TIDMCAT
RNS Number : 2840F
CATCo Reinsurance Opps Fund Ltd
20 April 2011
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE
UNITED STATES, OR INTO OR FROM CANADA, AUSTRALIA OR JAPAN.
This announcement does not constitute or form part of, and
should not be construed as, any offer for sale or subscription of,
or solicitation of any offer to buy or subscribe for, any shares in
CATCo Reinsurance Opportunities Fund Ltd. or securities in any
other entity, in any jurisdiction, including the United States, nor
shall it, or any part of it, or the fact of its distribution, form
the basis of, or be relied on in connection with, any contract or
investment decision whatsoever, in any jurisdiction. This
announcement does not constitute a recommendation regarding any
securities.
CATCo Reinsurance Opportunities Fund Ltd. ("the Company", or
"CATCo")
Announces Publication of Circular and Notice of Special General
Meeting
To: SFM, London Stock Exchange Date: 20 April 2011
Following the Company's announcement on 8 April 2011 in relation
to the intention to raise additional capital by way of a C-Share
issuance, CATCo Reinsurance Opportunities Fund Ltd ("the Company"
or "CATCo") announces that it is convening a special general
meeting (the "SGM") to be held at Crawford House, 50 Cedar Avenue,
Hamilton, HM 11 Bermuda on 13 May 2011 at 9.00 a.m. (Bermuda time)
to consider and, if thought fit, pass the following
resolutions:
-- a Special Resolution to amend the Bye-laws of the Company;
and
-- a Special Resolution to disapply pre-emption rights.
The circular to shareholders, together with a notice convening
the SGM and certain ancillary documents, was posted to shareholders
yesterday and can be viewed via the National Storage Mechanism
which is located at http://www.hemscott.com/nsm.do. A copy of the
circular will be available to download from CATCo's website at
http://www.catcoim.com.
For further information, please contact:
Jason Bibb
CATCo Investment Management Ltd
Telephone: +1 441 531 2227
Email: jason.bibb@catcoim.com
David Benda / Hugh Jonathan
Numis Securities Limited
Telephone: +44 (0)20 7260 1000
The information in this announcement should be read in
conjunction with the full text of the Circular issued by CATCo
Reinsurance Opportunities Fund Limited, dated 19 April 2011.
Capitalised terms used in this announcement shall, unless the
context otherwise requires, bear the meaning given to them in the
Circular.
EXPECTED TIMETABLE
Latest time and date for receipt 1:00 pm (UK time) on 10 May 2011
of Forms of Direction from holders
of Depository Interests
Latest time and date for receipt 1:00 pm (UK time) on 10 May 2011
of Forms of Proxy from Shareholders
Special General Meeting 9:00 am (Bermuda time) on 13 May
2011
(In the event that the Special General Meeting is adjourned, the
timetable will be revised and Shareholders will be notified
accordingly)
INTRODUCTION
It is expected that the issue of New Shares will enable the
Company to take advantage of the increased demand for
retrocessional protection and consequent higher premiums, following
the recent natural catastrophes in Australia, New Zealand and Japan
and will allow the Company to increase the diversity of its
underlying portfolio.
As described further below, the Company is indirectly exposed to
potential losses arising from these events and, although the Board
at this time is not of the view that the Company will ultimately be
exposed to any losses, the Board believes that the Company would be
in a better position to raise further capital if the Company was
able to issue New Shares that would not expose new investors to
potential losses arising from events that have occurred prior to
the date of their investment. Based on information as at the date
of the Circular, the Board does not currently believe that the
Company will ultimately suffer any losses arising from these
events; however, due to the uncertainty in valuing these
investments and the tenure of these contracts, the SAC Board has
designated the Master Fund's potential NZ Exposures and Japan
Exposures as a Side Pocket Investment, represented by a new series
of shares ("SP Shares"). Accordingly, SP Shares are expected to be
issued as at 1 April 2011 to each Master Fund Shareholder
(including the Company) by way of the conversion of a pro rata
proportion of their Master Fund Shares into SP Shares. In this way,
Master Fund Shares that are issued to Master Fund Shareholders
after 31 March 2011 will participate fully in the Master Fund's
portfolio, except that they will not have any NZ Exposures or Japan
Exposures and will accordingly not participate in any losses or
premiums attributable to such exposures.
