Replies to post #201 on Scottish Re Group Ltd Perp Pfd (SKRUF)

[Enterprising Investor]

A post from 2,498 days ago on the SKRRF board.

Enterprising Investor
Saturday, 07/25/09 09:38:08 PM
Re: None
Post #721 of 1731

Mass Mutual and Cerberus deal no grand slam.

The $600 million of Convertible Cumulative Participating Preferred Shares are convertible into an aggregate of 150,000,000 ordinary shares of SKRRF. Thus, the conversion price is $4.00 per share. SKRRF was selling for $4.66 at the time.

On the ninth anniversary of issue (5/07/16), the shares automatically convert into an aggregate of 150,000,000 ordinary shares if not previously converted. SKRRF is not required redeem these preferred shares for cash, except in the event of a liquidation or a change-in-control event. Someone suggested that Mass Mutual do a reverse merger. I am not sure if a Mass Mutual buyout of the Cerberus position would trigger the the change of control clause.

Needless to say, SKRRF has unbelievable upside for the investors to break even via the conversion. To get there, the almost $700 million deficit would have to be made up plus another $250 million or so.

In liquidation, the investors would have the right to receive the accrued unpaid dividends.

Conversion in 2016 is the mostly scenario, in my view.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=39887126

[Enterprising Investor]

Conversion of CCPP Shares

As discussed in Note 7, “Mezzanine Equity - Convertible Cumulative Participating Preferred Shares”, the CCPP Shares were convertible at the option of the holder, at any time, into an aggregate of 150,000,000 Ordinary Shares of SRGL. On May 7, 2016, which represented the ninth anniversary of issue, and in accordance with the CCPP Certificate of Designations, the CCPP Shares converted into an aggregate of 150,000,000 Ordinary Shares of the Company.

We accounted for the conversion of the CCPP Shares in accordance with FASB ASC 470-20. As a result, and in accordance with the CCPP Certificate of Designations, the CCPP Shares were converted into an aggregate of 150,000,000 Ordinary Shares, with each Ordinary Share having a par value of $0.01, representing an additional $1.5 million in the Ordinary Shares amount in the Company's Consolidated Balance Sheets. The remaining balance of the CCPP Shares amount of approximately $554.4 million that was previously classified under Mezzanine Equity in the Consolidated Balance Sheets, and was over and above the Ordinary Share conversion amount of $1.5 million as described earlier, was reclassified to Additional Paid-in Capital (“APIC”).

The conversion of the CCPP Shares had no impact on the results of operations of the Company and only impacted the Consolidated Balance Sheets.

The table below provides an illustration of the changes to the Company's Consolidated Balance Sheets as follows:

[tables deleted]

see page 28.

http://www.scottishre.com/pdf/Scottish%20Re%20Group%20Limited%201Q%202016%20Consolidated%20Financial%20Statements.pdf

The conversion of the CCPP Shares had no material effect on the operations of the Company.

[Enterprising Investor]

Davis v. Scottish Re Group Limited, et al.

On April 25, 2016, the plaintiff filed a motion with appellate court, seeking permission to appeal the dismissal of three derivative breach of fiduciary duty claims to the New York Court of Appeals. The Director Defendants who remain in the case and SRGL’s shareholders and certain of their affiliates have until May 12, 2016 to file an opposition to plaintiff’s motion. The plaintiff has until May 18, 2016 to file a reply brief in further support of his motion.

Notwithstanding the appellate court’s March 10, 2016 decision remanding the matter to the trial court to allow the plaintiff to replead only two breach of fiduciary duty claims against the remaining Director Defendants, on May 3, 2016, the plaintiff filed an amended complaint with the trial court in which the plaintiff repleaded eight of the original ten claims, removing two of the original claims and adding a new claim against certain of the Defendant Parties. The Director Defendants have until June 7, 2016 to file a Motion to Dismiss the repleaded breach of fiduciary duty claims. Plaintiff has until July 14, 2016 to file a brief in opposition to any motion to dismiss filed by the Director Defendants. The Director Defendants have until August 5, 2016 to file a reply brief in further support of any motion to dismiss the amended complaint. We anticipate that the deadline governing the Defendant Parties’ responses to the amended complaint will also be June 7, 2016.