Replies to post #1144 on Scottish Re Group Ltd (fka SKRRF)

[jobynimble]

Who said the company is for sale? And why wouldn't the debenture holders like to see the stock go higher? It's in their best interest to see the stock go up, lol...

You make absolutely no sense; the company isn't in bankruptcy and the common stock is very much viable...

[Tool_power]

You're on iggy. I've had it with your baseless arguments. Who the heck said this company is being shopped for sale???

You're grasping at straws for a reason...obviously not for the good of the shareholder, which means the shares are worth a lot more than their current price.

Thank you for strengthening my resolve in owning this stock.

[zino]

LOL...this guy see,s profit of over 2.92 P/S last 2 Q and tells you theyre not real...MATURE EQUITY INVESTMENTS are up big,... hedge funds are getting the money at .0025% from the fed... in turn they are investing it...this will continue, even with multi fed hikes, as that would put it at less than one percent,(.0075 %) still a bargain for hedge funds to borrow from fed and invest it somewhere...and we all know fed isn,t hiking any time soon

[AKAPAK]

Opinion please = what's your take on the SKRUF (preferred) as to their potential value / effect of the convertibles?

THX

[Enterprising Investor]

No need for MM and Cerberus buyout.

There is also some risk that the ME will convert at a lower price than $4 per share.

See Note 14.
http://www.scottishre.com/pdf/SRGL_Q32009_FinancialStatements.pdf

[Edited]

There were some statutory accounting issues and purchasing of the 2004 acquisition of the ING business. Management determined that as a result of these errors the statutory surplus for SRD was overstated on a cumulative basis at year end 2004, 2005 and 2006, resulting in a restated statutory surplus at year end 2006 of approximately $285 million after giving effect to these corrections. In addition, management determined that the statutory surplus for SRUS was understated on a cumulative basis at year end 2005 and 2006, resulting in a restated statutory surplus at year end 2006 of approximately $344 million after giving effect to these corrections. The restated statutory surplus of each of SRUS and SRD met the applicable minimum statutory surplus requirements at December 31, 2006. None of these corrections impacted historical consolidated financial statements under U.S. GAAP.

The agreement with MM and Cerberus, SKRRF made certain reps and warrants regarding the statutory financial statements of each of subs, including SRD and SRUS, for the years ended 2003, 2004 and 2005 and, with respect to SRUS but not SRD, the first three quarters of 2006, including that these statements were prepared in conformity with applicable statutory accounting practices and fairly present in accordance with such practices, in all material respects, the statutory financial condition of the relevant insurance subsidiary at the respective dates.

MM and Cerberus were notified of the overstatement. On 11/16/07, MM and Cerberus responded by notifying SKRRF of their concern that the corrections described above may constitute breaches of certain of the reps and warrants. In the event of a claim for losses resulting from a diminution in value, such losses would be determined by an independent investment banking firm of national reputation, agreed upon by SKRRF and MM and Cerberus, based on changes in the valuation of SRGL`using the assumptions and models used by MassMutual Capital and Cerberus at the time of their decision to invest in us. Furthermore, should any claim for indemnification be made, the agreement provides that any decision regarding defending or settling such claim will be taken by a committee of independent directors. The investors requested that SKRRF convene a committee of independent directors. No action has since been taken by SKRRF or the investors in respect of this claim. At this time, SKRRF does not know what the amount of any indemnifiable losses would be, if any, or what potential defenses or other limitations on indemnification may be available under those circumstances. The agreement provides that any indemnification claim would be satisfied by adjusting the conversion amount at which the Convertible Cumulative Participating Preferred Shares.

Imagine a situation in which the stock recovers to $.50 per share. Then suddenly SKRRF and the investors move forward with this price being the new conversion value. MM and Cerberus would receive at conversion not 150 million shares but 1.2 billion. Current SKRRF shareholders would see ownership decline from about 31.3 percent to 5.4.