Scottish Re Group Ltd. may be able to announce a major deal with an acquirer or investor sometime next week.
The “remaining parties” in the company’s “strategic process” are on track to complete due diligence for a deal shortly, according to Paul Goldean, chief executive officer of Scottish Re, Hamilton, Bermuda.
“I wish to assure our shareholders and other stakeholders that we believe the company remains on track to complete the strategic process in the next few weeks,” Goldean says.
Goldean gives that assessment of the reinsurance company’s situation in a response to an announcement that Standard & Poor’s Rating Services, New York, has cut its counterparty credit rating to CCC from B plus and cut the counterparty credit and financial strength ratings on Scottish Re’s operating companies to B plus, from BBB minus.
S&P says it is increasing ratings on Ballantyne Re P.L.C., a special-purpose reinsurer established by Scottish Re to reinsure policies assumed by Scottish Re from Security Life of Denver Insurance Company.
“Standard & Poor’s conclusion is that it can look directly through to Security Life of Denver as the relevant counterparty to this transaction,” S&P says.
The downgrade on Scottish Re reflects the possibility that the company may not repay the holders of $115 million of convertible notes who could exercise a put option Dec. 6, according to Neil Strauss, an S&P credit analyst.
Poor second-quarter results seem to make it difficult for Scottish Re to use cash from its operating companies to pay the noteholders, Strauss says.