Scottish Re Group Ltd (fka SKRRF)

[jackiebear]

With this news, what is the value the common shares.

[Enterprising Investor]

Exactly.

The company was public about its intentions to buy liabilities and SKRUF at discounts in any type of transaction.

SKRRF is paying a $.50 fee for each share purchased, so the real cost is at least $5.50.

Mr. Market will react on Monday, and the Arbs take it from here.

In any case, I am not tendering at this price.

[h_man_investor]

That's what I thought- maybe a large holder approached them to sell. This name is so illiquid that if anyone with size wanted to sell it would drive the price down significantly. So $5 may seem reasonable to a large holder.

But why would the company go to the expense of trying to get others to tender their shares if they could have bought a block directly from a large holder?

Is there anything in the MM/C docs or SKRUF prosectus that precludes them from a private purchase?

[bwana12]

I doubt they would get the tender going if they thought there would be no-one selling.

Maybe they've had some discussions.

[Enterprising Investor]

Offer to Purchase in hand - $5.00 verified.

Total waste of time and money.

They must be hoping there are "ignorant investors" out there who do not realize the 50-day SMA is $6.35.

What is the market price of my Perpetual Preferred Shares as of a recent date?

To SRGL's knowledge, the Perpetual Preferred Shares are traded infrequently in transactions arranged through brokers. Quotations for securities that are not widely traded, such as the Perpetual Preferred Shares, may differ from actual trading prices and should be viewed as approximations. Holders are urged to contact their brokers with respect to current information regarding the market price of the Perpetual Preferred Shares. See "Certain Significant Considerations."

Posted 5/03/10:

I envision a path similar to NCT.

"Right Side" balance sheet management will continue to be a focus. The discount at 12/31/09 was almost $620 million (see iBox). One potential action in 2010 is a cash tender offer for SKRUF.

The equity deficit should be eliminated within the next six months based on current run rates.

This is going to be fun!

[bwana12]

Is that the price?

[h_man_investor]

yeah, for $5.

[genlou]

News ...Scottish Re Group Limited Announces Tender Offer to Purchase for Cash Any and All of its Outstanding Non-Cumulative Perpetual Preferred Shares

[genlou]

May 7, 2010, 4:13 p.m. EDT · Recommend · Post:
Scottish Re Group Limited Announces Tender Offer to Purchase for Cash Any and All of its Outstanding Non-Cumulative Perpetual Preferred Shares

HAMILTON, Bermuda, May 07, 2010 (BUSINESS WIRE) -- Scottish Re Group Limited ("Scottish Re" or the "Company") (Pink Sheets:SKRRF) has commenced a cash tender offer for any and all of its outstanding Non-Cumulative Perpetual Preferred Shares, liquidation preference $25 per share (collectively, the "Perpetual Preferred Shares").

The tender offer is being made pursuant to the Offer to Purchase, dated May 7, 2010 (as it may be amended and supplemented from time to time, the "Offer to Purchase"), and the related Letter of Transmittal, dated May 7, 2010 (as it may be amended and supplemented from time to time, the "Letter of Transmittal" and, together with the Offer to Purchase, the "Offer"), which set forth the full details of the terms and conditions of the Offer.

BofA Merrill Lynch is serving as Dealer Manager for the Offer. Brokers and other persons with questions regarding the Offer are encouraged to contact BofA Merrill Lynch at [phone] or toll-free at [phone]. Requests for documents may be directed to D.F. King & Co., the Information Agent, at [phone] or [phone].

This press release is neither an offer to purchase nor a solicitation of an offer to sell the Perpetual Preferred Shares or any other security. The Offer is made only by the Offer to Purchase and the Letter of Transmittal. The Offer is not being made to security holders in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction in which the Offer is required to be made by a licensed broker or dealer, it shall be deemed to be made by the Dealer Manager on behalf of the Company.

About Scottish Re

Scottish Re is a global life reinsurance specialist, with operating businesses in Bermuda, Ireland and the United States. Its flagship operating subsidiaries include Scottish Annuity & Life Insurance Company (Cayman) Ltd., Scottish Re (Dublin) Limited and Scottish Re (U.S.), Inc. Additional information about Scottish Re can be obtained from its Web site, www.scottishre.com.

