Reinsurer Repeats Request For Votes On Deal

At least $600 million in financing arrangements also would fall through, Goldean adds.

“If we were unable to promptly arrange satisfactory alternative financing, we believe it may become necessary for us to seek protection from our creditors under applicable bankruptcy and insolvency laws in the jurisdictions where we and our operating subsidiaries are domiciled, or one or more of our regulators may seek to intervene in the operations of our operating company subsidiaries,” Goldean writes.

Bankruptcy probably would be worse for shareholders than the financing deal, Goldean writes.

Securities analysts in the New York office of Fox-Pitt, Kelton write in a comment that the letter could be a sign that Scottish Re is not sure whether it has enough votes to complete the proposed financing deal.

“We recognize the current stock price equates to a 15% premium to the deal price, which is not significant, in our view, given the expected returns for private equity firms,” the Fox-Pitt analysts write. “However, given the lack of competitive bidding from true industry players, we are not convinced that Cerberus and Mass Mutual Capital’s investment will reap private-equity like returns near term.”