SEC Form SC 13E3/A filed by Trean Insurance Group Inc. (Amendment)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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SCHEDULE 13E-3

RULE 13E-3 TRANSACTION STATEMENT

UNDER SECTION 13(E) OF

THE SECURITIES EXCHANGE ACT OF 1934

Amendment No. 2

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TREAN INSURANCE GROUP, INC.

(Name of the Issuer)

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Trean Insurance Group, Inc.

Treadstone Merger Sub Inc.

Treadstone Parent Inc.

Treadstone Upper Parent Inc.

Treadstone Aggregator L.P.

Altaris Health Partners V, L.P.

Altaris Health Partners V-A, L.P.

AHP V GP, L.P.

AHP-TH LLC

AHP-BHC LLC

ACP-TH LLC

ACP-BHC LLC

Altaris Health Partners III, L.P.

AHP III GP, L.P.

Altaris Constellation Partners, L.P.

AHP Constellation GP, L.P.

Altaris Partners, LLC

George E. Aitken-Davies

Daniel G. Tully

 (Names of Persons Filing Statement)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

89457R101

(CUSIP Number of Class of Securities)

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(Name, Address, and Telephone Numbers of Person Authorized to Receive Notices

and Communications on Behalf of the Persons Filing Statement)

With copies to

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This statement is filed in connection with (check the appropriate box):

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ☐

Check the following box if the filing is a final amendment reporting the results of the transaction: ☐

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of this transaction, passed upon the merits or fairness of this transaction or passed upon the adequacy or accuracy of the disclosure in this transaction statement on Schedule 13E-3. Any representation to the contrary is a criminal offense.

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Introduction

This Amendment No. 2 to the Transaction Statement on Schedule 13E-3 (as originally filed on January 19, 2023, and subsequently amended by Amendment No.1 filed on March 16, 2023, together with all exhibits thereto and hereto, this “Transaction Statement”) is being filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”), by (1) Trean Insurance Group, Inc. (“Trean” or the “Company”); (2) Treadstone Merger Sub Inc., a Delaware corporation (“Merger Sub”), (3) Treadstone Parent Inc., a Delaware corporation (“Parent”), (4) Treadstone Upper Parent Inc., a Delaware corporation (“Upper Parent”), (5) Treadstone Aggregator L.P., a Delaware limited partnership (“Aggregator”), (6) Altaris Health Partners V, L.P., a Delaware limited partnership (“Altaris Health Partners V”), (7) Altaris Health Partners V-A, L.P., a Delaware limited partnership (“Altaris Health Partners V-A”), (8) AHP V GP, L.P., a Delaware limited partnership (“AHP V GP”), (9) AHP-TH LLC, a Delaware limited liability company (“AHP-TH”), (10) AHP-BHC LLC, a Delaware limited liability company (“AHP-BHC”), (11) ACP-TH LLC, a Delaware limited liability company (“ACP-TH”), (12) ACP-BHC LLC, a Delaware limited liability company (“ACP-BHC”), (13) Altaris Health Partners III, L.P., a Delaware limited partnership (“Altaris Health Partners III”), (14) AHP III GP. L.P., a Delaware limited partnership (“AHP III GP”), (15) Altaris Constellation Partners, L.P., a Delaware limited partnership (“Altaris Constellation Partners”), (16) AHP Constellation GP, L.P., a Delaware limited partnership (“AHP Constellation GP”), (17) Altaris Partners, LLC, a Delaware limited liability company (“Altaris Partners”), (18) George E. Aitken-Davies and (19) Daniel G. Tully (each of (1) through (19) a “Filing Person,” and collectively, the “Filing Persons”). Merger Sub, Parent, Upper Parent, Aggregator, Altaris Health Partners V, Altaris Health Partners V-A, AHP V GP, AHP-TH, AHP-BHC, ACP-TH, ACP-BHC, Altaris Health Partners III, AHP III GP, Altaris Constellation Partners, AHP Constellation GP, Daniel G. Tully and George E. Aitken-Davies are each affiliates of Altaris Partners, which through its affiliates, AHP-BHC, AHP-TH, ACP-BHC and ACP-TH, owns collectively 24,023,919 shares of Trean’s common stock par value $0.01 per share (“Trean Common Stock”), representing approximately 46.9% of the voting power of the issued and outstanding shares of Trean Common Stock.

This Transaction Statement relates to the Agreement and Plan of Merger, dated as of December 15, 2022 (as it may be amended from time to time, the “Merger Agreement”), by and among Trean, Parent and Merger Sub.

