UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12
SCOTTISH RE GROUP LIMITED
-------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1. Amount previously paid:
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4. Date Filed:
Scottish Re Group Limited
P.O. Box HM 2939
Crown House, Third Floor
4 Par-la-Ville Road
Hamilton HM 08, Bermuda
, 2005
Dear Shareholder:
You are cordially invited to attend the Extraordinary General Meeting of
Shareholders of Scottish Re Group Limited (the "Company") to be held at the
Fairmont Hamilton Princess, 76 Pitts Bay Road, Pembroke, Bermuda, on Thursday,
April 7, 2005, at 11:00 a.m. Bermuda time.
The attached Notice of Extraordinary General Meeting and Proxy Statement
describe more fully the formal business to be transacted at the Extraordinary
General Meeting. Pursuant to the Securities Purchase Agreement (the "Securities
Purchase Agreement"), dated as of October 17, 2004, by and among the Company and
four investment funds affiliated with The Cypress Group L.L.C. (the "Cypress
Entities"), the Company completed the sale and issuance to the Cypress Entities
on December 31, 2004 (the "Closing Date") of (i) 3,953,183 ordinary shares, par
value $0.01 per share (the "Ordinary Shares") (equal to 9.9% of the aggregate
number of ordinary shares of the Company issued and outstanding on the Closing
Date, taking into account such issuance), (ii) 3,206,431 Class C Warrants (the
"Warrants") to purchase an equal number of ordinary shares of the Company (equal
to the difference between (A) 19.9% of the ordinary shares of the Company issued
and outstanding on the Closing Date (without taking into account the issuance of
Ordinary Shares pursuant to clause (i) above) and (B) the number of Ordinary
Shares issued to the Cypress Entities as provided in clause (i) above), and
(iii) $41,282,479 aggregate principal amount of 7.00% Convertible Junior
Subordinated Notes due 2034 (the "Notes"). The Ordinary Shares, the Warrants and
the Notes purchased by the Cypress Entities are collectively referred to as the
"Purchased Securities." The proceeds from the Purchased Securities are being
used to support the ongoing business purchased pursuant to the Asset Purchase
Agreement, dated as of October 17, 2004, by and among the Company, Scottish Re
(U.S.), Inc., Scottish Re Life (Bermuda) Limited and Security Life of Denver
Insurance Company and Security Life of Denver International Limited,
subsidiaries of ING America Insurance Holdings, Inc.
As described more fully herein, the Cypress Entities may not exercise the
Warrants or convert the Notes into ordinary shares of the Company or exchange
the Notes for additional Warrants unless certain amendments to the Company's
Articles of Association permitting the Cypress Entities to own up to 24.9% of
the ordinary shares of the Company are adopted by shareholders and unless the
issuance of ordinary shares of the Company upon conversion of the Notes pursuant
to their terms (or upon exercise of the Warrants for which the Notes are
exchangeable pursuant to their terms, as applicable) is approved by shareholders
pursuant to applicable New York Stock Exchange rules.
Consequently, at the Extraordinary General Meeting, you will be asked to
approve (i) certain amendments to the Company's Articles of Association referred
to above and (ii) the issuance of more than 20% of the outstanding ordinary
shares of the Company to the Cypress Entities pursuant to the terms of the
Purchased Securities.
Certain directors and officers will be present at the Extraordinary General
Meeting and will be available to respond to any questions you may have.
Your Board of Directors believes that the proposals described in the proxy
statement are in the best interests of the Company and its shareholders as a
whole. Accordingly, your Board of Directors unanimously recommends that
shareholders vote "FOR" the resolutions. Please give careful consideration to
all of the information contained in the proxy statement and the annex attached
thereto before casting your vote.
We urge you to review carefully the accompanying material and to return the
enclosed proxy card promptly. Please sign, date and return the enclosed proxy
card without delay. If you attend the Extraordinary General Meeting, you may
vote in person even if you have previously mailed a proxy.
Sincerely,
Scott E. Willkomm
Chief Executive Officer and President
EACH VOTE IS IMPORTANT. PLEASE ENSURE THAT YOUR VOTE COUNTS BY
COMPLETING, SIGNING, DATING AND RETURNING YOUR PROXY.
The date of this proxy statement is , 2005.
The approximate date of mailing for this proxy statement and
proxy card(s) is , 2005.
Scottish Re Group Limited
P.O. Box HM 2939
Crown House, Third Floor
4 Par-la-Ville Road
Hamilton HM 08, Bermuda
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
To Be Held On April 7, 2005
NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting of
Shareholders of Scottish Re Group Limited (the "Company") will be held at the
Fairmont Hamilton Princess, 76 Pitts Bay Road, Pembroke, Bermuda, on Thursday,
April 7, 2005, at 11:00 a.m. Bermuda time for the following purposes:
1. To consider and vote upon a special resolution to amend the Articles
of Association of the Company, attached as Annex A to this Notice;
2. To consider and vote upon an ordinary resolution to permit the Company
to issue ordinary shares upon conversion of the Notes which were
issued to the Cypress Entities on December 31, 2004 (or upon exercise
of the Warrants for which the Notes are exchangeable pursuant to their
terms, as applicable), which issuance when combined with the ordinary
shares of the Company issued to the Cypress Entities on December 31,
2004 and to be issued pursuant to the exercise of the Warrants exceeds
20% of the issued and outstanding ordinary shares of the Company on
such date; and
3. To consider such other business as may properly come before the
Extraordinary General Meeting or any adjournments thereof.
Information concerning the matters to be acted upon at the Extraordinary
General Meeting is set forth in the accompanying Proxy Statement.
The close of business on February 28, 2005, has been fixed as the record
date for determining the shareholders entitled to notice of and to vote at the
Extraordinary General Meeting or any adjournments thereof. For a period of at
least 10 days prior to the Extraordinary General Meeting, a complete list of
shareholders entitled to vote at the Extraordinary General Meeting will be open
for examination by any shareholder during ordinary business hours at the offices
of the Company at 4 Par-la-Ville Road, Hamilton HM 08, Bermuda.
Shareholders are urged to complete, date, sign and return the enclosed
proxy card in the accompanying envelope, which does not require postage if
mailed in the United States. Signing and returning a proxy card will not
prohibit you from attending the Extraordinary General Meeting. Please note that
the person designated as your proxy need not be a shareholder.
By Order of the Board of Directors,
Paul Goldean
Executive Vice President and General Counsel
Hamilton, Bermuda
, 2005
Annex A to Notice
BE IT RESOLVED, by special resolution, that the following articles of the
Articles of Association of the Company be amended and restated in their entirety
to read as set forth below:
6. (b) Notwithstanding Article 6(a) of these Articles, the Company
shall not issue any shares in a manner that the Board of Directors of
the Company believes would cause, by reason of such issuance, the
total Controlled Shares of any Person to equal or exceed 10% of a
class of the Company's shares; provided, however, that this provision
shall not apply to (i) the issuance of shares to Cypress Merchant B
Partners II (Cayman) L.P., Cypress Merchant Banking II-A C.V., 55th
Street Partners II (Cayman) L.P., Cypress Side-by-Side Cayman L.P.
