Last checked at 12 Sep 2011 11:37
Not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.
12 September 2011
Partial Cash Offerforup to 60,240,964 of the common shares of Omega Insurance Holdings LimitedbyHaverford (Bermuda) Limited
The Board of Omega Insurance Holdings Limited ("Omega" or the "Company") and the Board of Haverford (Bermuda) Limited ("HBL") are pleased to announce that they have reached agreement on the terms of a partial cash offer by HBL for up to 60,240,964 of the common shares of Omega ("Omega Shares"), representing approximately 25 per cent. of the existing issued share capital of Omega (the "Offer") at a price of up to 83 pence per Omega Share (the "Offer Price").
At a capped price of 83 pence per Omega Share, the Offer Price would represent a premium of 26 per cent. to the Closing Price of 66 pence per Omega Share on 9 September 2011 (being the last Business Day before this announcement) and 34 per cent. to the 30 calendar day volume weighted average price to that date.
On completion of the Offer, Mark Byrne, Chairman of HBL, is to be appointed a director and Executive Chairman of Omega. Omega's current Chairman John Coldman will step down as Chairman on completion of the Offer but remain on the Omega Board as a non-executive director. Richard Pexton, current Chief Executive Officer, together with the remaining Omega Directors, are to be asked to remain in their respective positions on completion of the Offer.
Jack Byrne, long time insurance industry executive, is expected to join the Omega Board as a non-executive director from completion of the Offer. His extensive industry experience and knowledge of the insurance market will provide a valuable contribution to the future of Omega.
Background to and reasons for the Offer
HBL believes that although Omega has experienced a challenging period, it continues to have a solid underlying core business with clear opportunities. HBL believes that its proposed strategy of simplification and a refocus of the business on its core operations will enhance Omega's core operations and maximise opportunities and long-term profitability.
Introduction to the Offer
Under the terms of the Offer, Omega Shareholders may tender their Omega Shares at a price of up to 83 pence in cash per Omega Share. After the close of the Offer, HBL intends to set the Strike Price per Omega Share. The Strike Price will be the lowest price per Omega Share that will allow HBL to purchase 60,240,964 Omega Shares or such lower number of Omega Shares for which valid tenders have been received (subject to a minimum number of 48,066,974 Omega Shares). If the number of Omega Shares tendered at a price less than or equal to the Strike Price is less than or equal to 60,240,964 then all Omega Shareholders who accept the Offer will receive the Strike Price for each Omega Share for which a valid tender has been received. If the aggregate of tenders at or below the Strike Price exceeds the maximum number of Omega Shares which are the subject of the Offer, all Omega Shareholders who have tendered a number of their Omega Shares representing more than the Offer Threshold Percentage will be scaled down pro-rata. Acceptances tendered above the Strike Price will not be accepted.
In order to facilitate the Offer, if HBL does not secure valid tenders for at least 60,240,964 Omega Shares pursuant to the Offer but does secure valid tenders for at least 48,066,974, Omega has undertaken to use its existing shareholder authorities to issue such number of Omega Shares to HBL as would result in HBL holding 60,240,964 Omega Shares at a price of 83 pence per Omega Share. Any top-up Omega Shares issued pursuant to the Offer will be issued within fourteen days of the number of Omega Shares agreed to be acquired pursuant to the Offer being announced and the Offer having become unconditional in all respects, save for the issue of the top-up Omega Shares.
Unless at least 48,066,974 Omega Shares are validly tendered pursuant to the Offer, the Offer will lapse.
Invesco Asset Management Ltd ("Invesco"), acting for and on behalf of its discretionary managed clients, has confirmed that it has no objections to HBL's strategy for Omega (as outlined below) or to Mark Byrne's appointment as Executive Chairman of Omega. Invesco has stated, in respect of 66,984,463 of its Omega Shares, that it does not intend to tender unless required to do so in order to allow the Offer to succeed.
Strategy
Under the chairmanship of Mark Byrne, following completion of the Offer, the strategy for Omega will be to simplify the business and have an increased focus on the core business, to continue to deliver a stronger control environment and underwriting discipline across all lines of business and to return the underwriting of the business to overall profitability.