In order to achieve this, the Board is seeking the approval of
Shareholders to change the Company's Bye-laws to permit the Company
to issue New Shares that are exposed to all of the Company's
portfolio other than in respect of losses (or any profits) arising
from events that have occurred prior to the date on which New
Shares are issued. It is proposed that any New Shares that are
issued whilst the Company's position in respect of any losses from
any event is unclear, will be issued as convertible shares (C
Shares) which will convert into Ordinary Shares at such time when
the Company's loss position in respect of such events is finally
determined.
In addition, on 31 March 2011, the Company issued additional
Ordinary Shares in order to satisfy demand that could not be met
through the secondary market. This issuance has almost exhausted
the Company's authority to allot Ordinary Shares on a
non-pre-emptive basis (i.e. an issue of shares other than an issue
to existing Shareholders pro rata to their holdings of Ordinary
Shares). Where New Shares are issued when the Company's loss
position is clear, the Company will issue New Shares as Ordinary
Shares. Accordingly, in order to allow the Company to issue New
Shares to new investors, the Board is also seeking the approval of
Shareholders to disapply pre-emption rights.
BACKGROUND TO THE PROPOSALS
Reasons for the issue of New Shares
The extraordinary events of the last few months, including the
natural disasters in Australia, New Zealand and Japan, have led to
billions of dollars of losses in the reinsurance industry. As a
consequence, reinsurers are seeking additional retrocessional
protection leading to a significant increase in premium rates. The
Board believes that the Company is in a position to provide such
protection via CATCo-Re Ltd. (the "Reinsurer") and consequently to
benefit from these higher rates.
In order to take advantage of this opportunity, the Board is
proposing to raise further capital by issuing New Shares. The
proposed capital raising will also enable the Company, through its
investment in the Master Fund, to further diversify the exposure by
risk type of its underlying portfolio. The issue of New Shares is
subject to the passing of the Resolutions at the Special General
Meeting and to the approval by the UK Listing Authority of a
prospectus in connection with the proposed issue.
Side-pocketing of NZ and Japan Exposures by the Master Fund
The Reinsurer has entered into fully collateralised reinsurance
contracts under which it is potentially exposed to losses arising
from the New Zealand earthquake on 22 February 2011 and the Japan
earthquake on 11 March 2011 (respectively, "NZ Exposures" and
"Japan Exposures"). Based on information as at the date of the
Circular, the Board does not currently believe that the Company
will ultimately suffer any losses arising from these events;
however, due to the uncertainty in valuing these investments and
the tenure of these contracts, the SAC Board has designated the
Master Fund's potential NZ Exposures and Japan Exposures as a Side
Pocket Investment, represented by a new series of shares ("SP
Shares"). Accordingly, SP Shares are expected to be issued as at 1
April 2011 to each Master Fund Shareholder (including the Company)
by way of the conversion of a pro rata proportion of their Master
Fund Shares into SP Shares. In this way, Master Fund Shares that
are issued to Master Fund Shareholders after 31 March 2011 will
participate fully in the Master Fund's portfolio, except that they
will not have any NZ Exposures or Japan Exposures and will
accordingly not participate in any losses or premiums attributable
to such exposures.
Once the loss position in respect of the NZ and Japan Exposures
is clarified, the Side Pocket Investment will be realised and the
SP Shares will be exchanged for Master Fund Shares. Following the
realisation of the Side Pocket Investment in such circumstances it
is expected that any C Shares of the first tranche which have been
issued will be converted into Ordinary Shares and will accordingly
participate in any losses or premiums attributable to such
exposures.