(the "Cypress Purchasers") and any other Shareholder (as such
capitalized term is determined by the Board of Directors by reference
to the definition of such term in the Shareholders' Agreement by and
among the Company and the Cypress Purchasers dated as of December 31,
2004) (together with the Cypress Purchasers, the "Cypress Entities"
and each, a "Cypress Entity") in such amount so that the Cypress
Entities' Controlled Shares do not exceed 24.9% of a class of the
Company's shares and (ii) any issuance of shares to a person acting as
an underwriter in the ordinary course of its business, purchasing such
shares pursuant to a purchase agreement to which the company is a
party, for resale.
9. (b) Except with respect to transfers of the Company's shares
executed on any recognized securities exchange or inter-dealer
quotation system, including without limitation the New York Stock
Exchange and the Nasdaq National Market, the Directors shall decline
to register a transfer of shares if the Directors have reason to
believe that the effect of such transfer would be to increase the
number of total Controlled Shares of any Person to ten percent (10%)
or any higher percentage of a class of the Company's shares on an
Unadjusted Basis. Notwithstanding the foregoing, the Cypress Entities
shall each be permitted to transfer shares of the Company to another
Cypress Entity, provided that the Controlled Shares of the Cypress
Entities in the aggregate do not exceed 24.9% of a class of the
Company's shares.
47. (a) (i) Subject to Article 6, every Member of record present in
person or by proxy shall have one vote for each issued and outstanding
Ordinary Share registered in his name in the register; PROVIDED THAT,
subject to the following provisions of this Article 47, if and for so
long as the number of Controlled Shares of any Person other than a
Cypress Entity would constitute 10% or more of the total combined
voting rights attaching to the issued shares of the Company
(calculated after giving effect to any prior reductions in voting
rights attaching to Controlled Shares of other persons as provided in
this Article 47), or the total number of Controlled Shares of the
Cypress Entities would constitute 25% or more of the total combined
voting rights attaching to the issued Shares of the Company
(calculated after giving effect to any prior reductions in voting
rights attaching to Controlled Shares of other persons as provided in
this Article 47), each such issued Controlled Share, regardless of the
identity of the registered holder thereof, shall confer only a
fraction of a vote as determined by the following formula (the
"Formula"):
(T-C)/(XxC)
Where: "T" is the aggregate number of votes conferred by all the
issued shares immediately prior to that application of the Formula
adjusted to take into account any prior reduction taken with respect
to any other Member pursuant to Article 47(d) as at the same date;
"C" is the number of issued Controlled Shares attributable
to such Person;
"X" is (i) 9.1 if such Person is any Person other than a
Cypress Entity or (ii) 3.016 if the Formula is being applied to
determine the reduction in total combined voting rights attributable
to the total number of Controlled Shares of the Cypress Entities.
47. (d) The Formula shall be applied successively as many times as may
be necessary to ensure that no Person other than a Cypress Entity
shall be a 10% Shareholder at any time, and that the voting rights
attached to the Controlled Shares of the Cypress Entities shall not
exceed 24.9% at any time. For the purposes of determining the votes
exercisable by Members as at any date, the Formula shall be applied
first to the votes of Controlled Shares attributable to the Person to
whom the greatest number of Controlled Shares are attributed and
successively to the Controlled Shares attributable to them, in each
case calculations being made on the basis of the aggregate number of
votes conferred by the issued shares as at such date as reduced by the
application of the Formula to any larger number of Controlled Shares
as at such date.
47. (e) Notwithstanding the provisions of Articles 47(a) and (d)
above, having applied the provisions thereof as best as they consider
reasonably practicable, the Directors may make such final adjustments
to the aggregate number of votes attaching to the shares of any Member
that they consider fair and reasonable in all the circumstances to
ensure that no Person other than a Cypress Entity shall be a 10%
Shareholder at any time, and that the voting rights attached to the
Controlled Shares of the Cypress Entities shall not exceed 24.9% at
any time.
89. If the Company redeems or purchases shares or directs the sale and
transfer of such shares pursuant to this Article 89, it shall do so
only in a manner the Board believes would not result, upon
consummation of such redemption or purchase, in the total number of
Controlled Shares of any Person other than a Cypress Entity,
increasing to ten percent (10%) or any higher percentage of a class of
the Company's shares on an Unadjusted Basis or the total number of
Controlled Shares of the Cypress Entities increasing to twenty-five
percent (25%) or any higher percentage of a class of the Company's
shares on a Unadjusted Basis.
provided that no individual amendment to any of the articles specified above
shall be effective where the necessary approval for the amendment of any other
of the articles specified above is not achieved.
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS AND THE MEETING
Q: When and where will the Extraordinary General Meeting be held?
A: The Extraordinary General Meeting will be held at 11:00 a.m. Bermuda time
on April 7, 2005, at the Fairmont Hamilton Princess, 76 Pitts Bay Road,
Pembroke, Bermuda. Admission to the meeting will be limited to shareholders
of the Company or their authorized proxies.
Q: Who is asking for my vote at the meeting?
A: The Company's Board of Directors asks that you vote on the proposals listed
in the Notice of Extraordinary General Meeting of Shareholders. The vote
will be taken at the Extraordinary General Meeting on April 7, 2005, or, if
the Extraordinary General Meeting is adjourned, at any later meeting. The
Board of Directors unanimously recommends that you vote "FOR" each
proposal.
Q: Who may attend the Extraordinary Meeting?
A: All shareholders of the Company may attend the Extraordinary General
Meeting. Shareholders entitled to attend and vote at the above meeting may
appoint one or more proxies to attend and vote in their place. A proxy need
not be a shareholder of the Company.
Q: Who is entitled to vote?
A: Shareholders as of the close of business on February 28, 2005 (the "Record
Date") are entitled to vote at the Extraordinary General Meeting. Each
ordinary share of the Company is entitled to one vote subject to certain
adjustments that may be made under the Company's Articles of Association.
In certain circumstances, the Company's Articles of Association currently
provide for the reduction of a shareholder's voting rights to ensure that
no shareholder, other than Pacific Life Insurance Company ("Pacific Life"),
may have 10% or more of the voting rights outstanding. Under the current
Articles of Association, Pacific Life may not have more than 24.9% of the
voting rights outstanding.
Q: What am I being asked to vote on?
A: You are being asked to approve:
o Amendments to the Articles of Association of the Company ("Proposal
No. 1"), as set forth in Annex A to this proxy statement;
o The issuance by the Company of ordinary shares upon conversion of the
Notes pursuant to their terms (or upon exercise of the Warrants for
which the Notes are exchangeable pursuant to their terms, as
applicable) in order to permit the Company to issue to the Cypress
Entities ordinary shares in an amount greater than 20% of the ordinary
shares of the Company outstanding on the Closing Date ("Proposal No.
2", and together with Proposal No. 1, the "Shareholder Proposals");
and
o Such other business as may properly come before the Extraordinary
General Meeting or any adjournments thereof.
Q: What vote is required to approve the proposals?
A: The affirmative vote by special resolution of at least two-thirds (66 2/3%)
of the holders of the ordinary shares of the Company present and voting in
person or by proxy at the Extraordinary General Meeting is required to
approve Proposal No. 1 (the amendments to the Company's Articles of
Association), unless voting is conducted by poll. If voting is conducted by
poll, the affirmative vote of the holders of at least two-thirds (66 2/3%)
of the ordinary shares of the Company present and voting in person or by
proxy will be required.