SOURCE: Scottish Re Group Limited

Scottish Re Group Limited
Media and Investor Contact:
Dan Roth, Chief Financial Officer, 441-298-4373




Copyright Business Wire 2010

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[insomniac]

Very Excellent posts guys... WTG

[bwana12]

I think we are pretty much in agreement as to what the docs say, but not necesarily as to when particular clauses apply or not. My views are that:

- if they sell the assets (or subs), they can't get the money out to pay themselves unless they pay the preferred first;

- if they sell the company (i.e. as majority shareholders), whoever buys it keeps the preferreds as they are.

The clause by which they get the "liquidation preference" paid in case of a sale pretty much means that they need to make sure that they get at least their preference AND the amount needed to pay the preferreds, and even then the preferreds get the money first. (The question really becomes, "is a sale of assets, or the subs, and the distribution of proceeds a liquidation?") I can't figure out a scenario where they sell assets, get the money out, and do not pay the preferreds.

Now, regarding the common, I would argue that the decission to sell the company (or its assets), which would in any case be made by the board, could be seen as unfairly benefitting the convert holders if the common gets nothing. The board is there to make sure ALL shareholder's interests are protected. If the common gets nothing, then why sell? Just so the convert can be paid off? That is a biased decission, would't you agree? A court might easily find that objectionable, IMO.

[h_man_investor]

Bwana- there is something that either i do not understand or something you are not considering. I'm not trying to be a pain but help me out with my logic:

- C/MM have a senior position to the preferred in the event of a change in control (junior to the preferred in the event of a liquidation)

- in the event of a outright sale of the company the C/MM mezz equity has a $716mm liquidation preference (in the event of a liquidation they have the same liquidation preference but is paid off after the preferreds)

- for the equity holders to receive $0.50, the buyer needs to assume the preferred and pay C/MM $716mm. This effectively raises the purchase price significantly. This is, of course, if this is done before the mandatory convert in 6 years. After 6 years and the mandatory convert, C/MM get diluted significantly- the same purchase price only gets them ~$530mm (($716mm + $30mm)/210mm shares times C/MM shares held). So i'm not sure why they would sell the co after 6 years.

- so the way i see it, if the company is sold the buyers may not even need to assume the preferred shares. A buyer is going to pay the present value of the future cash flows- if that doesnt equal (currently) $865mm, the equity holders arent getting $0.50 (716mm mezz equity liquidation preference + 125mm pref eq liquidation preference + 30mm equity valuation ($0.50).

To maximize their investment, MM/C need to sell the company (not liquidate) before the mandatory convert. Otherwise they are leaving money on the table.

I am not an attorney, but it seems like there wouldnt be too much of a lawsuit if the board sells the company for what it's worth- defined as what the market will pay.

In your statement you say "if MM and CC....sell the co's assets the buyer will factor the preferred into their numbers." I do not think this is true- in the event of a liquidation (which is selling the companies assets) the preferreds get paid before anyone gets any proceeds. It's very clearly stated in the prospectus.

"Upon any voluntary or involuntary liquidation, dissolution or winding up of Scottish Re, holders of the perpetual preferred shares are entitled to receive out of the assets of Scottish Re available for distribution to shareholders, before any distribution is made to holders of ordinary shares or other junior shares, a liquidating distribution in the amount of $25 per perpetual preferred share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Distributions will be made pro rata as to the perpetual preferred shares and any other parity shares and only to the extent of Scottish Re's assets, if any, that are available after satisfaction of all liabilities to creditors.

[bwana12]

No need to pay the Pref, you just leave them were they are. There is no contractual right to pay them if you sell. If MM and CC sell their securities, or sell the co's assets, the buyer will factor the preferred (the cost of the coupon, when and if it needs to be paid) into their numbers and deduct that from the purchase price. In essence, preferreds would have no grounds for a lawsuit against the board if they sell it and they get nothing from their purchase price. Common holders would. It this makes sense to hold both SKKRF and SKRUF at the same time, IMO.

[bwana12]

SKRUF has a $25 face value, with a 7% and change coupon. Of they sell the company the new buyer is stuck with it, so it just becomes a question of time. he only way it would be worth less is if you sell it for less. That pretty much says it all, IMO. Just hold on ....

[h_man_investor]

Under your scenario, its not costing C/MM $30mm but $155mm because the preferred shareholders would need to be made whole before equity shareholders get anything. You can't just skip over senior equity in the cap structure.

$155mm is a lot more material than $30mm.

[insomniac]

Bwana Would SKRUF be worth 25 bucks in your scenario?? Thanks in Advance.

