Markel CATCo buy-out terms sweetened after settlement reached

Markel CATCo Investment Management has announced a sweetening of the terms of the buyout process for its retrocessional reinsurance investment funds, after a settlement was reached and more investor support for its winding down was received.

Previously, the investment manager extended the expiry date of the support undertakings it received from investors through to the end of February.

Schemes of Arrangement have been proposed before the Supreme Court of Bermuda in order to implement a Buy-Out Transaction facilitated by Markel Corporation, to settle and distribute the remaining value in the CATCo retro reinsurance funds more quickly.

But some opposition had been received from certain investors and with that threatening to delay processes, it seems Markel has been working hard to find a resolution that investors are all happy with.

A court settlement on the buyout had been hoped for by the end of January.

Markel CATCo and Markel Corporation have been engaging with investors and said that they have now, “Reached a settlement that will improve the terms of the currently proposed Buy-Out Transaction, and result in the opposing investors withdrawing their objections to the schemes and withdrawing litigation that they commenced in courts in the United States.”

Because of this, a payout that would have been due to all Private Fund and Public Fund investors under the Buy-Out Transaction will now be increased, the investment manager said.

Also, Markel Corporation is going to pay the full costs of the transaction as well.

Importantly though, the new settlement arrangements, “Will not reduce recoveries that would otherwise be available to investors in the Private Fund or the Public Fund pursuant to the Buy-Out Transaction as previously announced,” the investment manager explained.

Under the improved terms, for the public and listed CATCo Reinsurance Fund, Ordinary Shares will now receive an estimated accelerated return of approximately $0.331 each (as well as the applicable consent fee for investors that have entered into Support Undertakings in relation to the Buy-Out Transaction), which represents an increase of 1.63% compared to the previously announced transaction terms.

Holders of C Shares are now to receive an estimated accelerated return of approximately $0.579 per C Share (as well as the applicable consent fee for investors that have entered into Support Undertakings in relation to the Buy-Out Transaction), which is up by 1.24% compared to the previously announced transaction terms.

Markel CATCO’s private fund investors will now be contacted and asked to consent to the updating of the support undertakings and also to extend the expiry of the Support Undertakings to 31st March 2022.

Having settled on the terms of the buy-out and extending the period for investors to show their support and approval, it gives Markel and Markel CATCo a far better chance to close this chapter more rapidly and move forwards in the finalisation of the running-off of the loss hit retrocessional reinsurance funds.

Also read:

Belisle fraud lawsuit to wait for CATCo insolvency decision in Bermuda.

CATCo retro fund gains again, NAVs now 148% & 231% higher than lows.

Markel CATCo buyout support undertakings extended to end of February 2022.

Markel CATCo says court decision on buyout hoped for in January.

Markel CATCo to “vigorously defend” investor challenges.