1
The affirmative vote by ordinary resolution of the holders of at least a
majority of the issued and outstanding ordinary shares of the Company
present and voting in person or by proxy at the Extraordinary General
Meeting is required to approve Proposal No. 2 (the issuance of ordinary
shares of the Company upon conversion of the Notes or exercise of the
Warrants for which the Notes are exchangeable pursuant to their respective
terms, as applicable).
The Company intends to conduct all voting at the Extraordinary General
Meeting by poll. In a poll, each shareholder present in person or by proxy
will have one vote for each ordinary share of the Company registered in its
name (which is referred to as a poll).
The Company, Pacific Life (one of the Company's shareholders), and certain
of the Company's officers and directors have also entered into Voting
Agreements with the Cypress Entities. Under these agreements, each of the
signatories has agreed to vote any ordinary shares of the Company held by
such person in favor of the Shareholder Proposals. These signatories
collectively hold 12.3% of the issued and outstanding ordinary shares of
the Company as of the Record Date.
Q: How do I vote?
A: You may vote by either attending the Extraordinary General Meeting and
voting in person or by appointing a proxy by signing and dating each proxy
card you receive and returning it in the enclosed prepaid envelope. The
Company encourages you to complete and send in your proxy card.
All ordinary shares of the Company represented by valid proxies, unless the
shareholder otherwise specifies, will be voted "FOR" the proposals and at
the discretion of the proxy holders with regard to any other matter that
may properly come before the Extraordinary General Meeting.
Q: Can I change my vote after I have returned my proxy card?
A: You may revoke your proxy by
o providing written notice of revocation at the Company's registered
office or to Computershare Investor Services, 1601 Elm Street, Suite
4340, Dallas, Texas 75201 by 5:00 p.m. (Bermuda time) on April 6,
2005, or
o attending the Extraordinary General Meeting and voting in person.
Q: What does it mean if I get more than one proxy card?
A: If you receive more than one proxy card, it is because your shares are in
more than one account. You will need to sign and return all proxy cards to
insure that all your shares are voted.
Q: My ordinary shares are held in "street name." Will my broker vote my shares
at the meeting?
A: A broker will vote your shares on the special resolution only if you
provide the broker with instructions on how to vote. Your broker may have
discretion, however, to vote your ordinary shares of the Company on the
ordinary resolution if you do not provide the broker with instructions. You
should follow the directions provided by your broker(s) regarding how to
provide voting instructions for your shares held in street name.
Q: What constitutes a quorum of the Extraordinary General Meeting?
A: As of the Record Date, of the ordinary shares of the
Company were issued and outstanding. The presence, in person or by proxy,
of members holding (1) at least fifty percent (50%) of the ordinary shares
of the Company entitled to vote at the meeting will constitute a quorum for
the purposes of approval of the ordinary resolution and (2) at least
two-thirds (66 2/3%) of the ordinary shares of the Company entitled to vote
at the meeting will constitute a quorum for the purposes of approval of the
special resolution.
2
If you submit a properly executed proxy card, then you will be considered
part of the quorum. Votes that are withheld and broker non-votes will be
counted towards a quorum but will not be counted in the vote for the
proposal.
Q: Are there other matters to be acted upon at the Extraordinary General
Meeting?
A: The Company does not expect any other matters to be presented or acted upon
at the Extraordinary General Meeting.
If any other matter is presented at the Extraordinary General Meeting on
which a vote may properly be taken, the ordinary shares of the Company
represented by proxies will be voted in accordance with the best judgment
of the proxy holders.
Q. Do I have dissenter's rights?
You do not have any rights of appraisal or similar rights of dissenters,
whether you vote for or against the resolutions.
Q: How much will this proxy solicitation cost?
A: Georgeson Shareholder Communications, Inc. was hired to assist in the
distribution of proxy materials and solicitation of votes at a cost of US
$5,500, plus out-of-pocket expenses. The Company will reimburse brokerage
firms and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for forwarding proxy and solicitation material to
the owners of the ordinary shares of the Company. The Company's officers
and regular employees may also solicit proxies, but they will not be
specifically compensated for such services.
Q: Who will count the vote?
A: Representatives of Computershare Investor Services, the Company's transfer
agent, will tabulate the votes and act as inspectors of election.
Q: When are shareholder proposals for inclusion in the proxy statement for the
2005 Annual General Meeting due?
A: In order to have been considered for inclusion in the proxy statement for
the 2005 Annual General Meeting of Shareholders, shareholder proposals must
have been in writing and received by December 3, 2004, by Scottish Re Group
Limited, P.O. Box HM 2939, Crown House, Third Floor, 4 Par-la-Ville Road,
Hamilton HM 08, Bermuda, Attn: Secretary.
Q: When are shareholder proposals for presentation at meetings of shareholders
due?
A: If you desire to submit a proposal for consideration at a meeting of
shareholders, or to nominate persons for election as Directors at any
meeting duly called for the election of Directors, written notice of your
intent to make such proposal or nomination must be given and received by
the Company Secretary at its principal executive office not later than (1)
with respect to an Annual General Meeting of Shareholders, sixty (60) days
prior to the anniversary date of the immediately preceding Annual General
Meeting, and (2) with respect to an Extraordinary General Meeting, the
close of business on the tenth (10th) day following the date on which
notice of such meeting is first sent or given to shareholders. Each notice
shall describe the proposal or nomination in sufficient detail for a
proposal or nomination to be summarized on the agenda for the meeting and
shall set forth (1) the name and address, as it appears on the books of the
Company, of the shareholder who intends to make the proposal or nomination;
(2) a representation that the shareholder is a holder of record of the
ordinary shares of the Company entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to present such proposal or
nomination; and (3) the class and number of ordinary shares of the Company
which are beneficially owned by the shareholder.
3
In addition, in the case of a shareholder's proposal, the notice shall set
forth the reasons for conducting such proposed business at the meeting and
any material interest of the shareholder in such business.
Q: Who can help answer my questions?
A: If you have any questions about the Extraordinary General Meeting you
should contact the Company's President and Chief Executive Officer, Scott
Willkomm, at 441-298-4364.
4
The Cypress Entities' Investment in the Company
Description of Securities Purchase Agreement
On October 17, 2004, the Company entered into a Securities Purchase
Agreement with the Cypress Entities. Pursuant to the Securities Purchase
Agreement, the Company issued the Purchased Securities to the Cypress Entities
on December 31, 2004 (the "Closing Date"). The effective purchase price was
$19.375 per ordinary share (the "Purchase Price"). If the Cypress Entities were
to exercise the Warrants and convert the Notes (which is subject to certain
conditions as described below) as of the Closing Date, the Cypress Entities
would own approximately 20.5% of our outstanding ordinary shares.
The investment by the Cypress Entities was conditioned upon the closing of
the transactions contemplated by an Asset Purchase Agreement (the "Asset
Purchase Agreement") by and among the Company, Scottish Re (U.S.), Inc.