If the Merger Agreement is adopted by Trean’s stockholders and the other conditions under the Merger Agreement are either satisfied or waived, Merger Sub will be merged with and into Trean (which we refer to as the “Merger”), the separate corporate existence of Merger Sub will cease and Trean will continue its corporate existence under Delaware law as the surviving corporation in the Merger (the “Surviving Corporation”) and as a wholly-owned subsidiary of Parent. Upon completion of the Merger, each share of Trean Common Stock issued and outstanding immediately prior to the effective time of the Merger (other than (i) any shares held in the treasury of Trean, (ii) any shares owned by Parent or any direct or indirect wholly-owned subsidiary of Parent (including Merger Sub), (iii) any shares to be treated as otherwise agreed to in writing before the Effective Time between Parent or its affiliates and the holder thereof, and (iv) any shares owned by stockholders who are entitled to and have properly exercised and perfected their demands for appraisal rights under Delaware law) will be automatically converted into the right to receive $6.15 in cash, without interest and subject to applicable withholding taxes (the “Transaction Consideration”). Following the completion of the Merger, the shares of Trean Common Stock will no longer be publicly traded, and holders of such shares of Trean Common Stock that have been converted into the right to receive the Transaction Consideration will cease to have any ownership interest in Trean.

On March 16, 2023, Trean filed with the SEC a definitive proxy statement (the “Proxy Statement”) under Regulation 14A of the Exchange Act, pursuant to which Trean’s board of directors (the “Board”) is soliciting proxies from stockholders of Trean in connection with the Merger. Terms used but not defined in this Transaction Statement have the meanings assigned to them in the Proxy Statement. A copy of the Proxy Statement is attached hereto as Exhibit (a)(1). A copy of the Merger Agreement is attached to the Proxy Statement as Annex A thereto and is incorporated herein by reference.

Concurrently with the filing of this Transaction Statement, Trean is filing with the SEC definitive additional proxy soliciting materials under Regulation 14A of the Exchange Act, a copy of which is attached hereto as Exhibit (a)(10), to amend and supplement the Proxy Statement.

On December 15, 2022, a special committee (the “Special Committee”) of the Board, consisting solely of non-management members of the Board who are disinterested and independent of Altaris Partners and its affiliates, after considering various factors, including those described in the Proxy Statement, and after consultation with the Special Committee’s independent legal and financial advisors, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Trean and the “Unaffiliated Stockholders” (defined as Trean’s stockholders other than Altaris Partners and its affiliates, Parent, Merger Sub, any Rollover Stockholders (as defined in the Merger Agreement) or any officers of Trean whom the Board has determined are subject to the reporting requirements of Section 16 of the Exchange Act (the “Section 16 Officers”) or any of their respective affiliates, associates or members of their immediate family (as such terms are defined in Rules 12b-2 and 16a-1 of the Exchange Act)), (ii) determined that it is advisable and in the best interests of Trean and the Unaffiliated Stockholders to enter into, approve, adopt and declare advisable, the Merger Agreement, (iii) recommended that the Board (A) determine that the terms of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to and in the best interests of, Trean and its stockholders (including the Unaffiliated Stockholders), (B) determine that it is in the best interests of Trean and its stockholders (including the Unaffiliated Stockholders) to enter into, and approve, adopt and declare advisable, the Merger Agreement, (C) approve the execution and delivery by Trean of the Merger Agreement, the performance by Trean of its covenants and agreements contained therein and the consummation of the Merger and the other transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained in the Merger Agreement, (D) direct that the adoption of the Merger Agreement and the approval of the transactions contemplated by the Merger Agreement, including the Merger, be submitted to the stockholders of Trean, and (E) recommend that the stockholders of Trean vote to adopt the Merger Agreement and approve the transactions contemplated by the Merger Agreement, including the Merger, at any meeting of the stockholders held for such purpose and any adjournment or postponement thereof.

The Board (other than Daniel G. Tully, who abstained from participating in the deliberations or voting on the matter due to his position as Co-Founder and Managing Director of Altaris), acting upon the unanimous recommendation of the Special Committee, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to, and in the best interests of, Trean and its stockholders (including the Unaffiliated Stockholders), (ii) determined that it is in the best interests of Trean and its stockholders (including the Unaffiliated Stockholders) to enter into, and approved, adopted and declared advisable, the Merger Agreement, (iii) approved the execution and delivery by Trean of the Merger Agreement, the performance by Trean of its covenants and agreements contained therein and the consummation of the Merger and the other transactions contemplated by the Merger Agreement, upon the terms and subject to the conditions contained in the Merger Agreement, (iv) directed that the adoption of the Merger Agreement and the approval of the transactions contemplated by the Merger Agreement, including the Merger, be submitted to the stockholders of Trean, and (v) resolved to recommend that the stockholders of Trean vote to adopt the Merger Agreement and approve the transactions contemplated by the Merger Agreement, including the Merger, at any meeting of the stockholders held for such purpose and any adjournment or postponement thereof.