Accelerating the progress which has been made under the new Omega Board, the strategy for the future will be built around a world class underwriting platform. To that end, even greater use will be made of technology in underwriting and risk management.
Omega will have a continued focus on core areas where it has traditionally been a strong, consistent and profitable performer as a skilled lead or quoting market. New classes may be added selectively dependent on availability of talent and market conditions.
Best practice Solvency 2 compliance will remain a priority. A more centralised reinsurance purchasing will be adopted. A rebranding exercise will also be carried out.
Omega Board Statement.
Since their appointment in 2010, the new Omega Directors have consulted frequently with Omega Shareholders about the future direction of the business. It became clear at the start of 2011 that the majority of Omega Shareholders wished to see the Board explore a sale of the business. The Board therefore engaged with a number of parties regarding a potential transaction.
With recent large catastrophe losses (including the Japanese earthquake and tsunami, the earthquakes in New Zealand, the flooding in Australia and the US windstorms), the recent turbulence in global financial markets and an uncertain premium rate environment, the current industry climate has not provided ideal conditions for a sale. Moreover, recent transactions involving Lloyd's businesses have been completed at lower valuations than those achieved historically.
The Board is aware that amongst the larger Omega Shareholders there are different views on the form of the most appropriate transaction, with some Omega Shareholders seeking a cash exit and others seeking continued exposure to Omega's business in some form. Whilst not representing an outright sale of the business, the Offer would allow Omega Shareholders to receive a significant amount of cash at a substantial premium to (i) Omega's closing share price on 9 September 2011 (being the last Business Day before this announcement) of 66 pence, and (ii) the 30 calendar day volume weighted average price (up to the close of trading on 9 September 2011) of 62 pence, whilst also providing an opportunity for continued investment in the business.
Despite remedial action taken by the Board to date, the Directors believe that for some time the stockmarket has undervalued the Omega business. The Directors believe that continued progress with existing initiatives, the successful implementation of the strategy set out above and the impact of the investment of up to £50 million by HBL has the potential to deliver significant value to Omega Shareholders over time.
Accordingly, the Directors believe that it is in the best interests of Omega for the Offer to be put to all Omega Shareholders.
Whether or not Omega Shareholders decide to tender their Omega Shares will depend, amongst other things, on their view of Omega's prospects, the prevailing share price for Omega Shares and their own individual circumstances including their tax position. Omega Shareholders are recommended to take their own professional advice. The Directors of Omega have confirmed that they are willing to tender up to approximately 25 per cent. of their Omega Shares to the extent that acceptances in respect of 60,240,964 Omega Shares are not otherwise received, in order to facilitate completion of the Offer.
Timing
The Offer Document, setting out the details of the Offer and the procedure to be followed, and the Form of Tender will be posted to Omega Shareholders in due course. Subject to the satisfaction of the Conditions to and terms of the Offer including the receipt of applicable regulatory consents, the Offer is expected to become effective towards the end of the fourth quarter of 2011.
Commenting on today's announcement, Mark Byrne, the Chairman of HBL said:
"We are delighted to be making this Offer. While the Company has experienced a challenging couple of years, the future for its core business looks bright. I am looking forward to the opportunities this executive role will offer and to working with the strong team already in place to accomplish the new strategy for Omega."
This summary should be read in conjunction with the following full text of the announcement and the Appendices.
The Offer will be subject to the Conditions and terms set out in this announcement and to the full terms and conditions which will be set out in the Offer Document. Appendix 2 to the full announcement contains bases and sources of certain information contained in this announcement. Certain terms used in this announcement are defined in Appendix 3 to the full announcement.
Enquiries:
Citi(Financial Adviser to Haverford (Bermuda) Limited) Tel: +44 (0)20 7986 4000Basil GeogheganJohn SandhuCyrille Cotte
Powerscourt Tel: +44 (0)20 7250 1446(Public Relations Adviser to Haverford (Bermuda) Limited)Giles SandersonNick Dibden
Omega Tel: +44 (0)20 7767 3000John Coldman, Chairman
Richard Pexton, Chief Executive
Kinmont Tel: +44 (0)20 7087 9100
(Joint financial adviser to Omega Insurance Holdings Limited)
John O'Malley
Mat Thackery
Cenkos Tel: +44 (0)20 7382 7800
(Joint financial adviser to Omega Insurance Holdings Limited)
Ian Soanes
Haggie Financial Tel: +44 (0)20 7417 8989
(PR adviser to Omega Insurance Holdings Limited)
David Haggie
Juliet Tilley
This announcement is not intended to and does not constitute or form part of any offer to sell or subscribe for or any invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise. The Offer will be made solely pursuant to the terms of the Offer Document, which will contain the full terms and conditions of the Offer, including details of how to vote in respect of the Offer. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in the Offer Document.
