sec document
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No.)
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Under Rule 14a-12
VESTA INSURANCE GROUP, INC.
---------------------------
(Name of Registrant as Specified in Its Charter)
NEWCASTLE PARTNERS, L.P.
NEWCASTLE CAPITAL MANAGEMENT, L.P.
NEWCASTLE CAPITAL GROUP, L.L.C.
MARK E. SCHWARZ
JAMES C. EPSTEIN
MARK J. MORRISON
STEVEN J. PULLY
---------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies: Not
applicable
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(2) Aggregate number of securities to which transaction applies: Not
applicable
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): Not
applicable
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(4) Proposed maximum aggregate value of transaction: Not applicable
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(5) Total fee paid: Not applicable
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/ / Fee paid previously with preliminary materials:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid: Not applicable
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(2) Form, Schedule or Registration Statement No.: Not applicable
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(3) Filing Party: Not applicable
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(4) Date Filed: Not applicable
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Newcastle Partners, L.P. ("Newcastle"), together with the other
participants named herein, is filing materials contained in this Schedule 14A
with the Securities and Exchange Commission ("SEC") in connection with a
possible preliminary filing with the SEC of a proxy statement and an
accompanying proxy card to be used to solicit votes for the election of their
nominees at the 2005 annual meeting of stockholders of Vesta Insurance Group,
Inc., a Delaware corporation, which has not yet been scheduled.
Item 1: On May 8, 2005, the following article was published in The
Birmingham News.
THE BIRMINGHAM NEWS
VESTA INVESTOR SEEKING CHANGE
Sunday, May 08, 2005
RUSSELL HUBBARD
NEWS STAFF WRITER
A large shareholder of Vesta Insurance Group wants to inject new life into the
Birmingham-based company whose stock has fallen 54 percent in the past year.
Dallas-based Newcastle Partners, which invests in underperforming companies,
said Friday in a filing with the Securities and Exchange Commission it plans to
nominate three outsiders to Vesta's board. Newcastle said that Vesta has
suffered "persistent missteps and shortfalls in operating performance."
Newcastle Partners already owns about 6.5 percent of Vesta's outstanding shares.
The nomination of outside directors is a challenge to current management, led by
Chief Executive Norman Gayle. Vesta has lost money for the past three years,
never fully recovered from a 1998 accounting scandal and said that it can't file
2004 financial results because of more accounting issues.
"Someone with an ownership interest deserves a seat at the table," said Mark
Schwarz, a Newcastle managing partner. "Someone with experience in the business
deserves a seat."
Vesta CEO Gayle said he won't comment on Newcastle's intentions until the
company's board has reviewed the matter. If elected, Newcastle's candidates
would be in position to advise on strategy and the use of capital. Those are the
normal responsibilities of directors, who as shareholder representatives, are
the bosses of executives.
Vesta was once one of the high-fliers among Alabama publicly traded companies.
Former CEO Robert Huffman was a master at complicated risk-sharing agreements
with other insurance companies, and led the company by June 1998 to a market
value of almost $1 billion.
Things unraveled in 1998 when accounting problems emerged and Huffman quit. In a
day, shares that traded at $52 fell by half and slid to $5 in following weeks.
They haven't traded for more than $10 since 2001, and closed at $2.26 Friday.
The company now has a market value of about $80 million and concentrates on
selling high risk homeowners and auto policies. It employs about 300 people at
the Birmingham headquarters.
Two of Newcastle's nominees have extensive experience in the insurance business,
and the other has a full resume of running and advising publicly traded
companies. Schwarz said he hopes an agreement can be reached with Vesta's
management to get them nominated for election by mutual agreement.
He said putting the matter directly to shareholders, a maneuver called a proxy
fight, isn't out of the question. That only happens when management resists
outside nominees.
"We plan to continue our dialogue with Vesta and see where it goes," Schwarz
said. "But if we have to go to the ballot box, we know how to do that too."
The Newcastle nominees, if elected, wouldn't form a majority on Vesta's
nine-member board, so it's unlikely they could dictate wholesale management
changes at the company, as sometimes happens.
"Our approach is to work with people," Schwarz said.
Newcastle has in recent years had a taste for investing in troubled companies.
They include Whitehall Jewellers, a 386-store Chicago-based retailer that was
sued in 2004 for inflating revenue and inventory. Whitehall said the suit was
without merit and that it intended to defend itself.
Vesta had delayed filing its 2004 financial results because it's still fixing an
accounting error discovered in November. The company can't hold an annual
meeting where shareholders vote on directors until if files the financial
results.
Newcastle's Friday SEC filing criticized the delay, saying shareholders have
been left in the dark while "the board of directors has found the time to grant
options and award bonuses to its officers for 2004."
E-mail: rhubbard@bhamnews.com
(C) 2005 The Birmingham News
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Newcastle Partners, L.P. ("Newcastle"), together with the other
participants named herein, may make a preliminary filing with the Securities and
Exchange Commission ("SEC") of a proxy statement and an accompanying proxy card
to be used to solicit votes for the election of their nominees at the 2005
annual meeting of stockholders of Vesta Insurance Group, Inc., a Delaware
corporation (the "Company"), which has not yet been scheduled.
IN THE EVENT THAT A DETERMINATION IS MADE TO FILE A PROXY STATEMENT
WITH THE SEC, NEWCASTLE STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ
THE PROXY STATEMENT WHEN IT IS AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY STATEMENT, IF FILED, WILL BE AVAILABLE AT NO CHARGE ON
THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN ANY
SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT, IF FILED, WITHOUT
CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO STEVEN PULLY,
NEWCASTLE PARTNERS, L.P., AT (214) 661-7474.
The participants in such potential proxy solicitation are
anticipated to be Newcastle Partners, L.P., Newcastle Capital Management, L.P.,
Newcastle Capital Group, L.L.C., Mark E. Schwarz, James C. Epstein, Mark J.
Morrison and Steven J. Pully (together, the "Participants").
Information regarding the Participants and their direct or indirect
interests in the Company is available in their Schedule 13D, jointly filed with
the SEC on May 6, 2005.
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