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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2006
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SCOTTISH RE GROUP LIMITED
(Exact name of registrant as specified in its charter)
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Cayman Islands 001-16855 98-0362785
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
P.O. Box HM 2939
Crown House, Third Floor, 4 Par-la-Ville Road
Hamilton HM12
Bermuda N/A
(Address of Principal Executive Offices) (Zip Code)
(441) 295-4451
Registrant's telephone number, including area code
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On May 4, 2006, Tartan Capital Limited ("Tartan Capital"), a special
purpose exempted company incorporated in the Cayman Islands, whose issued
ordinary shares are held by a share trustee and its nominees in trust for
charitable purposes, issued (i) $75,000,000 in aggregate principal amount of
Class A Guaranteed Variable Rate Notes due January 7, 2009 (the "Class A Notes")
and (ii) $80,000,000 in aggregate principal amount of Class B Principal-at-Risk
Variable Rate Notes due January 7, 2009 (the "Class B Notes," and together with
the Class A Notes, the "Notes") in a private offering. Proceeds from the
issuance of the Notes were deposited in an account (the "Collateral Account") to
satisfy Tartan Capital's obligations under the Counterparty Contract (as defined
below). The timely payment of scheduled interest payments under the Class A
Notes and the ultimate repayment of principal of such Class A Notes are insured
by Financial Guaranty Insurance Company ("FGIC") through an insurance policy.
The Class B Notes are not guaranteed by FGIC. FGIC will not guarantee the
payment of any redemption premium, the early repayment of principal on the Class
A Notes, taxes or shortfalls for withholding taxes. The Notes are direct
financial obligations of Tartan Capital, and none of Scottish Annuity & Life
Insurance Company (Cayman) Ltd. ("SALIC"), an indirect wholly owned subsidiary
of Scottish Re Group Limited (the "Company"), the Company or any of their
affiliates is an obligor or guarantor on the Notes.
Tartan Capital was formed as a special purpose vehicle for the purpose of
entering into and performing a counterparty contract (the "Counterparty
Contract") between it and SALIC, pursuant to which Tartan Capital is obligated
to make certain payments to SALIC if there are increases in population mortality
in the United States that exceed certain thresholds ("Trigger Events"). Pursuant
to the Counterparty Contract, SALIC is obligated to make payments (the
"Counterparty Payments") to Tartan Capital equal to the amount of (i) interest
on the Notes, (ii) the swap spread to the Swap Counterparty (as defined below)
and (iii) the insurance premium to be paid to FGIC.
The annual interest rate on the Notes will equal the 3-month London
Interbank Offered Rate ("LIBOR"), plus a spread. The Class A Notes and Class B
Notes bear interest at a rate equal to the 3-month LIBOR plus 0.19% and 3.0% per
year, respectively. Such interest will be payable quarterly in arrears on each
January 7, April 7, July 7 and October 7 (each a "Scheduled Payment Date"), for
each period beginning on (and including) May 4, 2006, and each succeeding
Scheduled Payment Date, and ending on (but excluding) the next succeeding
Scheduled Payment Date. The outstanding principal amount of the Class B Notes
will be reduced to the extent of any payments by Tartan Capital to SALIC with
respect to the Class B Notes pursuant to the Counterparty Contract.
If the information required in order to calculate whether a Trigger Event
has occurred is not yet available prior to January 7, 2009 (the "Scheduled
Redemption Date"), the redemption of the Notes may be extended for three-month
periods until such requirements are met, but in no event longer than 30 months
after the Scheduled
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Redemption Date. During such extension period, the annual interest rate on each
class of Notes will equal 3-month LIBOR plus 0.10% per year.
In connection with the issuance of the Notes, Tartan Capital entered into a
swap transaction with Goldman Sachs International. The primary purposes of the
swap is to (i) convert the interest yield on the investments in the Collateral
Account together with the Counterparty Payments to a rate that is consistent
with the accrual of interest on the Notes and (ii) enable Tartan Capital to
receive the stated principal amount of the investments in the Collateral
Account, regardless of the amounts actually realized upon the sale of such
investments.
A copy of the press release issued by the Company announcing the above
described transaction is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release issued by Scottish Re Group Limited on May 4, 2006.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SCOTTISH RE GROUP LIMITED
By: /s/ Paul Goldean
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Paul Goldean
Executive Vice President and General Counsel
Dated: May 10, 2006
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INDEX TO EXHIBITS
Number Description
99.1 Press Release issued by Scottish Re Group Limited on May 4, 2006.
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