This announcement does not constitute a prospectus or prospectus equivalent document.
Takeover Code disapplication
As Omega is incorporated and has its registered office in Bermuda, the Code does not apply to the Offer. Pursuant to Regulation 87 of the Omega Byelaws, the Omega Board may determine that the whole or part or the Code shall be deemed to apply to any offer for Omega. However, pursuant to the terms of the Implementation Agreement, Omega and HBL have agreed that the Code will not apply to the Offer. Omega and HBL have acknowledged that the Takeover Panel does not have jurisdiction over the Offer.
Omega Shareholders should be aware that one consequence of the Code not applying to and the Takeover Panel not having jurisdiction over the Offer is that any dispute relating to the Offer (including its Conditions) shall be judged by English law, and that any court would apply its own established sets of rules and standards of interpretation when deciding the merits of any such dispute. Accordingly, courts, when applying such rules and standards of interpretation, may not take account of, amongst other things, previous Takeover Panel rulings, practice statements and annual reports.
Notice to Overseas Shareholders
The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe any applicable requirements. This announcement has been prepared for the purpose of complying with the laws of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.
The Offer will not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities. Accordingly, copies of this announcement and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving this announcement and all documents (including custodians, nominees and trustees) relating to the Offer should observe these restrictions and should not mail or otherwise forward, distribute or send this announcement or documents relating to the Offer in or into or from any Restricted Jurisdiction.
Notice to US holders of Omega Shares
The Offer is being made for securities of a Bermuda company and Omega Shareholders in the United States should be aware that this announcement, the Offer Document and any other documents relating to the Offer have been or will be prepared in accordance with UK and Bermuda law and UK disclosure requirements, format and style, all of which differ from those in the United States. Omega's financial statements, and all financial information that is included in this announcement or that may be included in the Offer Document or any other documents relating to the Offer, have been or will be prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and may not be comparable to financial statements of United States companies.
Omega and HBL are both companies incorporated under the laws of Bermuda. Most of the directors of these companies are residents of countries other than the United States. Substantially all of the assets of HBL and a majority of the assets of Omega are located outside the United States. As a result, it may not be possible for Omega Shareholders in the United States to effect service of process within the United States upon Omega or HBL or their respective officers or directors or to enforce against any of them judgements of the United States predicated upon the civil liability provisions of the federal securities laws of the United States. It may not be possible to sue Omega or HBL or their respective officers or directors in a non-US court for violations of the US securities laws. There is also substantial doubt as to enforceability in Bermuda in original actions, or in actions for the enforcement of judgments of US courts, based on the civil liability provisions of US federal securities laws.
Financial advisers
Citi, which is authorised and regulated in the UK by the FSA, is acting exclusively for HBL and no one else in connection with the Offer and will not be responsible to anyone other than HBL for providing the protections afforded to clients of Citi or for providing advice in relation to the Offer or any other matters referred to in this announcement.
Kinmont, which is authorised and regulated in the UK by the FSA, is acting exclusively for Omega and no one else in connection with the Offer and will not be responsible to anyone other than Omega for providing the protections afforded to clients of Kinmont, or for providing advice in relation to the Offer or any other matters referred to in this announcement.
Cenkos, which is authorised and regulated in the UK by the FSA, is acting exclusively for Omega and no one else in connection with the Offer and will not be responsible to anyone other than Omega for providing the protections afforded to clients of Cenkos, or for providing advice in relation to the Offer or any other matters referred to in this announcement.
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of Omega and certain plans and objectives of HBL with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning. These statements are based on assumptions and assessments made by Omega, and/or HBL in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this document. Neither Omega nor HBL assumes any obligation to update or correct the information contained in this document (whether as a result of new information, future events or otherwise), except as required by applicable law.