("Scottish Re (U.S.)") and Scottish Re Life (Bermuda) Limited ("Scottish
Bermuda") and Security Life of Denver Insurance Company ("SLD") and Security
Life of Denver International Limited ("SLDI"), subsidiaries of ING America
Insurance Holdings, Inc. ("ING"). Pursuant to the Asset Purchase Agreement,
effective on December 31, 2004, SLD and SLDI have reinsured their individual
life reinsurance business to Scottish Re (U.S.) and Scottish Bermuda on a 100%
indemnity reinsurance basis. In addition, SLD and SLDI have transferred to the
Company or its affiliates certain systems and operating assets of SLD and SLDI
used in their individual life reinsurance business. The proceeds of the
financing from the Cypress Entities are being used to support the business
acquired from ING.
As long as the Cypress Entities continue to hold the lesser of (i) 9.9% or
more of the voting power of the Company's voting securities on an as-converted
basis or (ii) 35% or more of the Purchased Securities on an as-converted basis,
the Cypress Entities have the non-assignable right to appoint one director and
one non-voting observer to the Company's Board of Directors. Subject to
satisfaction of applicable legal criteria, this director is also entitled to be
on the Company's Compensation Committee, Corporate Governance Committee and
Finance and Investment Committee. The Cypress Entities have appointed William
Spiegel as a director. He serves on the Corporate Governance Committee and the
Finance and Investment Committee. The Cypress Entities have also appointed Gene
Lee as a non-voting observer. Mr. Spiegel and Mr. Lee were appointed to their
respective positions on the Board of Directors effective January 3, 2005.
Subject to certain limited exceptions, the Cypress Entities have agreed not
to divest the Purchased Securities for a period of 12 months from the Closing
Date. The Company has granted the Cypress Entities demand and piggyback
registration rights as well as, subject to certain exceptions, preemptive
rights. The Company also agreed to pay the Cypress Entities an equity commitment
fee and reimburse the Cypress Entities for certain reasonable out-of-pocket
expenses, both of which have been paid.
The Warrants
The Warrants will be exercisable at an exercise price equal to $0.01 per
ordinary share. The number of ordinary shares of the Company for which the
Warrants are exercisable is subject to customary anti-dilution adjustments. The
Warrants do not have voting rights and are not exercisable until (i) the
Company's shareholders approve (A) certain amendments to its Articles of
Association to allow the Cypress Entities to hold more than 9.9% of the issued
and outstanding ordinary shares of the Company and own or control ordinary
shares of the Company constituting 10% or more of the total combined voting
rights attaching to the issued ordinary shares of the Company (Proposal No. 1
hereof), and (B) the issuance to the Cypress Entities of more than 20% of the
outstanding ordinary shares of the Company, as required by New York Stock
Exchange rules (Proposal No. 2 hereof) (the "Shareholder Proposals"), and (ii)
requisite regulatory approvals have been obtained from insurance regulators in
Delaware and the United Kingdom. Notwithstanding the foregoing, the Warrants
will become exercisable (i) immediately upon their transfer to an unaffiliated
third party provided that such transfer complies with the ownership limitations
contained in the Company's Articles of Association or (ii) to the extent the
exercise thereof would not cause the Cypress Entities to own in the aggregate
greater than 9.9% of the ordinary shares of the Company then outstanding. Upon
approval of the Shareholder Proposals and the receipt of all requisite
regulatory approvals, the Warrants will automatically be exercised for the
applicable number of ordinary shares of the Company. In the event that a change
of control occurs and the Warrants cannot be exercised in full for ordinary
shares of the Company by the terms of
5
the Company's Articles of Association or by applicable law, the holders of
Warrants may require us to repurchase the unexercised Warrants pursuant to the
terms specified in the Warrants.
The Notes
Holders of the Notes do not have voting rights. The Notes are unsecured
obligations of the Company, subordinated to all indebtedness that does not by
its terms rank pari passu or junior to the Notes, including any guarantees
issued by the Company in respect of senior or senior subordinated indebtedness.
The Notes bear interest at 7% per annum, subject to the application of the
Penalty Rate if the Shareholder Proposals are not approved as more fully
described below. The accrued but unpaid interest on the Notes will be payable in
kind on December 1 and June 1 of each year, beginning June 1, 2005, by the
issuance of additional Notes of the same series, having the same terms and
conditions as the Notes and having a principal amount equal to the amount of
such accrued and unpaid interest. However, (i) during the period following the
third anniversary of the Closing Date until the tenth anniversary of the Closing
Date, the Company may at its option pay any of such accrued but unpaid interest
in cash in lieu of in kind, and (ii) following the tenth anniversary of the
Closing Date, the Cypress Entities may at their option receive any of such
accrued but unpaid interest in cash in lieu of in kind. The Notes are
convertible and exchangeable under the circumstances described below.
Consequences of Approval or Disapproval of the Shareholder Proposals
Approval
The effect of approving the Shareholder Proposals would be to allow the
Cypress Entities to exercise Warrants and convert Notes so that they would hold
approximately 20.5% of the outstanding ordinary shares of the Company. The
Cypress Entities would have the position under the Company's Articles of
Association previously occupied by Pacific Life, as the only shareholder
permitted to own more than 9.9% of the outstanding shares of the Company and to
own or control ordinary shares of the Company constituting 10% or more of the
total combined voting rights attaching to the issued ordinary shares of the
Company.
Upon the approval of the Company's shareholders and the receipt of all
requisite regulatory approvals, the Notes will automatically be converted into
ordinary shares at an initial conversion price of $19.375 per ordinary share,
subject to customary anti-dilution adjustments. If upon approval of the
Shareholder Proposals the requisite regulatory approvals have not been obtained,
the Notes will automatically be exchanged for additional Warrants to purchase
the number of ordinary shares into which the Notes (including any accrued and
unpaid interest through the date of conversion) were convertible. If the Company
has sought approval of the Shareholder Proposals unsuccessfully at least twice,
after the first anniversary of the Closing Date, the Company may redeem all (but
not less than all) of the then-outstanding Notes for cash at a redemption price
per share equal to the greater of (i) an amount equal to, (A) if prior to the
third anniversary of the Closing Date, the initial Purchase Price paid by the
Cypress Entities for the Notes, plus an amount calculated based on an annual,
compounded internal rate of return equal to the Penalty Rate (described below)
on such investment for the period from the Closing Date through the third
anniversary thereof (applying the 19% Penalty Rate to such period), or (B) if
after the third anniversary of the Closing Date, the principal amount thereof
plus accrued and unpaid interest thereon through the date of repurchase, and
(ii) the market value at the time of such redemption of the number of ordinary
shares into which the Notes are then convertible. In the event of a change of
control, it will be required to repurchase the Notes pursuant to the terms
specified in the Notes.
Disapproval
If the shareholders do not approve the Shareholder Proposals by June 30,
2005 (a "Failed Condition"), the Company will be required to make additional
payments on the Warrants by paying cash equal to, on a per annum basis, 5% of
the product of (i) the number of ordinary shares underlying the Warrants then
held by the Cypress Entities and (ii) the Purchase Price, or, at the Company's
option in lieu of cash, by issuing additional Notes with an equivalent aggregate
principal amount, such payment or issuance to be made on the business day
immediately following the date of occurrence of the Failed Condition, and on
each six-month anniversary thereafter, until the Shareholder Proposals have been
approved. In addition, until the Shareholder Proposals have been approved, the
6
Company will make an additional payment on the Warrants equal to the dividend
then currently payable on ordinary shares, which will be assumed to be no less
than $0.20 per share per annum.
