In connection with the termination of the agreements, Credit Suisse will pay $32m to Montpelier Re
Bermuda-based Montpelier Re has agreed to an early termination of its outstanding forward share agreement and share issuance agreement with an affiliate of Credit Suisse Securities USA.
The outstanding forward share agreement provided for sales of the company’s common shares in two tranches, each relating to 3.96 million shares.
The first tranche, which was scheduled to settle over a 20 business-day period beginning on October 8, 2009, was subject to an $11.25 forward floor price and a $22 forward cap price. The second tranche, which was scheduled to settle over a 20 business-day period beginning on November 11, 2009, was subject to an $11.25 forward floor price and a $23 forward cap price.
Under the terms of the related share issuance agreement, the company issued common shares to Credit Suisse in 2006 for an amount equal to the par value of such common shares.
In connection with the termination of the agreements, Credit Suisse will make a $32 million cash payment to the company; and deliver to the company, in exchange for a cash payment of $0.01, 5.92 million of the 7.92 million common shares previously issued to them under the share issuance agreement.
Chris Harris, president and CEO of Montpelier Re, said: The early settlement of these agreements, which has the same effect as the company issuing two million common shares, provides us with $32 million of equity capital on terms that are accretive to both our current market and fully converted book values per share. We will use these funds to provide additional underwriting support to our clients in the current capacity-constrained reinsurance market.