Details of the New Shares
For similar reasons, the Board is of the view that the Company
would be in a better position to raise further capital if the
Company is able to issue New Shares that are exposed to all of
Company's portfolio other than in respect of potential losses and
premiums attributable to events that have occurred before the date
on which New Shares are issued. Therefore, during any period where
one or more Side Pocket Investments are in existence, the Company
is proposing to raise capital by way of the issue of C Shares.
C Shares are a separate class of Shares in the capital of the
Company that convert into Ordinary Shares on the occurrence of a
defined event. Traditionally, C Shares are used by investment
companies as a way of raising money from new shareholders and
constructing an investment portfolio over a period of time without
exposing existing shareholders to uninvested cash. C Shares are
then typically converted into ordinary shares once the cash has
substantially been invested. In contrast to this, the Company
intends to use the net proceeds of the issue of C Shares to
subscribe for Master Fund Shares shortly after the C Shares are
issued so that the net proceeds of the issue of C Shares will be
invested shortly after their issue. The proceeds of the issue of C
Shares will be invested in Master Fund Shares but will not
participate in the SP Shares issued to the Company in respect of
any events that have occurred before the date on which the C Shares
are issued. In this way, the C Shares will, shortly after their
issue, be exposed to the Master Fund's portfolio in the same way
that the Ordinary Shares are, except that the C Shares will not be
exposed to potential losses and premiums attributable to events
that have occurred before the date on which the C Shares are
issued.
Therefore, during any period where one or more Side Pocket
Investments are in existence, the Company is proposing to raise
capital by way of the issue of C Shares. C Shares may be issued in
one or more tranches. If, after the issue of a tranche or tranches
of C Shares, an event occurs whose effect on the Master Fund is
unclear such that the Master Fund has designated the Master Fund's
exposure to such event as a Side Pocket Investment and issued SP
Shares is respect of it, the Company would issue a separate class
of C Shares in respect of such event.
If the Resolutions are passed, it is intended that the C Shares
issued whilst the extent of the Master Fund's exposure to any event
that has occurred prior to the issue of the C Shares will be
converted into Ordinary Shares once the extent of the Company's
exposure to all such prior outstanding events has been finally
determined.
It is expected that the Company will issue further Ordinary
Shares, rather than C Shares, if no Side Pocket Investments are in
existence at the time of such proposed issue.
DETAILS OF THE PROPOSALS
Proposed changes to the Bye-laws
The Directors are authorised to issue C Shares in one or more
tranches. The Directors intend that the first tranche of C Shares
will be issued shortly after the approval of the Proposals by
Shareholders and the approval of a prospectus by the UK Listing
Authority.
The issue of this tranche of C Shares will allow investors to
invest in the Company without being exposed to potential NZ or
Japan Exposures. It is intended that such C Shares will convert
into Ordinary Shares immediately following the date on which both
the New Zealand and Japan Side Pocket Investments are no longer
designated as such and the relevant SP Shares have converted back
into Master Fund Shares. Similarly, it is expected that any future
tranches of C Shares will convert once the Side Pocket Investments
in existence at the time they were issued are no longer so
designated.
However, the Bye-laws do not currently permit the Directors to
issue C Shares which convert on this basis. Consequently, the Board
is seeking the approval of Shareholders by way of Special
Resolution to be proposed at the Special General Meeting to amend
the Company's Bye-laws to allow the Directors greater discretion in
determining the timing of the conversion of C Shares into Ordinary
Shares.
The proposed amendments are set out in Part 2 of the Circular
and will permit the Board to determine the time on which a tranche
of C Shares converts into Ordinary Shares at the time of the first
issue of such tranche of C Shares. This is subject to the
requirement that at least 80 per cent of the assets attributable to
the relevant tranche of C Shares have been invested (as such term
is defined in the Bye-laws).