Furthermore, in the event of a Failed Condition, the Notes will bear
interest at the Penalty Rate applied retroactively from the Closing Date until
the earliest to occur of a cure of such condition, early redemption of the Notes
or the maturity thereof. The "Penalty Rate" means a rate per annum equal to, (i)
if a Failed Condition occurs in 2005, 15% applicable through December 31, 2005,
(ii) if a Failed Condition occurs or continues in 2006, 17% through December 31,
2006 and (iii) 19% thereafter.
As a result of the applicable Penalty Rate on the Notes and the additional
payments owed on the Warrants, if shareholders do not approve the Shareholder
Proposals by June 30, 2005, the Company's interest and fee expenses will
increase substantially, although interest on the Notes is payable in kind for
the first three years and payable in kind or in cash at the option of the
Company thereafter. For example, in the case of the Notes, in the event of a
Failed Condition through the third anniversary of the Closing Date, the
outstanding amount of Notes would increase from $41,282,479 to $ . Until
redeemed, these Notes would continue to accrue interest at 19% per annum,
instead of the original 7% per annum.
Voting Agreements
The Company, Pacific Life (one of the Company's shareholders), and certain
of the Company's officers and directors have entered into Voting Agreements with
the Cypress Entities. Under these agreements, each of the signatories has agreed
to vote any ordinary shares of the Company held by them in favor of the
Shareholder Proposals. These signatories collectively hold 12.3% of the issued
and outstanding ordinary shares of the Company as of the record date.
The Cypress Group
The Cypress Group L.L.C. (the "Cypress Group") is a New York-based private
equity group which manages two private equity funds with more than $3.5 billion
in commitments. The Cypress Entities are equity investment funds managed by
affiliates of The Cypress Group. The Cypress Group invests in privately
negotiated transactions, targeting operating businesses and investing with
management to foster continued growth. The Cypress Group has invested
approximately $3.2 billion in 20 transactions. Investments made by the Cypress
Group include Montpelier Re Holdings, Ltd., Catlin Group Ltd., Financial
Guaranty Insurance Company (FGIC), Cinemark, Inc., AMTROL, Inc., Williams
Scotsman, Inc., WESCO International, Inc., ClubCorp, Inc., Danka Business
Systems PLC, MedPointe Inc., Republic National Cabinet Corp., The Meow Mix
Company, Communications & Power Industries, Inc., Affinia Group, Inc.,
Cooper-Standard Automotive Inc., and Stone Canyon Entertainment Corporation.
7
Proposal to Amend Articles of Association
to
(Proposal No. 1)
The following is a summary of the material terms of the Amendments to the
Company's Articles of Association. This summary does not purport to describe all
the terms of the amendments to the Articles of Association and is qualified by
the complete amendments, which are attached as Annex A to this proxy statement
and incorporated by reference herein. All shareholders are urged to read the
amendments to the Articles of Association carefully and in their entirety.
General
In connection with the transaction, the Company's Board of Directors has
adopted a resolution to submit to a vote of its shareholders a proposal to amend
its Articles of Association.
Amendment to the Articles of Association
The Company's Articles of Association, which act as its by-laws, restrict
the Company's ability to issue shares in a manner that would result in any
person owning or controlling 10% or more of a class of the ordinary shares of
the Company. The Articles of Association also prevent the Company from
registering any transfers of its ordinary shares, except with respect to a
transfer executed on any recognized securities exchange or inter-dealer
quotation system, including the New York Stock Exchange and the NASDAQ National
Market, or redeeming or purchasing ordinary shares if the transfer, redemption
or purchase would cause the number of ordinary shares owned or controlled by any
person to be 10% or higher of the issued and outstanding ordinary shares of the
Company.
The 3,953,183 Ordinary Shares issued to the Cypress Entities on December
31, 2004, represented less than 10% of the outstanding ordinary shares of the
Company, and accordingly did not require an amendment to the Company's Articles
of Association. The right to exercise the Warrants and convert the Notes, as
described earlier, is expressly conditioned on receipt of shareholder approval
with respect to an amendment to the Company's Articles of Association to permit
the issuance of additional ordinary shares of the Company to the Cypress
Entities. The issuance of 3,206,431 ordinary shares of the Company issuable upon
the exercise of the Warrants (the "Warrant Shares") and the issuance of
2,130,709 ordinary shares of the Company upon the conversion of the Notes (the
aggregate number of ordinary shares of the Company for which the Notes would
have been convertible on the Closing Date; the "Note Shares"), when considered
as an integrated transaction with and added to the issuance of the 3,953,183
Ordinary Shares already issued, would exceed 10% (but would not exceed 24.9%) of
the currently outstanding ordinary shares of the Company. Consequently, the
Board of Directors has approved and recommends the adoption of amendments to the
Company's Articles of Association that accommodate (i) the issuance to the
Cypress Entities of up to 24.9% of the outstanding ordinary shares of the
Company and (ii) the transfer of the ordinary shares of the Company between the
Cypress Entities, and any other Shareholder (as such capitalized term is
determined by the Board of Directors by reference to the definition of such term
in the Shareholders' Agreement by and among the Company and the Cypress Entities
dated as of December 31, 2004 (the "Shareholders' Agreement")), provided that
the number of ordinary shares of the Company controlled by these companies in
the aggregate does not exceed 24.9% of the issued and outstanding ordinary
shares of the Company.
The Company's Articles of Association also provide that if the number of
ordinary shares owned or controlled by any person would constitute 10% or more
of the total combined voting rights in the Company, the voting rights of each
such issued share would be cut back so as to allow only a fraction of a vote,
thereby preventing any person from exercising more than 10% of the voting rights
in relation to the ordinary shares at any time. The Board of Directors has
approved the form of, and recommends the adoption of, amendments allowing the
Cypress Entities and any other Shareholder (as defined in the above paragraph)
to own or control ordinary shares of the Company constituting not more than
24.9% of the total combined voting rights attaching to the issued shares of the
Company.
Voting for Proposal No. 1 would have the effect of placing the Cypress
Entities in the same position under the Company's Articles of Association
previously occupied by Pacific Life, as the only shareholder permitted to own
more than 9.9% of the outstanding ordinary shares of the Company and own or
control ordinary shares
8
constituting 10% or more of the total combined voting rights attaching to the
issued shares of the Company; the Cypress Entities would not have any rights
under the Company's Articles of Association beyond the rights Pacific Life
previously had.
You should note that from and after June 30, 2005, if the Company has not
obtained shareholder approval to amend the Company's Articles of Association,
the Company will be required to make additional payments to the Cypress Entities
under the Warrants and pay a Penalty Rate on the Notes (each as described under
the heading "Description of Securities Purchase Agreement" above) until such
time as the Company obtains shareholder approval or it is determined that such
approval is not required.