There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions.
Responsibility
The HBL Directors (all of whose names will be set out in the Offer Document) accept responsibility for the information contained in this announcement relating to HBL, HBL Group and themselves and their immediate families, related trusts and connected persons. To the best of the knowledge and belief of the HBL Directors (who have taken all reasonable care to ensure that such is the case), such information for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Omega Directors (all of whose names will be set out in the Offer Document) accept responsibility for the information contained in this announcement relating to the Omega Group and themselves and their immediate families, related trusts and connected persons. To the best of the knowledge and belief of the Omega Directors (who have taken all reasonable care to ensure that such is the case), such information for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
Dealing disclosure requirements
Although the Code does not apply to Omega or to the Offer, Omega Shareholders and persons considering the acquisition or disposal of any interest in Omega Shares are reminded that they are subject to the Disclosure and Transparency Rules made by the UK Listing Authority and other applicable regulatory rules regarding transactions in Omega securities.
Publication on website
A copy of this announcement will be available free of charge on Omega's website at http://www.omegauw.com, and on HBL's website at http://www.haverfordbermuda.com, by no later than 12.00 p.m. (London time) on 13 September 2011.
Not for release, publication or distribution, in whole or in part, directly or indirectly in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.
Partial Cash Offerforup to 60,240,964 of the common shares of Omega Insurance Holdings LimitedbyHaverford (Bermuda) Limited
1. Introduction
The Board of Omega Insurance Holdings Limited and the Board of Haverford (Bermuda) Limited are pleased to announce that they have reached agreement on the terms of a partial cash offer by HBL for up to 60,240,964 of the common shares of Omega representing approximately 25 per cent. of the existing issued share capital of Omega.
Subject to the receipt of all required regulatory approvals, Mark Byrne, Chairman of HBL, is to be appointed a director and Executive Chairman of Omega on completion of the Offer. Omega's current Chairman John Coldman will step down as Chairman but remain on the Omega Board as a non-executive director. Richard Pexton, current Chief Executive Officer, together with the remaining Omega Directors, are to be asked to remain in their respective positions on completion of the Offer. The Board of Omega have agreed that on completion of the Offer and Mr Byrne's appointment, that they will implement a new strategy for Omega.
The strategy for Omega will be to simplify the business and have an increased focus on the core business, to continue to deliver a stronger control environment and underwriting discipline across all lines of business and to return the underwriting of the business to overall profitability.
Accelerating the progress which has been made under the new Omega Board, the strategy for the future will be built around a world class underwriting platform. To that end, even greater use will be made of technology in underwriting and risk management.
Omega will have a continued focus on core areas where it has traditionally been a strong, consistent and profitable performer as a skilled lead or quoting market. New classes may be added selectively dependent on availability of talent and market conditions.
Best practice Solvency 2 compliance will remain a priority. A more centralised reinsurance purchasing will be adopted. A rebranding exercise will also be carried out.
HBL reserves the right to withdraw the Offer and/or revise the capped price (and the price at which any Omega Shares are issued by Omega to HBL, which will be the same as the capped price), if either (i) circumstances arise as a result of which it is necessary or appropriate for the Omega interim results for the first half of 2011 to be amended, other than by reason of a Restatement Event, or (ii) one or more natural catastrophes occurs between the release of this Announcement and completion of the Offer, as a result of which it is reasonable to assume claims for losses exceeding US$10 billion will be made on insurance companies, and with a reasonable estimated cost to the Omega Group of over five per cent. of net tangible asset value.
2. The Partial Offer
It is intended that the Offer will be structured as a partial cash offer. Under the terms of the Offer, which will be subject to the Conditions and terms set out in this announcement and to further terms to be set out in the Offer Document and the Form of Tender, Omega Shareholders may accept the Offer by tendering their Omega Shares at a price up to a cap. HBL will consider tenders up to a price of 83 pence in cash per Omega Share. After the close of the Offer, HBL will set the Strike Price per Omega Share. The price which will be payable per Omega Share will be the lowest price per Omega Share that will allow HBL to purchase 60,240,964 Omega Shares or such lower number of Omega Shares for which valid tenders have been received.