The Merger cannot be completed without both (a) the affirmative vote of a majority of the aggregate voting power of the outstanding shares of Trean Common Stock beneficially owned by the Unaffiliated Stockholders entitled to vote thereon, and (b) the affirmative vote of a majority of the aggregate voting power of the outstanding shares of Trean Common Stock entitled to vote thereon.

Pursuant to General Instruction F to Schedule 13E-3, the information in the Proxy Statement, including all annexes thereto, is expressly incorporated by reference herein in its entirety, and responses to each item herein are qualified in their entirety by the information contained in the Proxy Statement and the annexes thereto. The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the Proxy Statement of the information required to be included in response to the items of Schedule 13E-3.

While each of the Filing Persons acknowledges that the Merger is a going-private transaction for purposes of Rule 13E-3 under the Exchange Act, the filing of this Transaction Statement shall not be construed as an admission by any Filing Person, or by any affiliate of a Filing Person, that Trean is “controlled” by any of the other Filing Persons and/or their respective affiliates.

The information concerning Trean contained in, or incorporated by reference into, this Transaction Statement and the Proxy Statement was supplied by Trean. Similarly, all information concerning each other Filing Person contained in, or incorporated by reference into, this Transaction Statement and the Proxy Statement was supplied by such Filing Person. No Filing Person is responsible for the accuracy of any information supplied by any other Filing Person.

Regulation M-A Item 1001

The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers”

Regulation M-A Item 1002

Trean Insurance Group, Inc.

150 Lake Street West

Wayzata, MN 55391

(952) 974-2200

“Summary Term Sheet”

“Questions and Answers—What votes are required to approve the Special Meeting Proposals?”

“Questions and Answers—I understand that a quorum is required to conduct business at the Special Meeting. What constitutes a quorum?”

“Other Important Information Regarding Trean —Market Price of Common Stock and Dividends”

“Other Important Information Regarding Trean —Market Price of Common Stock and Dividends”

“Terms of the Merger Agreement—Conduct of Business Pending the Merger”

“Other Important Information Regarding Trean—Prior Public Offerings”

“Other Important Information Regarding Trean—Certain Transactions in the Shares of Trean Common Stock”

Regulation M-A Item 1003(a) through (c)

“Summary Term Sheet—Parties Involved in the Merger”

“The Merger—Parties Involved in the Merger”

“Other Important Information Regarding Trean—Directors and Executive Officers of Trean”

“Other Important Information Regarding the Altaris Filing Parties”

“Where You Can Find More Information”

“Other Important Information Regarding Trean—Directors and Executive Officers of Trean”

“Other Important Information Regarding the Altaris Filing Parties”

“Where You Can Find More Information”

Regulation M-A Item 1004(a) and (c) through (f)

“Summary Term Sheet”

“Questions and Answers”

“Special Factors—Background of the Merger”

“Special Factors—Recommendation of the Special Committee; Reasons for the Merger”

“Special Factors—Purpose and Reasons of Trean for the Merger”

“Special Factors—Purpose and Reasons of the Altaris Filing Parties for the Merger”

“Special Factors—Certain Effects of the Merger”

“Special Factors—Certain Effects of the Merger for the Altaris Filing Parties”

“Special Factors—Interests of the Directors and Executive Officers of Trean in the Merger”

“The Merger”

“Terms of the Merger Agreement”

“Voting and Support Agreement”

Annex A—Agreement and Plan of Merger, dated as of December 15, 2022, by and among Trean, Treadstone Parent Inc., and Treadstone Merger Sub Inc.

Annex B—Opinion of Houlihan Lokey, Inc.

Annex D—Voting and Support Agreement, dated as of December 15, 2022, by and among Trean Insurance Group, Inc., AHP-BHC LLC, AHP-TH LLC, ACP-BHC LLC, ACP-TH LLC and Altaris Partners, LLC.

“Summary Term Sheet”

“Questions and Answers—What will I receive if the Merger is consummated?”

“Questions and Answers—What will the holders of outstanding Trean equity awards receive in the Merger?”

“Special Factors—Certain Effects of the Merger”

“Special Factors—Interests of the Directors and Executive Officers of Trean in the Merger”

“The Merger—Transaction Consideration”

“Terms of the Merger Agreement—Transaction Consideration”

“Terms of the Merger Agreement—Exchange and Payment Procedures”

“Summary Term Sheet”

“Special Factors—Background of the Merger”

“Special Factors—Recommendation of the Special Committee; Reasons for the Merger”

“Special Factors—Approval and Recommendations of the Board; Trean’s Position as to the Fairness of the Merger to Trean’s Unaffiliated Security Holders”

“Special Factors—Position of the Altaris Filing Parties as to the Fairness of the Merger”

“Special Factors—Purpose and Reasons of Trean for the Merger”

“Special Factors—Purpose and Reasons of the Altaris Filing Parties for the Merger”

“Special Factors—Opinion of the Special Committee’s Financial Advisor”

“Special Factors—Unaudited Prospective Financial Information of Trean”

“Special Factors—Certain Effects of the Merger”

“Special Factors—Certain Effects of the Merger for the Altaris Filing Parties”

Annex B –Opinion of Houlihan Lokey, Inc.

