and at the due date, the
aggregate principal and interest outstanding under the Original Note was
$8,262,188.
On
January 6, 2009, two of the Company's subsidiaries, Penn Treaty Network America
Insurance Company and American Network Insurance Company, were placed into
rehabilitation under the control of the Pennsylvania Department of
Insurance. The LTC Global group of companies is a general creditor of
the Company's subsidiaries, with renewal commission rights valued at
approximately $12 million gross of credit impairment. As a result of
the entry into rehabilitation, the associated commission rights owned by LTC
Global subsidiaries were no longer eligible as collateral under LTC Global’s
primary credit facility. LTC Global advised the Company that payment
of the Original Note at this time would have an impact on its liquidity and
therefore, asked the Company for an extension of credit to enable LTC Global to
continue its growth plan without interruption. As a result, the
Company agreed to refinance a portion of the amount outstanding on the Original
Note conditioned upon a release of potential indemnification obligations of the
Company related to actions of former officers of UIG.
Pursuant to the Release, the Company
canceled the Original Note and LTC Global (i) paid to the Company $3,262,188;
(ii) delivered to the Company the New Note; and (iii) released the Company from
any and all liability related to the conduct of the defendants in the action
captioned UIG v. Patrick
Patterson, et al. Oakland County Circuit Court Case No.
08-096069-CK.
Pursuant to the New Note, UIG will pay
to the Company principal and accrued interest in monthly installment
payments. The New Note matures on April 16, 2019 or such earlier date
upon which the original principal amount and all accrued interest thereon has
been paid in full.
As
collateral for the amounts due under the New Note, Penn Treaty received a
security interest in certain commissions payable to ACSIA from Penn Treaty
Network America Insurance Company and American Network Insurance
Company.
Item
1.02 Termination of a Material Definitive Agreement.
As described in Item 1.01 and
incorporated herein by reference, the Original Note has been cancelled and
replaced by the New Note.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits.
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.
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PENN
TREATY AMERICAN CORPORATION
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May
4, 2009
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By: /s/ Eugene
Woznicki
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Name: Eugene
Woznicki
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Title: Chief
Executive Officer
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EXHIBIT
INDEX