At the capped price of 83 pence per Omega Share, the Offer Price represents a premium of 26 per cent. at the Closing Price of 66 pence per Omega Share on 9 September 2011 (being the last Business Day before this announcement) and 34 per cent. to the 30 calendar day volume weighted average price to that date.
Omega Shareholders may tender in respect of any number of their Omega Shares or none at all. Subject to the Offer becoming unconditional in all respects, tenders at or below the Strike Price will be met in full to the extent that they are for up to 60,240,964 Omega Shares in aggregate. This amount represents approximately 25 per cent of the aggregate issued Omega Shares (the exact proportion 60,240,964 bears to the issued share capital of Omega of 244,229,862 shall be known as the "Offer Threshold Percentage"). If aggregate tenders pursuant to the Offer at or below the Strike Price exceed 60,240,964 Omega Shares, each Omega Shareholder who has tendered a number of their Omega Shares representing no more than the Offer Threshold Percentage shall have their tender met in full and Omega Shareholders who have tendered a number of their Omega Shares representing more than the Offer Threshold Percentage will be scaled back such that tenders are accepted in respect of 60,240,963 Omega Shares in aggregate.
All Omega Shareholders who have tendered a proportion of their Omega Shares representing more than the Offer Threshold Percentage will have their tender accepted in respect of the sum of: (A) the Offer Threshold Percentage applied to their total holding of Omega Shares; and (B) a proportion of the shares tendered in excess this level. (B) shall be calculated by allocating the remainder of the 60,240,963 Omega Shares, once the elements of tenders at or below Omega Shareholders' Offer Threshold Percentages are satisfied, pro rata to Omega Shareholders' tenders in excess of their Offer Threshold Percentages.
If HBL does not secure valid tenders for at least 60,240,964 Omega Shares pursuant to the Offer but does secure valid tenders for at least 48,066,974, Omega has undertaken to use its existing shareholder authorities to issue such number of Omega Shares to HBL as would result in HBL holding 60,240,964 Omega Shares at a price of 83 pence per Omega Share. Any top-up Omega Shares issued pursuant to the Offer will be issued within fourteen days of the number of Omega Shares agreed to be acquired pursuant to the Offer being announced and the Offer having become unconditional in all respects, save for the issue of the top-up Omega Shares.
Unless at least 48,066,974 Omega Shares are validly tendered pursuant to the Offer, the Offer will lapse.
In accordance with the terms of the Offer, the Omega Shares will be acquired fully paid and free from all liens, charges, equitable interests, encumbrances and rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching thereto.
3. Omega Board Statement
Since their appointment in 2010, the new Omega Directors have consulted frequently with Omega Shareholders about the future direction of the business. It became clear at the start of 2011 that the majority of Omega Shareholders wished to see the Board explore a sale of the business. The Board therefore engaged with a number of parties regarding a potential transaction.
With recent large catastrophe losses (including the Japanese earthquake and tsunami, the earthquakes in New Zealand, the flooding in Australia and the US windstorms), the recent turbulence in global financial markets and an uncertain premium rate environment, the current industry climate has not provided ideal conditions for a sale. Moreover, recent transactions involving Lloyd's businesses have been completed at lower valuations than those achieved historically.
The Board is aware that amongst the larger Omega Shareholders there are different views on the form of the most appropriate transaction, with some Omega Shareholders seeking a cash exit and others seeking continued exposure to Omega's business in some form. Whilst not representing an outright sale of the business, the Offer would allow Omega Shareholders to receive a significant amount of cash at a substantial premium to (i) Omega's closing share price on 9 September 2011 (being the last Business Day before this announcement) of 66 pence, and (ii) the 30 calendar day volume weighted average price (up to the close of trading on 9 September 2011) of 62 pence, whilst also providing an opportunity for continued investment in the business.
Despite remedial action taken by the Board to date, the Directors believe that for some time the stockmarket has undervalued the Omega business. The Directors believe that continued progress with existing initiatives, the successful implementation of the strategy set out above and the impact of the investment of up to £50 million by HBL has the potential to deliver significant value to Omega Shareholders over time.