Vote Required
Approval of the amendments to the Company's Articles of Association
requires a special resolution passed by the affirmative vote of at least
two-thirds (66 2/3%) of the holders of the Company's ordinary shares present and
voting in person or by proxy at the Extraordinary General Meeting, unless voting
is conducted by a poll. If voting is conducted by poll, the affirmative vote of
the holders of at least two-thirds (66 2/3%) of the Company's ordinary shares
present and voting in person or by proxy will be required. Abstentions and
broker non-votes will be deemed present and entitled to vote but will not be
counted as a vote either for or against approval of the amendments to the
Articles of Association, and therefore will not have the effect of a vote
against the approval of the amendments to the Articles of Association.
THE BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENTS TO THE COMPANY'S
ARTICLES OF ASSOCIATION.
9
Proposal to Issue Ordinary Shares upon Conversion of the Notes or Exercise
of the Warrants for which the Notes are Exchangeable Pursuant to their
Respective Terms, as Applicable (Proposal No. 2)
General
Section 312.03 of the New York Stock Exchange Listed Company Manual
requires that companies listed on the New York Stock Exchange obtain shareholder
approval prior to the issuance of common stock (or securities convertible into
or exercisable for common stock), in any transaction or series of related
transactions if: (1) the common stock has, or will have upon issuance, voting
power equal to or in excess of 20% of the voting power outstanding before the
issuance of such stock or of securities convertible into or exercisable for
common stock; or (2) the number of shares of common stock to be issued is, or
will be upon issuance, equal to or in excess of 20% of the number of shares of
common stock outstanding before the issuance of the common stock or of
securities convertible into or exercisable for common stock. The 3,953,183
Ordinary Shares and 3,206,431 Warrants issued to the Cypress Entities on
December 31, 2004, represented less than 20% of the outstanding ordinary shares
of the Company, and accordingly did not require shareholder approval under the
New York Stock Exchange rules. The right to convert the Notes (or exercise the
Warrants issued in exchange for the Notes, as applicable) and issue the ordinary
shares of the Company as a result of such conversion (or exercise), as described
earlier, is expressly conditioned on receipt of shareholder approval with
respect to such issuance. The issuance of the Note Shares, in the aggregate
amount as of the Closing Date of 2,130,709 ordinary shares of the Company, when
considered as an integrated transaction with and added to the issuance of the
3,953,183 Ordinary Shares and 3,206,431 Warrants already issued, would exceed
20% of the currently outstanding ordinary shares of the Company. As a result,
under the applicable New York Stock Exchange listing standards shareholder
approval of the issuance of the Note Shares is required.
You should note that from and after June 30, 2005, if the Company has not
obtained shareholder approval to issue the Note Shares, the Company will be
required to pay a Penalty Rate on the Notes (as described under the heading
"Description of Securities Purchase Agreement" above) until such time as the
Company obtains shareholder approval or it is determined that such approval is
not required.
Vote Required
Approval of the issuance of ordinary shares of the Company to the Cypress
Entities requires an ordinary resolution passed by the affirmative vote of at
least a majority of the issued and outstanding ordinary shares of the Company
present and voting in person or by proxy. Votes that are withheld, abstentions,
and broker non-votes will be deemed present and entitled to vote but will not be
counted as a vote for or against the ordinary resolution, and therefore will not
have the effect of a vote against the ordinary resolution.
THE BOARD RECOMMENDS A VOTE "FOR" THE ISSUANCE OF ORDINARY SHARES
TO THE CYPRESS ENTITIES AS DESCRIBED ABOVE.
Interest of Certain Persons in the Matter to be Acted Upon
William Spiegel, one of the Company's directors, is a Managing Director of
The Cypress Group. He was appointed to the Company's Board of Directors pursuant
to the Shareholders' Agreement effective January 3, 2005. In connection with the
sale of securities to the Cypress Entities, the Company paid on January 4, 2005
an equity commitment fee to The Cypress Advisors, Inc., an affiliate of The
Cypress Group, in the amount of $2,000,000. None of the Company's other
officers, directors or affiliates has a substantial interest in the matter to be
acted upon at the Extraordinary General Meeting other than as a shareholder of
the Company.
10
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth the beneficial ownership of the ordinary
shares of the Company by all persons who beneficially own 5% or more of the
ordinary shares, by each director and named executive officer and by all
directors, director nominees and executive officers as a group as of February
22, 2005.
Number of Percent of
Number of Percent of Name and Address of Beneficial Owners (1) Shares Class
- --------------------------------------------------------------------- ------------ ------------
Michael Austin (3) .................................................. 27,000 *
Bill Caulfeild-Browne (3) ........................................... 32,000 *
Robert M. Chmely (3) ................................................ 27,200 *
Jean Claude Damerval................................................. 20,000 *
Michael C. French (2)(3) ............................................ 944,067 2.3%
Paul Goldean (3)..................................................... 21,797 *
David Huntley (3).................................................... 40,000 *
Lord Norman Lamont (3) .............................................. 16,000 *
Thomas A. McAvity, Jr. (3) .......................................... 92,600 *
Hugh T. McCormick.................................................... -- *
Elizabeth A. Murphy (3).............................................. 60,000 *
Hazel R. O'Leary (3) ................................................ 20,700 *
Glenn S. Schafer (4) ................................................ -- *
Oscar R. Scofield (3) ............................................... 143,489 *
William Spiegel(11).................................................. -- *
Seth Vance........................................................... -- *
Clifford Wagner(3)................................................... 91,852 *
Scott E. Willkomm (3)................................................ 426,507 1.1%
CMBP II (Cayman) Ltd.(5)(11)........................................ 3,953,183 9.9%
Pacific Mutual Holding Company (6) ................................. 3,007,380 7.5%
Boston Partners Asset Management, LLC (7)........................... 2,052,445 5.1%
Wellington Management Company, LLP (8).............................. 3,553,694 8.5%
T. Rowe Price Associates, Inc. (9).................................. 3,385,836 8.5%
FMR Corp. (10)...................................................... 3,586,612 9.0%
All directors, director nominees and executive officers as a
group (fifteen persons).............................................. 1,924,699 4.8%
* Less than 1%
(1) Except as otherwise indicated, the address for each beneficial owner is c/o
Scottish Re Group Limited, P.O. Box HM 2939, Crown House, Third Floor, 4
Par-la-Ville Road, Hamilton HM 08, Bermuda.
(2) Includes (i) 227,000 ordinary shares of the Company and 200,000 ordinary
shares of the Company issuable upon the exercise of Class A warrants
beneficially owned by an irrevocable trust of which Mr. French and certain
family members are beneficiaries and (ii) 266,667 ordinary shares of the
Company issuable upon the exercise of options beneficially owned by an
irrevocable trust of which Mr. French and certain family members are
beneficiaries. Mr. French disclaims beneficial ownership of such ordinary
shares. Includes 60,000 ordinary shares of the Company issuable upon the
exercise of options exercisable within 60 days and 150,000 ordinary shares
of the Company issuable upon the exercise of Class A warrants exercisable
within 60 days.
(3) Does not include ordinary shares issuable upon exercise of stock options
not exercisable within 60 days.
(4) In accordance with Pacific Life's policy prohibiting Pacific Life
executives from receiving direct, personal benefits from Pacific Life
investments, Glenn S. Schafer transferred 16,000 ordinary shares issuable
upon exercise of stock options to Pacific Life.
