If investors fail to approve a financing deal Scottish Re Group Ltd. has arranged, the company might face serious problems with ongoing operations.
Executives of Scottish Re, Hamilton, Bermuda, have presented that warning and others in documents filed with the U.S. Securities and Exchange Commission.
The documents include a preliminary proxy statement concerning the financing deal and a notice that the company plans to hold a shareholders’ meeting to give shareholders a chance to vote on the deal.
Scottish Re hopes to give the meeting date in a final proxy statement that will be mailed to shareholders by Jan. 19, the company says.
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Scottish Re is a struggling life reinsurer that at one point was one of the most active players in the U.S. life reinsurance market.
The financing deal, announced No. 27, 2006, involves plans for an affiliate of Massachusetts Mutual Life Insurance Company, Springfield, Mass., and a group of affiliates of Cerberus Capital Management L.P., New York, to each invest $300 million in Scottish Re.
The MassMutual affiliate and the Cerberus affiliate group would each get 1 million convertible shares. The convertible shares would be converted into 150 ordinary shares, or enough shares to give the investors ownership of about 69% of Scottish Re’s shareholder voting power, Scottish Re says in the preliminary proxy.
Once the deal was consummated, all company directors other than Paul Goldean, the company’s president, and Jeffrey Hughes, who represents a major shareholder, would resign.
The MassMutual affiliate and the Cerberus affiliate group have filed applications or notices concerning the proposed deal with state regulators in Delaware and South Carolina, the states of domicile for Scottish Re’s U.S. insurance company subsidiaries.