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Scottish Re Group Limited Announces End of "Go-Shop" Period, Recommendations by Institutional Shareholder Services and Glass Lewis that Shareholders Vote "FOR" the Merger, and Reminder Regarding Effects of Failure of Approve the Merger
Company Release - 06/01/2011 18:30
HAMILTON, Bermuda--(BUSINESS WIRE)-- Scottish Re Group Limited (“Scottish Re” or the “Company”) (Pink Sheets: SKRRF) announced today the expiration of the 45-day "go-shop" marketing period pursuant to the previously announced merger agreement entered into on April 15, 2011 with a newly formed subsidiary ("Merger Sub") of its controlling shareholders, SRGL Acquisition, LDC (an affiliate of Cerberus Capital Management, L.P. (“Cerberus”)) and certain affiliates of Massachusetts Mutual Life Insurance Company (“MassMutual Capital” and, together with Cerberus, the “Investors”), with no bids, superior or otherwise, having been received.
End of “Go-Shop” Period
As previously announced on April 15, 2011, under the terms of the merger agreement between the Company and affiliates of the Investors, the Company has the right to solicit, receive, evaluate and enter into negotiations with respect to alternative proposals for a 45 day “go-shop” period beginning April 15, 2011 and ending on May 30, 2011 (the “Marketing Period”). In connection with this right, the special committee of the Company's board of directors engaged Bank of America Merrill Lynch (“Merrill Lynch”) to assist the special committee with soliciting alternative proposals for the acquisition of the Ordinary Shares during the Marketing Period. During this period, Merrill Lynch contacted 21 potential acquiring parties that Merrill Lynch believed might be interested in making an alternative proposal. Only three of the contacted parties chose to pursue due diligence investigations of the Company, and no party submitted an alternative proposal for the acquisition of the Ordinary Shares.
Independent Proxy Advisory Firms Recommend Shareholders Vote “FOR” the Merger
The Company further announced that independent proxy advisory firms Glass Lewis & Co. (www.glasslewis.com) (“Glass Lewis”) and ISS Proxy Advisory Services (www.issgovernance.com) (“ISS”), have each recommended that Scottish Re shareholders vote “FOR” the merger and each of the proposals described in the Information Statement.
In making its recommendation to Scottish Re’s shareholders, Glass Lewis said “n light of our conclusions that the rationale for the transaction is sound, the board took appropriate steps to safeguard the interests of the minority shareholders and the negotiations proved to be effective, along with our valuation assessment, we believe the proposed transaction is in the best interests of shareholders.”
The ISS report stated “ased on a review of the terms of the transaction and the factors described [in the ISS report], in particular the significant premium, the special committee’s negotiation process, and an agreement that allowed for a marketing period, shareholder support for the merger is warranted.”
“We are pleased that both ISS and Glass Lewis have each recommended that the Company’s shareholders vote in favor of the proposed merger transaction. Both a special committee of the disinterested directors and the full Board unanimously approved the merger, and we strongly urge shareholders to vote their proxies FOR the transaction," said Jonathan Bloomer, Chairman of the Company.
Statements attributed to Glass Lewis and ISS are excerpted from Glass Lewis & Co. “Proxy Paper” republished on May 27, 2011 and Institutional Shareholder Services “ISS Proxy Advisory Services” publication dated May 20, 2011.
Effects of the Merger Not Being Approved
As discussed in more detail under “The Merger – Effect of Failure to Approve, Authorize and Adopt the Transaction” in the Information Statement dated May 11, 2011 and distributed to shareholders of record as of May 4, 2011 (a copy of which can be viewed on the Company’s website at www.scottishre.com), it is expected that, if the merger is not approved at the Extraordinary General Meeting and, as a result, not consummated, the Investors will continue to hold the Convertible Preferred Shares (the issuance and terms of which were approved by the Company’s shareholders in connection with the Investor’s May 2007 investment of $600 million into Scottish Re) and, as a result of their ownership thereof, will continue to control the Board. If the merger is not consummated, the Investors have advised the Company that they intend to explore strategic alternatives for the Company prior to the 2016 automatic conversion date of the Convertible Preferred Shares. Such strategic alternatives may include, but are not limited to, a sale of all or substantially all of the Company’s assets or a merger or other business combination of the Company with a third-party. In any such transaction, the Investors, through their control of 68.7% of the outstanding voting shares of the Company, can determine the outcome of any required shareholder vote under the applicable provisions of the Company’s Articles of Association and the laws of the Cayman Islands. Moreover, a change in control transaction involving a third party acquirer that is unaffiliated with the Investors would not require approval by the disinterested directors of the Company. If such a strategic alternative is consummated before the May 7, 2016 automatic conversion date of the Convertible Preferred Shares, the Ordinary Shareholders would not be entitled to receive any consideration unless the Company is sold for a price greater than the accreted liquidation preference of the Convertible Preferred Shares (which, as of December 31, 2010, was $759 million in the aggregate and will increase to $803 million at December 31, 2011). This liquidation preference compares to the implied gross enterprise value reference range of $348 million to $599 million under the various valuation methodologies discussed in the Information Statement.
Update on Closing Matters
Following execution of the Merger Agreement on April 15, 2011, the Benton Street Partners limited partnerships that were parties to the merger agreement advised the Company that ownership of its portion of the shares of Merger Sub would be held directly by their affiliate MassMutual Capital Partners LLC, rather than such partnerships. This change has no affect on the terms or conditions of the merger or any of the proposals included on the ballot for the Extraordinary General Meeting.
The proposed Merger transaction has cleared U.S. antitrust review, but remains subject to additional regulatory approvals (including receipt of certain U.S. and international governmental approvals or consents) and approval of a majority of the Ordinary Shares held by persons or entities not affiliated with the Investors or the Company attending and voting at the Extraordinary General Meeting (whether in person or by proxy).
All shareholders of record as of May 4, 2011 are urged to return their proxy card (attached to the Information Statement) or to vote by following the instructions to vote by Internet (www.proxyvote.com) or by phone ((800) 690-6903) that appear on the proxy card. For questions regarding the Extraordinary General Meeting or the vote on the proposals set forth in the Information Statement, please contact Morrow & Co., LLC at (800) 607-0088 (reference “Scottish Re Group Limited” when prompted for the “company name”).
About Scottish Re
Scottish Re Group Limited is a global life reinsurance specialist, with operating businesses in Bermuda, Ireland, and the United States. Its 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 web site, www.scottishre.com.
Source: Scottish Re Group Limited
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Scottish Re Group Limited