Accordingly, the Directors believe that it is in the best interests of Omega for the Offer to be put to all Omega Shareholders.
Whether or not Omega Shareholders decide to tender their Omega Shares will depend, amongst other things, on their view of Omega's prospects, the prevailing share price for Omega Shares and their own individual circumstances including their tax position. Omega Shareholders are recommended to take their own professional advice. The Directors of Omega have confirmed that they are willing to tender up to approximately 25 per cent. of their Omega Shares to the extent that acceptances in respect of 60,240,964 Omega Shares are not otherwise received, in order to facilitate completion of the Offer.
Invesco Asset Management Ltd ("Invesco"), acting for and on behalf of its discretionary managed clients, has confirmed that it has no objections to HBL's strategy for Omega (as outlined above) or to Mark Byrne's appointment as Executive Chairman of Omega. Invesco has stated, in respect of 66,984,463 of its Omega Shares, that it does not intend to tender unless required to do so in order to allow the Offer to succeed.
4. Background to and reasons for the Offer
HBL believes that although Omega has experienced a challenging period, it continues to have a solid underlying core business with clear opportunities. HBL believes that its proposed strategy of simplification and a refocus of the business on its core operations will enhance Omega's core operations and maximise opportunities and long-term profitability.
5. Information relating to Omega
Omega is a Bermuda-domiciled international insurance and reinsurance group listed on the Main Market of the London Stock Exchange, with business operations in Bermuda, London, Chicago and Cologne. The Group underwrites a predominantly short-tail property insurance and reinsurance account, with a focus on insuring small to medium sized insureds and reinsuring smaller insurance companies.
For the year ending 31 December 2010, Omega reported gross premiums written of $356.1m (2009: $265.8m), net premiums written of $268.4m (2009: $199.3m) and a loss for the year of $42.8m (2009: profit of $43.6m). At 31 December 2010 Omega had net tangible assets of $374.8m. For the half year to 30 June 2011 Omega reported gross premiums written of $206.5m (half year to 30 June 2010: $244.1m), net premiums written of $163.1m (half year to 30 June 2010: $183.8m) and a loss of $44.5m (half year to 30 June 2010: loss of $32.3m).
Further information on Omega is available on its website at www.omegauw.com.
6. Information relating to HBL
HBL is a Bermuda Class 3A insurer and reinsurer, currently writing no insurance business. It was formed by Mark Byrne in 1993 and has at various times in the past been an active underwriter.
Further information on HBL is available on its website at www.haverfordbermuda.com.
7. Management, employees and locations
HBL gives much weight to the skills and experience of the current employees of Omega and it is committed to their fair treatment and intends to safeguard fully the existing employment rights of all employees and management. Richard Pexton, current Chief Executive Officer, together with the remaining Omega Directors, are to be asked to remain in their respective positions on completion of the Offer. Following the Effective Date, Mark Byrne would join the board as Executive Chairman and John Coldman would be retained as a Non-Executive Director.
Jack Byrne, long time insurance industry executive, is expected to join the Omega Board as a non-executive director from completion of the Offer. His extensive industry experience and knowledge of the insurance market will provide a valuable contribution to the future of Omega.
8. Financing of the Offer
The cash consideration payable to Omega Shareholders pursuant to the Offer will be financed from HBL existing cash resources and through agreed equity subscriptions and borrowing.
Further information on the financing of the Offer will be set out in the Offer Document.
9. Current Trading
2011 continues to be a period of transition for Omega. The first half of 2011 has been a period of exceptional loss activity for the insurance industry, in particular from those events relating to the Japanese earthquake and tsunami, the earthquake in New Zealand, the Australia flooding and the US tornados. The corrective actions Omega has taken have brought its catastrophe losses in line with its peers.
Omega incurred a pre-tax loss of US$49.1 million for the first half of the year and a combined ratio of 133.2 per cent., of which approximately 41.9 per cent. is attributed to the catastrophe losses. The actions Omega has taken over the past 12 months through repositioning of the underlying books of business and purchase of more effective reinsurance programmes have lessened the severity of these major industry losses on its capital compared to what would otherwise have been the case. 2011 catastrophe losses measured as a percentage of 31 December 2010 Net Tangible Assets were at the lower end of its peer group. Going forward, Omega continue to focus on the core book of business written by the Syndicate and the US, and is well positioned to take advantage of more favourable market conditions when the rating environment improves.