(5) Based on a Schedule 13D filed by CMBP II (Cayman) Ltd. with the Securities
and Exchange Commission on January 7, 2005, as a joint filer with Cypress
Associates II (Cayman) L.P., Cypress Merchant B Partners II (Cayman) L.P.,
Cypress Merchant B II-A C.V., Cypress Side-by-Side (Cayman) L.P. and 55th
Street Partners II (Cayman) L.P. The address of the joint filers is Cypress
Associates II (Cayman) L.P. c/o The Cypress Group L.L.C., 65 East 55th
Street, 28th Floor, New York, New York 10022.
11
(6) Based on a Schedule 13D filed by Pacific Mutual Holding Company with the
Securities and Exchange Commission on January 11, 2002. The number is
adjusted for the purchase by the Company from Pacific Life of 1,525,000
ordinary shares pursuant to a Share Purchase Agreement dated July 3, 2003.
The address of Pacific Mutual Holding Company is 700 Newport Center Drive,
Newport Beach, CA 92660-6397. The directors of Pacific Mutual Holding
Company are Richard M. Ferry, Donald E. Guinn, Allen W. Mathies, Jr., Donn
B. Miller, Susan Westerberg Prager, Richard M. Rosenberg, Glenn S. Schafer,
Thomas C. Sutton, James R. Ukropina and Khanh T. Tran, all of whom disclaim
beneficial ownership of the shares of the Company owned by Pacific Mutual
Holding Company, except to the extent of their pecuniary interest therein.
(7) Based on a Schedule 13G/A filed by Boston Partners Asset Management, LLC
with the Securities and Exchange Commission on February 10, 2005. The
address of Boston Partners Asset Management, LLC is 28 State Street, 20th
Floor, Boston, MA 02109.
(8) Based on a Schedule 13G/A filed by Wellington Management Company, LLP with
the Securities and Exchange Commission on February 14, 2005. The address of
Wellington Management Company, LLP is 75 State Street, Boston, MA 02109.
(9) Based on a Schedule 13G filed by T. Rowe Price Associates, Inc. with the
Securities and Exchange Commission on February 14, 2005. The address of T.
Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202.
(10) Based on a Schedule 13G filed jointly by FMR Corp., Edward C. Johnson, 3d
and Abigail P. Johnson with the Securities and Exchange Commission on
February 14, 2005. Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, is the beneficial
owner of 3,250,072 ordinary shares of the Company as a result of acting as
investment adviser to various investment companies registered under Section
8 of the Investment Company Act of 1940. The number of ordinary shares of
the Company owned by the investment companies at December 31, 2004 included
322,432 ordinary shares of the Company resulting from the assumed
conversion of $7,000,000 principal amount of the Company's senior
convertible notes (46.0617 ordinary shares of the Company for each $1,000
principal amount of debenture). Edward C. Johnson 3d, FMR Corp., through
its control of Fidelity, and the funds each has sole power to dispose of
the 3,250,072 shares owned by the Funds. Neither FMR Corp. nor Edward C.
Johnson 3d, Chairman of FMR Corp., has the sole power to vote or direct the
voting of the shares owned directly by the Fidelity Funds, which power
resides with the Funds' Boards of Trustees. Fidelity carries out the voting
of the shares under written guidelines established by the Funds' Boards of
Trustees. Fidelity Management Trust Company, a wholly-owned subsidiary of
FMR Corp. and a bank as defined in Section 3(a)(6) of the Securities
Exchange Act of 1934, is the beneficial owner of 100,890 ordinary shares of
the Company as a result of its serving as investment manager of the
institutional account(s). Edward C. Johnson 3d and FMR Corp., through its
control of Fidelity Management Trust Company, each has sole dispositive
power over 100,890 ordinary shares of the Company and sole power to vote or
to direct the voting of 100,890 ordinary shares of the Company owned by the
institutional account(s) as reported above. Members of the Edward C.
Johnson 3d family are the predominant owners of Class B shares of common
stock of FMR Corp., representing approximately 49% of the voting power of
FMR Corp. Mr. Johnson 3d owns 12.0% and Abigail Johnson owns 24.5% of the
aggregate outstanding voting stock of FMR Corp. Mr. Johnson 3d is Chairman
of FMR Corp. and Abigail P. Johnson is a Director of FMR Corp. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be voted
in accordance with the majority vote of Class B shares. Accordingly,
through their ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the Investment Company Act of 1940, to form a controlling
group with respect to FMR Corp. Fidelity International Limited and various
foreign-based subsidiaries provide investment advisory and management
services to a number of non-U.S. investment companies and certain
institutional investors. Fidelity International Limited is the beneficial
owner of 235,650 ordinary shares of the Company. Fidelity International
Limited, a Bermudan joint stock company incorporated for an unlimited
duration by private act of the Bermuda Legislature ("FIL") and an
investment adviser to various investment companies and certain
institutional investors, as a beneficial owner of the 235,650 ordinary
shares of the Company. FIL has sole power to vote and the sole power to
dispose of 235,650 shares.
12
(11) Mr. William Spiegel, CMBP II (Cayman) Ltd. and Cypress Associates II
(Cayman) L.P. disclaim beneficial ownership of the ordinary shares of the
Company owned by the Cypress Entities.
Other Matters
Neither management nor the Board of Directors knows of any matter to be
acted upon at the Extraordinary General Meeting other than the matter described
above. If any other matter properly comes before the Extraordinary General
Meeting, however, the proxy holders will vote thereon in accordance with their
best judgment.
13
Where You Can Find More Information
This preliminary proxy statement "incorporates by reference" certain of the
reports and other information that the Company has filed with the SEC under the
Exchange Act. This means that the Company is disclosing important information to
you by referring you to those documents. Information filed with the SEC after
the date of this preliminary proxy statement will update and supersede this
information. The following documents filed with the SEC are incorporated by
reference:
o Annual Report on Form 10-K for the year ended December 31, 2003;
o Definitive Proxy Statement filed with the SEC on April 1, 2004;
o Quarterly Report on Form 10-Q for the quarter ended March 31, 2004;
o Quarterly Report on Form 10-Q for the quarter ended June 30, 2004;
o Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2004;
o Quarterly Report on Form 10-Q for the quarter ended September 30,
2004;
o Quarterly Report on Form 10-Q/A for the quarter ended September 30,
2004;
o Current Report on Form 8-K filed with the SEC on January 6, 2004;
o Current Report on Form 8-K/A filed with the SEC on March 5, 2004;
o Current Report on Form 8-K filed with the SEC on October 18, 2004;
o Current Report on Form 8-K filed with the SEC on October 21, 2004;
o Current Report on Form 8-K filed with the SEC on October 29, 2004;
o Current Report on Form 8-K (under Item 5.02) filed with the SEC on
November 9, 2004;
o Current Report on Form 8-K filed with the SEC on December 8, 2004;
o Current Report on Form 8-K filed with the SEC on December 20, 2004;
o Current Report on Form 8-K filed with the SEC on December 29, 2004;
o Current Report on Form 8-K filed with the SEC on December 30, 2004;
o Current Report on Form 8-K filed with the SEC on January 6, 2005;
o Current Report on Form 8-K filed with the SEC on January 18, 2005;
o Current Report on Form 8-K filed with the SEC on February 11, 2005
(under Item 5.02);
o Current Report on Form 8-K filed with the SEC on February 11, 2005
(with respect to Item 2.03 only); and
o Current Report on Form 8-K filed with the SEC on February 24, 2005.
