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) - November 11, 2003
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TRENWICK GROUP LTD.
(Exact name of registrant as specified in its charter)
(in provisional liquidation)
Bermuda 1-16089 98-0232340
(State or other jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
LOM Building, 27 Reid Street
Hamilton, HM 11, Bermuda Not Applicable
(Address of principal executive offices) (Zip Code)
(441) 292-4985
(Registrant's telephone number, including area code)
None
(Former name or address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
As part of the implementation of the terms of the Letter of Intent dated
August 6, 2003 (the "Letter of Intent") filed as Exhibit 99.2 to current Report
on form 8-K dated August 18, 2003, of Trenwick Group Ltd. (in provisional
liquidation) ("Trenwick"), on October 28, 2003, Trenwick, LaSalle Re Holdings
Limited (in provisional liquidation), a direct subsidiary of Trenwick ("LSH"),
and Trenwick America Corporation, an indirect subsidiary of Trenwick ("TAC," and
together with Trenwick and LSH, the "Debtors"), each a debtor and
debtor-in-possession in In re Trenwick America Corporation, et al., Case No.
03-12635 (MFW)(Bankr. D. Del. 2003) (the "Chapter 11 Cases"), filed motions (the
"Motions") with the United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court") seeking approval to effect the following transactions:
(i) the sale of the ordinary shares of Oak Dedicated Limited, Oak Dedicated Two
Limited, Oak Dedicated Three Limited ("Oaks 1-3"), subsidiaries of LaSalle Re
Limited ("LaSalle Re"), a Bermuda operating insurance company and the direct
subsidiary of LSH together with their net operating losses (the "Barclays Sale")
to FOSPV Limited ("FOSPV"), a wholly owned subsidiary of Barclays Bank PLC
("Barclays"); and (ii) the sale of substantially all of Trenwick's insurance
underwriting operations at Lloyd's (the "Lloyd's Operations"), to Magicsunny
Limited (the "Magicsunny Sale"). Magicsunny Limited ("Magicsunny") is a company
controlled, through Magicsunny's parent company Talisman Holdings Limited, by
members of management of the Lloyd's Operations (the "Management Team") and with
capital provided by the Management Team, third-party investors and the lending
institutions (the "Banks") that have previously issued letters of credit under a
senior secured credit facility (the "LoC Facility") on behalf of certain
subsidiaries of Trenwick in support of the Lloyd's Operations. The Barclays Sale
and Magicsunny Sale are described in greater detail below and in the Motions.
On August 20, 2003, Trenwick and LSH (the "Bermuda Debtors") filed
insolvency proceedings in the Supreme Court of Bermuda (the "Bermuda Court"). On
August 22, 2003, the Bermuda Court granted an order appointing Michael Morrison
and John Wardrop, partners of KPMG in Bermuda and KPMG LLP in the United
Kingdom, respectfully, as Joint Provisional Liquidators ("JPLs") in respect of
the Bermuda Debtors. The Bermuda Court granted the JPLs the power to oversee the
continuation and reorganization of these companies' businesses under the control
of their boards of directors and under the supervision of the Bankruptcy Court
and the Bermuda Court. The JPLs have not audited the contents of this report.
On November 17, 2003, the Bermuda Court entered an Order (the "Bermuda
Court Order") sanctioning the Barclays Sale and the Magicsunny Sale.
On November 24, 2003, the Bankruptcy Court entered (1) in connection with
the Barclays Sale, that certain "Order Pursuant to 11 U.S.C. ss.ss. 105(a), 363
and 541 of Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et seq. and
Rules 2002, 6004 and 6007 of the Federal Rules of Bankruptcy Procedure Allowing
the Debtors to Exchange Obligations Owed to Them by Certain Non-Debtor
Affiliates and Enter Into Certain Related Standstill Agreements" (the "Barclays
Sale Order"); and (2) in connection with the Magicsunny Sale, that certain
"Order Pursuant to 11 U.S.C. ss.ss. 105(a), 363 and 541 of
Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et seq. and Rules 2002,
6004 and 6007 of the Federal Rules of Bankruptcy Procedure Authorizing and
Approving the Sale of Certain of Debtors' Assets Free and Clear of Liens, Claims
and Encumbrances" (the "Magicsunny Sale Order").
On November 28, 2003, Trenwick completed the Barclays Sale. On December 8,
2003, Trenwick completed the Magicsunny Sale.
