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.

Efforts to free cash by eliminating the balance on a credit facility appears to be going slowly, and efforts to find an acquirer or a source of a capital infusion also appear to be going slowly, S&P says.

If Scottish Re finds an acquirer or major source of capital before Dec. 6, S&P will take another look at the company’s ratings, S&P says.

“Any final resolution would incorporate the viability of the franchise and business prospects following the events of the past several months,” S&P says.

The S&P announcement comes on the heels of comments by securities analysts who have suggested that Scottish Re seems to be getting more cautious in its descriptions of its efforts to find an acquirer or major investor.

But, “we believe the information provided to S&P should have led them to conclude that we are on track to complete the strategic process,” Goldean says.

Scottish Re already has reduced the balance on its credit agreement, it already has “numerous alternatives” for meeting obligations to the noteholders, and it could have accelerated completion of some transactions if S&P had warned it far enough in advance about the downgrade, according to Dean Miller, Scottish Re’s chief financial officer.

“Our clients are being very supportive of our need to terminate their existing letters of credit, but appropriate time is required to complete this process,” Miller says in a statement. “Any remaining letters of credit not replaced by reserve credit trusts can be handled with replacement letters of credit issued by a financial institution. As a final alternative, we can request the clients to draw on the letters of credit, which will require us to provide the bank group with the assets to terminate the letters of credit.”