[bwana12]

The only reason they would offer something to common holders in the event they find a buyer for $700 million would be to avoid lawsuits (or, to put a more positive spin on it, because they are ethical individuals). To the extent the company is not in bankruptcy and making some money, it would be hard to justify selling it and giving common shareholders nothing, as by waiting they might actually get something some day. At $0.50 per share they would give up $30 million, which is a reasonably low amount in a multi-hundred million dollar transaction, and I bet they could easily get shareholder approval under that scenario. If they enter bankruotcy it will be a mees that they would, IMO, gladly save themselves for that price.

[h_man_investor]

Help me out here- if the company is sold within 2 years as you indicated as likely, the mezz equity has a liquidation preference of $700mm which is greater than the $550mm on the balance sheet. So the hurdle is a little higher than $250mm for sh/e to be back to breat even.

Its not even a consideration that MM and Cerb convert their shares at $4 to make $0.50.

What am i not understanding? I believe MM and Cerb will attenpt to maximize the recovery of their investment. Selling the company or a change in control will trigger the liquidation preference and will have a higher IRR than seeing this run-off over the next 30 years. All private equity funds have a fund like of max 12 years- they are not interested in being in this for the long hall.

[h_man_investor]

I do own a little.

[Enterprising Investor]

A successful tender offer requires a premium.

Would you participate in an offer if the consideration was only $7.50? Probably not. Neither would most investors. SKRUF would probably immediately trade at $7.50 upon announcement, and the company would fail to obtain the required number of shares in the offering.

$7.00 plus 25 percent ($1.75) is $8.75.

[insomniac]

H Man. Do you own any SKRRF?? Just curious..

[bwana12]

Well, I think two years is a function more of when I believe a sale is likely to take place. Again, I see the end result here for everyone as a function of CC and MM's patience. They continue to be well rewarded by holding this through the restructuring, and it seems to be that is likely to continue for a while. They should be able to clean up some of the XXX reserve mess with Ballantyne and the Orkneys based on the recent run-up in RMBS pricing. We currently only get to see a portion of that having a direct positive effect on SKRRF's books, but the additonal info provided regarding reserves in the securitizations is highly telling: there are ample assets at this stage.

How long will the convert owners wait to push for a sale? It seems that two years from now is starting to look like a bit too long. They could still buy back some stuff, and get another $100 million or so in additional equity through that. (That could happen in a few quarters). Will holding the RMBS portfiolio longer provide much more stability? Nah, I think that is all taken care of based on the XXX reserve adequacy. I would thus shorten my expectation to a year ... at $0.50 for the common.

Just a guess, though.

[insomniac]

Bwana 12 are you still figuring 50 cents in TWO Years for the common?? Thanks in Advance;..

[h_man_investor]

EI- run rate is not sustainable by any means. You're looking at least 2-3 years of normal operations before it's close to positive shareholder equity.

[bwana12]

EI, how do you get to the $8.75 to $10.00. It would be obviuos to think it would be higher than the recent market tradin range ($6.50), plus a bit more, but $10?

[eom7]

TY.

[Enterprising Investor]

SKRUF tender could be $8.75 to $10.

The price range would reflect corporate action in the near future. The closer equity gets to break even (or the longer management waits), the higher the offer would need to be for the tender to be successful. At $10, a tender would create $75 million in equity ($15 x 5 million shares).

There is no way for me to predict future prices.

Look for Show iBox (more information) near the upper left corner.

[insomniac]

EI what is your guesstimated buy out price for SKRUF??

What about poor skrrfy???


Where or what is IBOX ????? Thanks in Advance

[Enterprising Investor]

I envision a path similar to NCT.

"Right Side" balance sheet management will continue to be a focus. The discount at 12/31/09 was almost $620 million (see iBox). One potential action in 2010 is a cash tender offer for SKRUF.

The equity deficit should be eliminated within the next six months based on current run rates.

[eom7]

Where does that leave us?

[Enterprising Investor]

4Q Income Statement.

Revenues
Premiums earned $125,517
Fee and other income $1,258
Investment income, net $41,200
Net realized and unrealized gains (losses) $30,019
Gain on de-consolidation of collateral finance facility 0
Gain on consolidation of funding arrangement $253,824
Change in value of long term debt at fair value $(-22,125)
Gain on extinguishment of debt 0
Change in value of embedded derivatives, net $6,862
Total revenues $436,555

Benefits and expenses
Claims and other policy benefits $106,248
Interest credited to interest sensitive contract liabilities $13,568
Acquisition costs and other insurance expenses $38,325
Operating expenses $7,740
Collateral finance facilities expense $8,215
Interest expense $1,434
Total benefits and expenses $175,530

Income (loss) from continuing operations before income taxes $261,025

[cdaniel394]

So the million dollar question is "Is this a $.125 stock, or worth more?'. Opinions?

