Scottish Re rejects Brandes proposal, set to vote on Cerberus, MassMutual investment

By Lisa Kerner

Charlotte, N.C., Jan. 19 - Scottish Re Group Ltd. rejected Brandes Investment Partners, LP's alternative shareholder-backed rights offering in connection with a proposed investment by Cerberus Capital Management, LP and MassMutual Capital Partners, LLC in Scottish Re.

Brandes presented its alternative on behalf of its clients, who own 2.63% of Scottish Re shares, in a Jan. 11 letter to the Scottish Re board.

Brandes, a San Diego investment adviser, objects to the low strike price and the inability of existing shareholders to participate in the offering, according to a company news release. Instead, Brandes believes the board should raise capital to remain a going concern by offering and selling Scottish Re common stock to existing stockholders at a strike price between $4.50 and $4.75 per share, or roughly $600 million.

Brandes is likely to vote against the investment transaction if it is put to a shareholder vote.

Scottish Re's board said in its response it did not believe the Brandes proposal was superior to the Cerberus and MassMutual offer and therefore would no longer consider it.

Scottish Re will hold an extraordinary general meeting of shareholders on Feb. 23 to vote on the agreement with MassMutual Capital and Cerberus Capital.

Scottish Re is a Hamilton, Bermuda-based global life reinsurance specialist.

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