Trenwick has participated at Lloyd's principally through Trenwick Managing
Agents ("TMAL"), which is a managing agent at Lloyd's, and through Lloyd's
corporate members. The corporate members include Oaks 1-3, and Oak Dedicated
Four Limited ("Oak 4," and together with Oaks 1-3, the "Oaks"), which is a
subsidiary of Adit Holdings Limited and an indirect subsidiary of Trenwick.
The Barclays Sale was effected, among other things, by (i) a Sale and
Purchase Agreement dated November 11, 2003 (the "Sale Agreement") among LaSalle
(UK) Ltd., a wholly owned subsidiary of LaSalle Re established in connection
with the transaction ("LSUK"), as Seller, FOSPV, as Purchaser, Barclays, the
Directors (as defined in the Sale Agreement), and LaSalle Re pursuant to which
FOSPV acquired the entire ordinary share capital of Oaks 1-3 and (ii) a Group
Relief Agreement dated November 11, 2003 (the "GRA") among Barclays, FOSPV, as
Purchaser, Oaks 1-3, and LSUK, as Seller to effectuate the transfer of certain
tax attributes of Oaks 1-3 to FOSPV.
The Magicsunny Sale was effected, among other things, pursuant to a Share
Acquisition Agreement dated December 8, 2003 (the "SPA") among Trenwick UK PLC,
Trenwick and Adit Holding Limited, as Sellers, and Magicsunny Limited, as Buyer,
and the Executives (as defined in the SPA), pursuant to which Magicsunny
acquired all of the shares of the following entities: Trenwick Managing Agents
Limited, Trenwick UK Management Services Limited, Resource Underwriting Pacific
Pty Limited, Acorn Corporate Capital Limited, and Oak 4 (ordinary shares only).
As part of the Barclays Sale, Trenwick and TAC released the Oaks from
repaying the intercompany debt (the "Intercompany Debt") owed by them to
Trenwick and TAC. In consideration for such release, LaSalle Re set up a new
holding company, LSUK, a Bermuda company that is operated principally in the
U.K. and is U.K. tax resident, which assumed the liability for the Intercompany
Debt and issued to Trenwick and TAC subordinated promissory notes (the "LSUK
Notes") in exchange for and in respect of such Intercompany Debt.
Upon the winding up of the Oaks' financial affairs, which is not
anticipated to occur prior to 2009, their economic interests, consisting of
profits, if any, from their underwritings, together with any cash held in trust
at Lloyd's to support underwriting activities released to them by Lloyd's, would
be used to repay their creditors, including the LoC Banks, and the Intercompany
Debt, with the remaining amounts, if any, to be payable to LaSalle Re as LSUK's
sole shareholder to the extent permitted under applicable law. In connection
with LSUK's assumption of the Oaks' liabilities to Trenwick and TAC, LSUK has
acquired 100% of the economic interest in the Oaks and
20% of the economic interest in Flinstone Limited (a Corporate Capital Member
formed by Magicsunny to support underwriting at Lloyd's for 2004 and subsequent
years ("Flinstone")). The LSUK Notes, the LSUK Memorandum of Association and the
LSUK Bye-Laws provide for payment to Trenwick and TAC from LSUK to the extent
that funds are received, if any, from each of the Oaks.
Upon the consummation of the Magicsunny Sale, Trenwick's and TAC's rights
to payment under the LSUK Notes were subordinated to amounts owing to the Banks
under the LoC Facility, as amended in connection with the Magicsunny Sale. In
addition, any amount payable to Trenwick and TAC pursuant to the LSUK Notes will
occur only after the Letters of Credit issued by the Banks to support
underwriting activities of the Oaks through year of account 2003, and Flinstone
through year of account 2006, have expired and the Banks' claims under the LoC
Facility have been satisfied in full. This may not occur until 2009. As a result
of the priority of distributions contemplated, Trenwick and TAC would receive
payment pari passu to one another from the respective Oaks that owe the debts to
Trenwick and TAC through the Preference Shares; Oaks 1-3 will not fund amounts
owing to Trenwick or TAC by Oak 4 and vice versa, although Oaks 1-3 will funds
amounts owing to Trenwick or TAC by Oaks 1-3 in the aggregate.
In connection with these agreements the Oaks have agreed to cease
underwriting after the 2003 Lloyd's year of account.