[insomniac]

Way to Go H man... You predicted 25 million on the other board.. Whats your prediction for the 1st quarter. ????
Do you think the common will ever reach positive shareholder equity?
Do they have any other assets to sell??? Thanks in advance.

[Alyssa]

For the year ended December 31, 2009, Scottish Re reported net income attributable to ordinary shareholders of $2,305 million, or $10.56 per diluted ordinary share, as compared to a net loss attributable to ordinary shareholders of $2,710 million, or ($39.63) per diluted ordinary share, for the prior year period.

Rather unbelievable! Monday should be interesting to say the least.

;)

[h_man_investor]

4th quarter earnings were $214,668,000 but this includes a gain on consolidation of funding arrangement and change in value of long-term debt at fair value of ~$230,000,000.

Stripping out one time gains and using an 18% tax rate (which is the blended rate paid for the quarter) the earnings were $24,143,000.

[eom7]

Thank you.

[Enterprising Investor]

Had a feeling it was "homework" time again!

[Last year, SKRRF issued the annual financials on 4/30.]

Expect to see iBox updates in the morning.

[eom7]

Will there be anything left here for Shareholders?

[genlou]

ress release

April 30, 2010, 5:00 p.m. EDT · Recommend · Post:
Scottish Re Posts to its Web Site Financial Statements for the Year Ended December 31, 2009

HAMILTON, Bermuda, Apr 30, 2010 (BUSINESS WIRE) -- Scottish Re Group Limited (Pink Sheets:SKRRF) ("Scottish Re" or the "Company"), announced today that it has posted to its website its consolidated financial statements as of December 31, 2009 and 2008. For the year ended December 31, 2009, Scottish Re reported net income attributable to ordinary shareholders of $2,305 million, or $10.56 per diluted ordinary share, as compared to a net loss attributable to ordinary shareholders of $2,710 million, or ($39.63) per diluted ordinary share, for the prior year period.

The net income attributable to ordinary shareholders for the year ended December 31, 2009 was driven primarily by the following significant one-time items:

-- A pre-tax gain of $704 million associated with the sale to Hannover Ruckversicherung AG of a block of U.S. individual life reinsurance business acquired by the Company from ING in 2004;

-- A $1,150 million gain generated by the de-consolidation of Ballantyne Re plc from the Company's consolidated financial statements; and

-- A $254 million gain on the consolidation of the Stingray funding arrangement following the Company's discounted purchases of a majority of the outstanding Stingray pass-through certificates.

In addition, the Company had net realized and unrealized gains of $243 million resulting from an overall market recovery of fixed maturity investments.

For further discussion on the Company's results, please refer to the "Summary of Results" section in the consolidated financial statements as of December 31, 2009 and 2008, as well as in the Notes thereto, available on the Company's website at www.scottishre.com. Excluding the significant events highlighted above and other items detailed in the "Summary of Results", net income attributable to ordinary shareholders would have resulted in a net loss.

As noted in the Company's consolidated financial statements as of December 31, 2009 and 2008, the Company has corrected an error in its interim consolidated financial statements for the three months ended March 31, 2009 related to the determination of its deferred tax liabilities. The error, which was included in the "Income tax expense" financial statement line on the Company's Consolidated Statements of Income, resulted in a $49.8 million understatement of income tax expense in the first quarter of 2009. Net income attributable to ordinary shareholders for the three months ended March 31, 2009 has been restated to $1,662 million from the previously reported figure of $1,711 million. This restatement is reflected in the unaudited Quarterly Financial Data footnote of the Company's consolidated financial statements as of December 31, 2009 and 2008.

About Scottish Re

Scottish Re Group Limited is a global life reinsurance specialist. Scottish Re has operating businesses in Bermuda, Ireland and the United States. Its flagship operating subsidiaries include Scottish Annuity & Life Insurance Company (Cayman) Ltd., Scottish Re (Dublin) Limited and Scottish Re (U.S.), Inc. Additional information about Scottish Re Group Limited can be obtained from its website, www.scottishre.com.

SOURCE: Scottish Re Group Limited

Scottish Re
Media and Investor Contact:
Dan Roth, Chief Financial Officer, 441-298-4373




Copyright Business Wire 2010

[genlou]

NEWS!

[cdaniel394]

Added a little more today.

[cdaniel394]

I posted this on the Yahoo message site. Feedback more than welcomed.

