Uslico Corp., a life insurance holding company, said yesterday that it has agreed to spend $57.3 million to buy more than one-third of the outstanding shares of International Bank of Washington from a Dutch insurance company, and plans to try to buy the remaining shares.
The transaction, if completed, would make Uslico, a life insurance holding company that has been owned in part by International Bank, the owner of the bank instead.
International Bank's chairman and chief executive officer said he was not aware of Uslico's plan to buy all of the bank's shares, however.
"I'm not aware of any interest on their part" to acquire more than a third of the bank, George Olmsted, chairman and chief executive officer of International Bank, said in a telephone interview. "I don't know anything about this. I haven't seen any such proposal. As far as I know, there's no such discussion going on."
Uslico, which primarily sells life insurance to the military, said it has entered into an agreement with several U.S. affiliates of AEGON N.V., to purchase approximately 38 percent of the oustanding shares of International Bank, which now holds about 35 percent of Uslico's shares.
AEGON is the second-largest insurance operation in the Netherlands, with assets worth $11 billion.
Upon completion of the purchase of International Bank shares from AEGON, Uslico would "make a proposal to exchange Uslico shares for the remaining International Bank shares in a tax-free transaction," Uslico said.
"Through the exchange process, as well as purchase of Dutch shares, we would be in essence acquiring control of International Bank," said W. Alan Aument, treasurer of Uslico.
International Bank, which calls itself a "merchant bank," has a wide range of investments in industrial, insurance and shipping companies. Its headquarters is at 1701 Pennsylvania Ave NW, in a building named for Olmsted, an 84-year-old retired Army general who served in World War II and the Korean conflict.
International Bank, which does business in 50 states and 38 foreign countries, has had rough financial going since 1981 and reported a loss of $8.8 million for 1984. However, the company reported sharply increased profits during the second quarter of this year. Net income for the three months ended June 30 was $3.9 million (30 cents per share), compared with a loss of $2.1 million (58 cents) for the comparable period a year ago.
Included in the 1985 results, however, was an extraordinary $4.7 million item representing a tax benefit from losses in previous years, the company said.
In June, Olmsted tried to obtain AEGON's holding in International Bank for $57.3 million.
The purchase would have given Olmsted a total of 62.3 percent of the bank.
But on July 2, AEGON's attorneys told Olmsted that he was in default of the agreement by not completing the purchase of International Bank shares held by AEGON and its subsidiaries, according to documents filed at the Securities and Exchange Commission.
Olmsted then asked AEGON to allow Uslico to purchase AEGON shares. AEGON agreed, but on Aug. 6, AEGON was told that Uslico would not purchase its shares, according to a letter from AEGON's lawyers and filed with the SEC.
Uslico said yesterday that the agreement it reached with AEGON's affiliates calls for Uslico to pay $14 million in cash and the balance with a promissory note. The purchase is subject to obtaining certain required regulatory approvals and exemptions.
In addition, Uslico said that it intends to make a public offering of up to $35 million in convertible debentures, but the terms of the offering have not been completed.
Leslie P. Schultz, chairman and chief executive officer of Uslico, said "there is no connection" between the offering and the purchase of International Bank's stock.