The Board believes that such discretion would provide the
Company with greater flexibility in the structuring of issues of C
Shares which would ultimately increase the ability of the Company
to effectively raise new capital.
Proposed disapplication of pre-emption rights
The Company issued 80,392,000 Ordinary Shares on 20 December
2010 following its initial public offering. Since then, the
Ordinary Shares have traded on average at a premium to the Net
Asset Value per Ordinary Share and on 31 March 2011 the Company
issued a further 7,250,000 Ordinary Shares in order to satisfy
demand that could not be met through the secondary market. This
issuance has almost exhausted both the Company's authority to allot
Ordinary Shares on a non-pre-emptive basis (i.e. an issue of shares
other than an issue to existing Shareholders pro rata to their
holdings of Ordinary Shares) and the limit on the number of new
Ordinary Shares that can be admitted to trading on the Specialist
Fund Market without the publication of a new prospectus.
The initial issue of each tranche of C Shares will be made on a
non-pre-emptive basis, notwithstanding the fact that they
ultimately convert into Ordinary Shares. However, further issues of
that class of C Shares would be required to be offered on a
pre-emptive basis to C Shareholders, as will the issue of further
Ordinary Shares (which the Company may issue when no Side Pocket
Investments are in existence).
Accordingly, in order to permit the Company to issue New Shares
(except for the initial issue of a tranche of C Shares) on a
non-pre-emptive basis, the Board is seeking to disapply pre-emption
rights in respect of an unlimited number of Shares until the
Company's next annual general meeting by way of a Special
Resolution to be proposed at the Special General Meeting.
The Board intends to seek approval for the disapplication of
pre-emption rights at each annual general meeting, although once
the Net Asset Value targets referred to above are met, the Board
may limit the number of Shares that it can issue on a
non-pre-emptive basis when seeking approval for such
disapplication.
The Board has also resolved to publish a new prospectus in order
to obtain admission to trading on the Specialist Fund Market of
Shares to be issued pursuant to this authority.
Use of proceeds
The net proceeds of any issue of New Shares will be invested by
the Investment Manager in accordance with the Company's published
investment policy as detailed in the Prospectus.
Dilution
The allotment of New Shares (other than on a pro rata basis to
then existing Shareholders) will dilute the voting control of
existing Shareholders. Further dilution may occur on conversion of
a particular tranche of C Shares into Ordinary Shares if the Net
Asset Value of such C Shares has increased by a greater amount than
the Net Asset Value of Ordinary Shares.
Consent
Numis Securities Limited has given and not withdrawn its written
consent to the issue of the Circular with the inclusion in it of
references to its name in the form and context in which they
appear.
SPECIAL GENERAL MEETING
Each of the Proposals requires the approval of Shareholders at a
special general meeting of the Company (the "Special General
Meeting"). The Special General Meeting will be held at 9 am
(Bermuda time) on 13 May 2011 at Crawford House, 50 Cedar Avenue,
Hamilton, HM11 Bermuda.
The following resolutions will be proposed at the Special
General Meeting:
-- a Special Resolution to amend the Bye-laws; and
-- a Special Resolution to disapply pre-emption rights.
RECOMMENDATION
The Board, which has received financial advice from Numis
Securities Limited, considers that the passing of the Resolutions
is in the best interests of Shareholders and Depository Interest
Holders as a whole. In providing its financial advice, Numis
Securities Limited has taken into account the Board's commercial
assessment of the effects of the Proposals. Accordingly, the
Directors unanimously recommend you to vote in favour of the
Resolutions to be proposed at the Special General Meeting. The
Chairman of the Board intends to vote in favour of the Resolutions
in respect of the 110,000 Ordinary Shares held by him.
- ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
NOEUROORARASUAR
Catco Reinsurance Opport... (LSE:CAT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Catco Reinsurance Opport... (LSE:CAT)
Historical Stock Chart
From Jul 2023 to Jul 2024