Royston Run-Off, a wholly owned subsidiary of Enstar Group, has entered into a definitive agreement for the purchase of Unionamerica Holdings from St Paul Fire and Marine Insurance Company, an affiliate of The Travelers Companies, for a purchase price of $343.4 million.
In connection with the proposed transaction, Royston Run-Off has entered into a term facilities agreement with National Australia Bank for a $184.6 million loan to be made at the closing of the acquisition.
Unionamerica Holdings is comprised of the discontinued operations of Travelers’s UK-based London Market business, which were placed into run-off between 1992 and 2003.
The purchase price of $343.4 million is expected to be financed approximately 54% through the bank loan; approximately 14% from JC Flowers II ((the Flowers Fund); and approximately 32% from available cash on hand.
The Flowers Fund is a private investment fund for which JCF Associates II is the general partner and JC Flowers & Company is the investment advisor. JCF Associates II and JC Flowers & Company are controlled by Christopher Flowers, a director and one of Enstar’s largest shareholders. In addition, John Oros, a director and Enstar’s executive chairman, is a managing director of JC Flowers & Company.
Completion of the transaction is conditioned on, among other things, completion of the bank financing, approval by the UK’s Financial Services Authority and satisfaction of various customary closing conditions. The transaction is expected to close in the fourth quarter of 2008.