Bermudian reinsurer PartnerRe has announced that the holders of its preferred shares will receive a cash payment of approximately $42.7 million, in the aggregate (equal to $1.25 per preferred share), in connection with last year’s merger agreement with Exor.
This payment will be made to preferred shareholders of record and is dependent on the closing of the transaction, which is expected to occur in the current fiscal quarter.
As part of the merger agreement, Exor had previously announced enhanced terms for PartnerRe’s preferred shares, to be effected through an exchange offer, amounting to a 100 basis point increase in the current dividend rate and an extended redemption date, contingent upon the receipt by PartnerRe of a private letter ruling from the United States Internal Revenue Service (IRS) as to the tax shelter reporting obligations of such enhanced preferred shares.
The company said a request was made to the IRS for the ruling. On February 16, 2016, the IRS indicated that it will not grant such a ruling. As a result, and under the terms of the merger agreement, Exor will, in lieu of a 100 basis point increase in the current dividend rate, make a cash payment to PartnerRe preferred shareholders of record on the closing date totalling approximately $42.7 million.
Following the closing, the Company will use commercially reasonable efforts to launch an exchange offer, referred to as the Alternate Exchange Offer in the merger agreement, whereby existing preferred shares could be exchanged for new preferred shares with an extended redemption date.
PartnerRe, Bermuda, preferred shares, Exor, payout