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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 7, 2007
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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 (I.R.S. Employer
of Incorporation) Number) Identification No.)
P.O. Box HM 2939
Crown House, Second 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 1.01. Entry into a Material Definitive Agreement.
In connection with the closing of the transactions contemplated by the
Securities Purchase Agreement (as defined below), Scottish Re Group Limited (the
"Company") entered into a Registration Rights and Shareholders Agreement, dated
as of May 7, 2007 (the "Registration Rights and Shareholders Agreement") with
MassMutual Capital Partners LLC ("MassMutual Capital"), SRGL Acquisition, LLC,
an affiliate of Cerberus Capital Management, L.P. ("Cerberus") that assigned all
of its rights and obligations under the Securities Purchase Agreement in
accordance with its terms to SRGL Acquisition, LDC (together with MassMutual
Capital, the "Investors") and 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. (collectively the "Cypress Entities"). A copy of the
form of Registration Rights and Shareholders Agreement is attached hereto as
Exhibit 10.1 and is incorporated herein by reference. Pursuant to the
Registration Rights and Shareholders Agreement, the Company granted the
Investors demand and piggyback registration rights as well as, subject to
certain exceptions, preemptive rights with respect to issuances of equity
securities by the Company. The Company also granted the Cypress Entities certain
demand and piggyback registration rights.
For so long as the Investors in the aggregate own at least 51% of the
outstanding voting shares of the Company on a fully diluted basis, the Investors
are entitled to designate two-thirds of the Company's board of directors. After
falling below this ownership threshold, the Investors will continue to have the
foregoing right for the following 12 months. Thereafter, the Investors will have
the right to designate the number of directors that is proportionate to their
ownership percentage of the equity of the Company. For so long as the Investors
in the aggregate own at least 5% of the outstanding voting shares of the
Company, they are entitled to designate at least one director. In addition, for
so long as the Cypress Entities in the aggregate beneficially own at least 2.5%
of the outstanding voting shares of the Company on a fully diluted basis, the
Cypress Entities are entitled to designate at least one individual for election
to the board of directors. Such individual shall be approved by the Investors as
a designee of the Cypress Entities, such approval not to be unreasonably
withheld or delayed, but subject in any event to Investors' fiduciary duties and
applicable law.
The Investors will be restricted from entering into affiliate transactions with
the Company without the approval of the independent directors of the Company or
the approval of a majority of the ordinary shares (excluding any shares held by
the Investors), subject to an exception for certain transactions entered into in
the ordinary course of business on terms that are no less favorable to the
Company than those that could have been obtained in a comparable transaction by
the Company with an unrelated person.
Item 1.02. Termination of a Material Definitive Agreement.
The Term Loan Agreement (the "Loan Agreement"), dated March 9, 2007, entered
into among Scottish Annuity & Life Insurance Company (Cayman) Ltd, the Company
and each subsidiary of the Company listed as a guarantor on the signature pages
thereto, Ableco Finance LLC, an affiliate of Cerberus, and Massachusetts Mutual
Life Insurance Company ("MassMutual"), an affiliate of MassMutual Capital, as
lenders (the "Lenders"), and Ableco Finance LLC, as agent, was terminated
effective May 7, 2007.
The Loan Agreement was terminated, in accordance with its terms, as a result of
the consummation of the transactions contemplated by the Securities Purchase
Agreement described below. As described in more detail below, affiliates of the
Lenders collectively hold securities representing approximately 68.7% of the
voting power of all of the Company's shareholders.
Item 5.01. Change of Control.
On May 7, 2007, pursuant to the Securities Purchase Agreement, dated as of
November 26, 2007, as amended (the "Securities Purchase Agreement"), entered
into by the Company and the Investors, the Investors each purchased 500,000
shares of the Company's newly issued convertible cumulative participating
preferred stock (the "Convertible Shares") for $300 million ($600 million in the
aggregate) in cash. The Convertible Shares may be converted, subject to certain
adjustments, into an aggregate of 150,000,000 shares of the Company's ordinary
stock at any time, and will automatically convert on the ninth anniversary of
the issue date if not previously converted. The Investors now hold securities
representing approximately 68.7% of the voting power of all of the Company's
shareholders, subject to certain adjustments.
See Items 1.01 and 1.02 above for a description of arrangements with respect to
election of directors to the Company's board and other matters.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On May 7, 2007, upon the closing of the transactions contemplated by the
Securities Purchase Agreement, Michael Austin, William Caulfeild-Browne, Robert
M. Chmely, Jean Claude Damerval, Michael C. French, Lord Norman Lamont, Hazel R.
O'Leary and Glenn Schafer resigned from their positions as directors of the
Company. In addition, pursuant to the Investors' rights to nominate directors
for election to the board, as described above, the following persons were
elected to serve as directors of the Company:
Jonathan Bloomer
Mr. Bloomer is a partner of Cerberus European Capital Advisors, which is the UK
advisory arm of Cerberus. Mr. Bloomer is also Executive Chairman of Lucida plc,
a newly formed company that assumes the assets and liabilities of corporate
defined pension schemes. Prior to joining Cerberus, Mr. Bloomer worked for
Prudential plc, serving as Group Finance Director from January 1995 to March
2000, and Group Chief Executive from March 2000 until May 2005. Mr. Bloomer was
also a senior partner in Arthur Andersen's London financial markets division and
managing partner of their European Insurance Practice. Mr. Bloomer was a Member
of the Board of the Geneva Association from 2001 to 2005, a member of the board
of the Association of British Insurers from 2000 to 2005, Chairman of the
Financial Services Practitioner Panel of the Financial Services Authority from
2003 to 2005 and Vice Chairman until October 2006. He was also a member of the
Urgent Issues Task Force of the Accounting Standards Board from 1995 to 1999 and
is currently a member of the Finance Committee of the NSPCC.
