Scottish Re Group Ltd. says it is unwinding a securitization deal and implementing a merger that should provide liquidity for ordinary shareholders.
Scottish Re, Hamilton, Bermuda (Pink Sheets:SKRRF.pk), is a company that once operated a large life reinsurance operation but later ran into problems with claims rates and investment performance.
Affiliates of Cerberus Capital Management L.P., New York, and Massachusetts Mutual Life Insurance Company, Springfield, Mass., now control Scottish Re.
The merger agreement calls for a new subsidiary of the controlling shareholders to merge into Scottish Re, the company says.
Non-affiliate holders of ordinary shares would get a total price of about $21 million, or 30 cents per share, Scottish Re.
The company notes that the shares have been selling for an average price of about 16 cents.
If the deal is completed as planned, affiliates of the controlling investors would end up owning all Scottish Re ordinary shares, the company says.
The controlling investors need the approval from “disinterested directors” to go forward with the deal. The company has made up a special committee of disinterested board members to consider the deal.
The deal would let Scottish Re simplify its capital and ownership structure, Daniel Roth, the Scottish Re chief financial officer, says in a statement about the deal.