14
The Company will provide each person to whom a copy of this preliminary
proxy statement has been delivered, without charge, a copy of any of the
documents referred to above as being incorporated by reference. You may request
a copy by writing or telephoning Scottish Re Group Limited, Attn: Scott E.
Willkomm, P.O. Box 2939, Hamilton, HM MX, Bermuda, (441) 295-4451.
By Order of the Board of Directors,
Scott E. Willkomm
Chief Executive and Officer President
Hamilton, Bermuda
, 2005
15
Annex A
In the description of each article below, where articles have been marked
to show the changes proposed, deleted text is shown in [brackets] and inserted
text is shown in capitalized type.
Text of the Amendments to the Articles of Association
BE IT RESOLVED, by special resolution, that the following articles of the
Articles of Association of the Company be amended and restated in their entirety
to read as set forth below:
6. (b) Notwithstanding Article 6(a) of these Articles, the Company
shall not issue any shares in a manner that the Board of Directors of
the Company believes would cause, by reason of such issuance, the
total Controlled Shares of any Person to equal or exceed 10% of a
class of the Company's shares; provided, however, that this provision
shall not apply to (i) the issuance of shares to [Pacific Life
Insurance Company] CYPRESS MERCHANT B PARTNERS II (CAYMAN) L.P.,
CYPRESS MERCHANT BANKING II-A C.V., 55TH STREET PARTNERS II (CAYMAN)
L.P., CYPRESS SIDE-BY-SIDE CAYMAN L.P. (THE "CYPRESS PURCHASERS") AND
ANY OTHER SHAREHOLDER (AS SUCH CAPITALIZED TERM IS DETERMINED BY THE
BOARD OF DIRECTORS BY REFERENCE TO THE DEFINITION OF SUCH TERM IN THE
SHAREHOLDERS' AGREEMENT BY AND AMONG THE COMPANY AND THE CYPRESS
PURCHASERS DATED AS OF DECEMBER 31, 2004) (TOGETHER WITH THE CYPRESS
PURCHASERS, THE "CYPRESS ENTITIES" AND EACH, A "CYPRESS ENTITY") in
such amount so that [Pacific Life Insurance Company's] THE CYPRESS
ENTITIES' Controlled Shares do not exceed 24.9% of a class of the
Company's shares and (ii) any issuance of shares to a person acting as
an underwriter in the ordinary course of its business, purchasing such
shares pursuant to a purchase agreement to which the company is a
party, for resale.
9. (b) Except with respect to transfers of the Company's shares
executed on any recognized securities exchange or inter-dealer
quotation system, including without limitation the New York Stock
Exchange and the Nasdaq National Market, the Directors shall decline
to register a transfer of shares if the Directors have reason to
believe that the effect of such transfer would be to increase the
number of total Controlled Shares of any Person to ten percent (10%)
or any higher percentage of a class of the Company's shares on an
Unadjusted Basis. Notwithstanding the foregoing, [Pacific Life
Insurance Company, Pacific Mutual Holding Company, Pacific Life Corp
and/or any direct or indirect wholly owned subsidiary of Pacific
Mutual Holding Company (each, a "Pacific Life Entity," provided
however, that any Pacific Life Entity shall cease to be a Pacific Life
Entity in the event it is no longer a 100% direct or indirect
subsidiary of Pacific Mutual Holding Company)] THE CYPRESS ENTITIES
shall each be permitted to transfer shares of the Company to another
[Pacific Life] CYPRESS Entity, provided that the Controlled Shares of
the [Pacific Life] CYPRESS Entities in the aggregate do not exceed
24.9% of a class of the Company's shares.
47. (a) (i) Subject to Article 6, every Member of record present in
person or by proxy shall have one vote for each issued and outstanding
Ordinary Share registered in his name in the register; PROVIDED THAT,
subject to the following provisions of this Article 47, if and for so
long as the number of Controlled Shares of any Person other than a
[Pacific Life] CYPRESS Entity would constitute 10% or more of the
total combined voting rights attaching to the issued shares of the
Company (calculated after giving effect to any prior reductions in
voting rights attaching to Controlled Shares of other persons as
provided in this Article 47), or the total number of Controlled Shares
of the [Pacific Life] CYPRESS Entities would constitute 25% or more of
the total combined voting rights attaching to the issued Shares of the
Company (calculated after giving effect to any prior reductions in
voting rights attaching to Controlled Shares of other persons as
provided in this Article 47), each such issued Controlled Share,
regardless of the identity of the registered holder thereof, shall
confer only a fraction of a vote as determined by the following
formula (the "Formula"):
A-1
(T-C)/(XxC)
Where: "T" is the aggregate number of votes conferred by all
the issued shares immediately prior to that application of the Formula
adjusted to take into account any prior reduction taken with respect
to any other Member pursuant to Article 47(d) as at the same date;
"C" is the number of issued Controlled Shares
attributable to such Person;
"X" is (i) 9.1 if such Person is any Person other than a
[Pacific Life] CYPRESS Entity or (ii) 3.016 if the Formula is being
applied to determine the reduction in total combined voting rights
attributable to the total number of Controlled Shares of the [Pacific
Life] CYPRESS Entities.
47. (d) The Formula shall be applied successively as many times as may
be necessary to ensure that no Person other than a [Pacific Life]
CYPRESS Entity shall be a 10% Shareholder at any time, and that the
voting rights attached to the Controlled Shares of the [Pacific
Life] CYPRESS Entities shall not exceed 24.9% at any time. For the
purposes of determining the votes exercisable by Members as at any
date, the Formula shall be applied first to the votes of Controlled
Shares attributable to the Person to whom the greatest number of
Controlled Shares are attributed and successively to the Controlled
Shares attributable to them, in each case calculations being made on
the basis of the aggregate number of votes conferred by the issued
shares as at such date as reduced by the application of the Formula to
any larger number of Controlled Shares as at such date.
47. (e) Notwithstanding the provisions of Articles 47(a) and (d)
above, having applied the provisions thereof as best as they consider
reasonably practicable, the Directors may make such final adjustments
to the aggregate number of votes attaching to the shares of any Member
that they consider fair and reasonable in all the circumstances to
ensure that no Person other than a [Pacific Life] CYPRESS Entity shall
be a 10% Shareholder at any time, and that the voting rights attached
to the Controlled Shares of the [Pacific Life] CYPRESS Entities shall
not exceed 24.9% at any time.
89. If the Company redeems or purchases shares or directs the sale and
transfer of such shares pursuant to this Article 89, it shall do so
only in a manner the Board believes would not result, upon
consummation of such redemption or purchase, in the total number of
Controlled Shares of any Person other than a [Pacific Life] CYPRESS
Entity, increasing to ten percent (10%) or any higher percentage of a
class of the Company's shares on an Unadjusted Basis or the total
number of Controlled Shares of the [Pacific Life] CYPRESS Entities
increasing to twenty-five percent (25%) or any higher percentage of a
class of the Company's shares on a Unadjusted Basis.
provided that no individual amendment to any of the articles specified above
shall be effective where the necessary approval for the amendment of any other
of the articles specified above is not achieved.
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