The Barclays Sale purchase price, which was received on November 28, 2003,
included initial consideration of (pound)14 million ($24,017,000) to Oaks 1-3 as
consideration for Oaks 1-3 surrendering up to (pound)200 million ($343,100,000)
of net operating losses. Of the gross proceeds, approximately (pound)2 million
($3,431,000) is to be used to meet certain liabilities of Oaks 1-3. Of these
liabilities, (i) approximately (pound)1.4 million ($2,401,700) relates to a
payment as consideration for (pound)40 million ($68,620,000) of net operating
losses being surrendered to Oaks 1-3 by Trenwick International Limited, (ii)
approximately (pound)400,000 ($686,200) relates to a payment due to Magicsunny
under the terms of the Letter of Intent, and (iii) the balance relates to
various other obligations of Oaks 1-3. Upon consummation of the Magicsunny Sale,
the net proceeds from the Barclays Sale, approximately (pound)12 million
($20,586,000), were released, as required by Lloyd's, into the Oaks' Deposit
Trust Fund at Lloyd's, and Lloyd's allowed the LoC Facility to be reduced by
such amount. For purposes hereof, (pound)/$ conversions were calculated using
the Royal Bank of Scotland exchange rate for November 28, 2003,
(pound)1=$1.7155.
The Debtors do not anticipate that sufficient assets will be available in
the Chapter 11 Cases to pay all unsecured claims in full, and as a result,
holders of interests in any of the Debtors, including but not limited to holders
whose interests derive solely from ownership of common or preferred stock of any
of the Debtors, are not likely to receive any distributions on account of such
interests.
The Bermuda Court Order, the Barclays Sale Order and the Magicsunny Sale
Order, which are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively,
are incorporated herein by reference in their entirety. The descriptions herein
of the Sale
Agreement, GRA and SPA are qualified in their entirety by reference to the full
text of these agreements, which are attached hereto as Exhibits 99.4, 99.5 and
99.6, respectively, and are incorporated herein by reference in their entirety.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Description
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99.1 Bermuda Court Order dated November 17, 2003.
99.2 Order Pursuant to 11 U.S.C. ss.ss. 105(a), 363 and 541 of
Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et
seq. and Rules 2002, 6004 and 6007 of the Federal Rules of
Bankruptcy Procedure Allowing the Debtors to Exchange
Obligations Owed to Them by Certain Non-Debtor Affiliates
and Enter Into Certain Related Standstill Agreements.
99.3 Order Pursuant to 11 U.S.C. ss.ss. 105(a), 363 and 541 of
Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et
seq. and Rules 2002, 6004 and 6007 of the Federal Rules of
Bankruptcy Procedure Authorizing and Approving the Sale of
Certain of Debtors' Assets Free and Clear of Liens, Claims
and Encumbrances.
99.4 Sale and Purchase Agreement dated November 11, 2003 among
LSUK, as Seller, FOSPV, as Purchaser, Barclays, the
Directors (as defined therein), and LaSalle Re.
99.5 Group Relief Agreement dated November 11, 2003 among
Barclays, FOSPV, as Purchaser, Oaks 1-3, and LSUK, as
Seller.
99.6 Share Acquisition Agreement dated December 8, 2003 among
Trenwick UK PLC, Trenwick and Adit Holding Limited, as
Sellers, and Magicsunny Limited, as Buyer, and the
Executives (as defined therein).
SIGNATURES
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 thereunto duly authorized.
By: /s/ W. Marston Becker
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Name: W. Marston Becker
Title: Chairman and Chief Executive Officer
Dated: December 24, 2003
EXHIBIT INDEX
Exhibit No. Description
99.1 Bermuda Court Order dated November 17, 2003.
99.2 Order Pursuant to 11 U.S.C. ss.ss. 105(a), 363 and 541 of
Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et
seq. and Rules 2002, 6004 and 6007 of the Federal Rules of
Bankruptcy Procedure Allowing the Debtors to Exchange
Obligations Owed to Them by Certain Non-Debtor Affiliates
and Enter Into Certain Related Standstill Agreements.
99.3 Order Pursuant to 11 U.S.C. ss.ss. 105(a), 363 and 541 of
Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et
seq. and Rules 2002, 6004 and 6007 of the Federal Rules of
Bankruptcy Procedure Authorizing and Approving the Sale of
Certain of Debtors' Assets Free and Clear of Liens, Claims
and Encumbrances.
99.4 Sale and Purchase Agreement dated November 11, 2003 among
LSUK, as Seller, FOSPV, as Purchaser, Barclays, the
Directors (as defined therein), and LaSalle Re.
99.5 Group Relief Agreement dated November 11, 2003 among
Barclays, FOSPV, as Purchaser, Oaks 1-3, and LSUK, as
Seller.
99.6 Share Acquisition Agreement dated December 8, 2003 among
Trenwick UK PLC, Trenwick and Adit Holding Limited, as
Sellers, and Magicsunny Limited, as Buyer, and the
Executives (as defined therein).