(iv)	The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(v)	The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

(vi)	The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

(vii)

The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

(c)	Different terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(d)	Appraisal rights. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(e)	Provisions for unaffiliated security holders. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

(f)	Eligibility for listing or trading. Not applicable.

Item 5.

Past Contacts, Transactions, Negotiations and Agreements

(b) – (c)

Significant corporate events; Negotiations or contacts. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(e)	Agreements involving the subject company’s securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

Item 6.

Purposes of the Transaction and Plans or Proposals

(b)	Use of securities acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

Item 7.

Purposes, Alternatives, Reasons and Effects

(a)	Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Special Factors—Background of the Merger”

(b)	Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(c)	Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Special Factors—Position of the Altaris Filing Parties as to the Fairness of the Merger”

(d)	Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Special Factors—U.S. Federal Income Tax Consequences of the Merger”

Item 8.

Fairness of the Transaction

(a) – (b)

Fairness; Factors considered in determining fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(c)	Approval of security holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(d)	Unaffiliated representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(e)	Approval of directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(f)	Other offers. Not applicable.

Item 9.

Reports, Opinions, Appraisals and Negotiations

(a) – (b)

Report, opinion or appraisal; Preparer and summary of the report, opinion or appraisal. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(c)

Availability of documents. The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive offices of Trean during its regular business hours by any interested equity security holder of Trean or representative who has been so designated in writing.

Item 10.

Source and Amounts of Funds or Other Consideration

(a) – (b)

Source of funds; Conditions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

(c)	Expenses. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(d)	Borrowed funds. Not applicable.

Item 11.

Interest in Securities of the Subject Company

(a)	Securities ownership. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(b)	Securities transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

Item 12.

The Solicitation or Recommendation

(d)	Intent to tender or vote in a going-private transaction. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(e)	Recommendation of others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

Item 13.

Financial Information

(a)

Financial statements. The audited consolidated financial statements of Trean for the fiscal years ended December 31, 2022 and 2021 are incorporated herein by reference to Trean’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on March 16, 2023 (see “Item 8 - Financial Information” beginning on page 75).

(b)	Pro forma information. Not applicable.

Item 14.

Persons/Assets, Retained, Employed, Compensated or Used

(a) – (b)

Solicitations or recommendations; Employees and corporate assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

Item 15.

Additional Information

(b)	Golden Parachute Compensation. Not applicable.

(c)	Other material information. The information set forth in the Proxy Statement, including all annexes thereto, is incorporated herein by reference.

Item 16.

Exhibits

(a)(1)

Definitive Proxy Statement of Trean Insurance Group, Inc. (the “Proxy Statement”) (included in the Schedule 14A filed with the SEC on March 16, 2023, and incorporated herein by reference).

(a)(2)

Form of Proxy Card (included in the Proxy Statement and incorporated herein by reference).

(a)(3)

Letter to Trean Insurance Group, Inc. Stockholders (included in the Proxy Statement and incorporated herein by reference).

(a)(4)

Notice of Special Meeting of Stockholders (included in the Proxy Statement and incorporated herein by reference).

(a)(5)

Current Report on Form 8-K, dated December 16, 2022 (included in Schedule 14A filed on December 16, 2022 and incorporated herein by reference).

(a)(6)

Current Report on Form 8-K, dated December 19, 2022 (included in Schedule 14A filed on December 19, 2022 and incorporated herein by reference).

(a)(7)

Current Report on Form 8-K, dated January 26, 2023 (included in Schedule 14A filed on January 26, 2023 and incorporated herein by reference).

(a)(8)

Definitive Additional Proxy Soliciting Materials (included in Schedule 14A filed on March 16, 2023 and incorporated herein by reference).

(a)(9)

Current Report on Form 8-K, dated March 22, 2023 (incorporated herein by reference).

(a)(10)

Definitive Additional Proxy Soliciting Materials (included in Schedule 14A filed on April 12, 2023 and incorporated herein by reference).

(a)(11)

Definitive Additional Proxy Soliciting Materials (included in Schedule 14A filed on April 12, 2023 and incorporated herein by reference).

(c)(1)*

Discussion Materials of Houlihan Lokey, Inc. for the Special Committee, dated October 28, 2022.

(c)(2)*

Discussion Materials of Houlihan Lokey, Inc. for the Special Committee, dated December 15, 2022.