Life reinsurance specialist Scottish Re has entered into an agreement whereby MassMutual Capital, a member of the MassMutual Financial Group, and affiliates of Cerberus Capital Management will each invest $300 million into the company, resulting in a total new equity investment of $600 million.
Under the terms of the agreement, both investors will purchase a total of one million newly issued convertible preferred shares of Scottish Re, which can also be converted into 150 million ordinary shares of Scottish Re at any time, representing a 68.8% ordinary share ownership. This transaction agreement has been approved by Scottish Re’s board.
This completes the process announced earlier this year to evaluate strategic alternatives, and will stabilize Scottish Re while providing long-term liquidity benefits, said Paul Goldean, CEO of Scottish Re. In addition to the financial strength afforded by MassMutual Capital and Cerberus as majority shareholders, these firms offer Scottish Re extraordinary insurance, operational and investment expertise.
Scottish Re will continue to operate its business under its current structure, and will remain traded on the New York Stock Exchange under the ticker SCT.
The transaction is anticipated to close by the second quarter of 2007, subject to shareholder approval.