Is this comany a good representation of what is(will be) happening with SKRRF? Is it bail time? Thanks

Organization and ownership

Overseas Partners Ltd. (“OPL” or the “Company”) was organized as a corporation under the laws of Bermuda in 1983 as a subsidiary of United Parcel Service of America, Inc. (“UPS”). On December 31, 1983, OPL ceased to be a subsidiary of UPS when UPS paid a special dividend to its shareowners of one share of our Common Stock for each UPS share owned.

We currently have approximately 98,000 shareholders, all of whom are current or former employees of OPL or UPS (or family members or trusts to which such current or former employees have transferred their shares). The Company's stock is not, and has never been, listed or traded on any securities exchange.

Operating History

OPL was originally formed to provide reinsurance against loss or damage to packages carried by UPS (the “shipper’s risk business”) and later diversified into other lines of reinsurance business as well as real estate ownership and management.

The shipper’s risk business remained our largest single reinsurance program until it was cancelled effective October 1, 1999. The shipper’s risk business was significant, not only because of the magnitude of the underwriting income that it generated, but also because its unique characteristics influenced our strategic and operational decision making. Our long-term investment philosophy, our underwriting risk tolerance and our real estate diversification were all functions of the profitability, stability and liquidity of the shipper’s risk business as were our dividend and share repurchase programs.

Run Off Operations

After the cancellation of the shipper’s risk business, it became more difficult to satisfy our shareowners’ desire for liquidity through the dividend and share repurchase programs while also meeting the Company’s capital needs to grow and compete effectively in the reinsurance market. As such, following a review of strategic alternatives, we decided to cease writing new reinsurance business and to begin an orderly runoff of the Company’s operations, effective February 13, 2002.
Our operational focus since entering runoff has been to (i) preserve our capital base through various risk management initiatives and cost control; (ii) actively manage and negotiate early settlement of our reinsurance liabilities and real estate debt; (iii) seek opportunistic sales of our real estate assets and reinsurance subsidiaries; and (iv) prudently return capital to our shareowners over time.

Our runoff activities, including the resulting sales of all of our real estate assets and operating subsidiaries, freed up significant amounts of excess capital, which we have been distributing to shareholders with the approval of our insurance regulator in Bermuda, the Bermuda Monetary Authority. Since going into runoff we have made five liquidating distributions to shareholders, totaling approximately $1.2 billion, equivalent to $9.90 per share.

[cdaniel394]

Wonder if the new CEO(Sorry, Cerberus) is going to release some numbers soon?

[Enterprising Investor]

President and CEO Paul Goldean to step down 4/30/10.

Jonathan Bloomer, Chairman, will assist executive management in directing the company.

http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100406006883&newsLang=en

[RonnieD]

i'm wondering if large limit sells are responsible..and market makers maneuvered the price toward them. otherwise we would have to think a seller or group of sellers know something.
watching the indicators.. to see if RSI sees -30 and MACD -0.1
the STO here suggests a bounce may already be underway.

[insomniac]

Yours is the best explanation Ive heard so far.. I also think the absence of the earnings announcement, without an explanation,certainly is adding more fuel to the onslaught.

[RonnieD]

when they announced the blowout earnings last quarter, the stock barely reacted. it is now at half the price it reached.
I haven't done enough research to say for sure, but perhaps their business was impacted positively by the government interventions in the market during the 3rd q and those in the know realize it's a one-time event that is not expected to reoccur in any reliable way.
You would have to think that those TRULY in the know are aware of the business patterns and long-term plans.. and that those patterns and plans do not warrant a higher share price.
Otherwise, it would be capable of holding gains based on 3q.

[ROCKHard]

Have watched it's penny price deteriorate by 1/3. Remember past 2 earnings releases were excellent. It's been a long time since... are we just once again waiting upon a new earnings release ...is that it? Is the SKRRF still in 'run-off' mode? What if anything is fundementally is wrong with SKRRF?

[insomniac]

I dont think it has to do with Bermuda.. I believe it has to do with being a bulletin board stock.
If skrrf was on a major exchange , they would have to report within a certain time limit.. It was(ie.) 45 days for a qtrly, and a bit longer for a year end report.. if they didnt comply ,, they would be delisted from the NYSE (for example) and would be placed on the pinks/bulletin board. Frankly Im not sure if bulletin board stocks have any such requirement.It certainly must be more relaxed than the above example. Try calling NASDaq/FINRA, and find out "reporting requiements" for pink sheet stocks..

[cdaniel394]

Does SKRRF even have to report being its based out of Bermuda????