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Christopher S. Brody
Mr. Brody joined Cerberus in 2001 and is now a Managing Director. From 1996 to
2001 Mr. Brody was a partner at TGV Partners, a private equity firm. At TGV, he
was responsible for identifying, analyzing, financing, executing and monitoring
leveraged buy-out opportunities. Mr. Brody also worked at Fried, Frank, Harris,
Schriver and Jacobson, LLP as head of the corporate research group which focused
on M&A, financing, restructuring and bankruptcy transactions. Mr. Brody is also
a director of SLI Holdings, LLC and Horizon National Services, LLC. He is a 1991
graduate of Brandeis University.
James J. Butler
Mr. Butler was a partner at KPMG LLP from 1984 until his retirement in December
2006, primarily serving insurance clients, including reinsurance, property and
casualty, financial guaranty, life and health insurers. Mr. Butler holds a B.A.
from The College of the Holy Cross.
James N. Chapman
Mr. Chapman has been non-executive Vice Chairman of JetWorks Leasing, LLC, an
aircraft management services company since December 2004. Prior to this, Mr.
Chapman worked with Regiment Capital Advisors, LLC, from January 2003 to
December 2004 and acted as a capital markets and strategic planning consultant
with private companies, public companies and hedge funds (including Regiment),
across a wide range of industries. Mr. Chapman also worked for The Renco Group,
Inc., a multi-billion dollar private corporation in NY, from 1996 to 2001. Mr.
Chapman was a founding principal of Fieldstone Private Capital Group in August
1990, and served as the head of their Corporate Finance and High Yield Finance
Groups. Prior to joining Fieldstone, Mr. Chapman worked for Bankers Trust
Company from July 1985 to August 1990. Mr. Chapman holds a BA, magna cum laude,
with distinction, from Dartmouth College, was Phi Beta Kappa and also a Rufus
Choate Scholar. Mr. Chapman holds an M.B.A., with distinction, from Dartmouth
College and is an Edward Tuck Scholar.
Thomas Finke
Mr. Finke serves as Head of The Bank Loan Team at Babson Capital Management LLC,
an investment management firm ("Babson"), and has over 18 years of industry
experience. Mr. Finke joined Babson in June 2002 as part of Babson's acquisition
of First Union Institutional Debt Management ("IDM"), where he was Co-Founder
and President. Prior to founding IDM, Mr. Finke started the Par Loan Trading
Desk at First Union Securities. Before that, he served as a Vice President at
Bear, Stearns & Co. and as a member of the founding Board of Directors of the
Loan Syndications and Trading Association. Mr. Finke holds a B.A. from the
University of Virginia's McIntire School of Commerce and an M.B.A. from Duke
University's Fuqua School of Business.
Robert Joyal
Mr. Joyal has been a Director of Jefferies Group, Inc. since January 2006. He
was the President of Babson from 2001 until his retirement in June 2003, and
also served as their Managing Director from 2000 until 2001. Prior to that, Mr.
Joyal worked for MassMutual as their
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Executive Director from 1997-1999, and Vice President and Managing Director from
1987-1997. Mr. Joyal is a trustee of each of MassMutual Corporate Investors and
MassMutual Participation Investors (closed end investment companies) and a
director of MassMutual Select Funds and the MML Series Investment Fund (open end
investment companies). Mr. Joyal is also a director of Pemco Aviation Group
(Aircraft Maintenance & Overhaul), York Enhanced Strategies Fund (a Closed End
Investment Co.) and various Private Equity and Mezzanine Funds sponsored by
First Israel Mezzanine Investors.
Larry Port
Mr. Port is President and Managing Director of MassMutual Capital and is
responsible for MassMutual's worldwide corporate development activity and
private equity group. Before this, he also served as Senior Vice President and
Deputy General Counsel in the Law Division of MassMutual. Prior to joining
MassMutual Capital, Mr. Port spent 19 years at Texaco, Inc. Mr. Port holds a
B.A. from the University of Virginia and a J.D. from the University of
Pittsburgh, School of Law.
Michael Rollings
Mr. Rollings joined MassMutual in 2001, and has served as Executive Vice
President and Chief Financial Officer since June 2006. Prior to assuming this
role, Mr. Rollings also served as Senior Vice President, Acting Chief Financial
Officer, Senior Vice President and Deputy Chief Financial Officer. Before
joining MassMutual, Mr. Rollings spent 13 years at Morgan Stanley and Co.
Lenard B. Tessler
Mr. Tessler joined Cerberus in 2001 and is a Managing Director. Prior to joining
Cerberus, Mr. Tessler served as managing partner of TGV Partners, a private
equity firm which he founded. Mr. Tessler serves as a member of the board of
directors of GMAC LLC, NewPage Corporation and BlueLinx Corporation. Mr. Tessler
is a 1973 graduate of the University of Miami, and holds an M.B.A. from Farleigh
Dickenson University.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
10.1 Form of Registration Rights and Shareholders Agreement (incorporated herein
by reference to Scottish Re Group Limited's Current Report on Form 8-K which was
filed with the Securities and Exchange Commission on November 29, 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.
Date: May 11, 2007
SCOTTISH RE GROUP LIMITED
By: /s/ Nathan Gemmiti
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Name: Nathan Gemmiti
Title: General Counsel
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INDEX TO EXHIBITS
Number Description
10.1 Form of Registration Rights and Shareholders Agreement (incorporated
herein by reference to Scottish Re Group Limited's Current Report on
Form 8-K which was filed with the Securities and Exchange Commission
on November 29, 2006).
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