GROSS PREMIUM WRITTEN SUMMARY | Six months ended 30 June 2011 | Six months ended 30 June 2010 | Year ended 31 December 2010 |
US$'m | US$'m | US$'m | |
Syndicate 958 derived | 151.9 | 164.8 | 244.9 |
Omega Specialty (third party reinsurance) | 28.9 | 56.5 | 65.2 |
Omega US | 25.7 | 22.8 | 46.0 |
Total Group | 206.5 | 244.1 | 356.1 |
Syndicate 958 (100 per cent.) | 290.7 | 341.9 | 503.8 |
In line with its 2011 business plan, the Syndicate (of which the Group has an economic interest of 52.4 per cent.) for 2011 (2010: 51.1 per cent.) has reduced its premium written, having exited Marine Energy and retrocessional business. This is reflected in the overall reduction of US$12.9 million in Syndicate derived gross premium written. The Syndicate anticipates writing total premium for the 2011 year of account of approximately US$430 million which is broadly in line with its original business plan.
Omega Specialty third party premium volume in H1 2011 was US$28.9 million (H1 2010 US$56.5 million) due to the previously announced exits from the retrocessional account and the significant reduction of mid-year catastrophe renewals. Omega does not plan significant further writings in Bermuda this year which will allow more efficient use of capital.
Omega's US business continues to grow with gross written premium of US$25.7 million (H1 2010: US$22.8 million), and it is now licensed to write business in 50 states. Increased underwriting opportunities from these recent licences should enable it to meet its growth targets for 2011. The combined ratio decreased for the period to 101.5 per cent. (H1 2010: 107.9 per cent.) as the business increases in scale.
During 2011, more effective Group reinsurance protections have been purchased. Omega has better matched the reinsurance programme to underlying exposures and reduced the basis risk. Although the Group has suffered significant net losses from catastrophe experience during 2011, reinsurance recoveries increased substantially to 29.1 per cent., up from 16.8 per cent. in H1 2010 (2010 full year: 9.0 per cent.).
On 6 September 2011 A.M. Best affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of "a+" of Lloyd's Syndicate 958, which is managed by Omega Underwriting Agents Limited, a subsidiary of the Group. The outlook for both ratings remains stable. At the same time A.M. Best commented that the FSR of A- (Excellent) and ICR of "a-", pertaining to Omega Specialty Insurance Company Limited (OSIL) and Omega US Insurance, Inc (OUS), together with the ICR of "bbb" of Omega Insurance Holdings Limited are unaffected and remain under review with negative implications.
A.M. Best made the following comments about Omega:
"Omega's management team has taken positive action to alleviate A.M. Best's concerns regarding the group's risk management processes and the ongoing placement of the 2011 reinsurance programme and has reduced the group's exposure to catastrophe events. However, uncertainty remains in respect of the continuing review by the group's directors of approaches that may lead to an offer to acquire Omega. A.M. Best will continue to closely monitor developments relating to the group's ownership."
"Syndicate 958 has a good business profile within the London market as a specialist underwriter of short-tail, small to medium-sized property risks, predominantly located in the United States (more than half of gross written premiums in 2010 were derived from U.S. business). In addition, the syndicate benefits from its presence in the European market through Omega Europe GmbH, a wholly owned subsidiary of Omega that operates solely as a coverholder to the syndicate."
"The ratings of Lloyd's Syndicate 958 reflect the financial strength of the Lloyd's of London (Lloyd's) market, which underpins the security of all Lloyd's syndicates. In addition, syndicate 958 benefits from the financial flexibility provided by Omega. Omega Dedicated Limited, Omega's corporate member at Lloyd's, provides 40.5 per cent. of the capacity of syndicate 958 for its 2011 year of account and OSIL underwrites a 20 per cent. quota share of the syndicate."
10. Implementation Agreement
Omega and HBL have entered into an Implementation Agreement in relation to the implementation of the Offer and related matters. Pursuant to the Implementation Agreement Omega and HBL have agreed, inter alia, subject to the fiduciary duties of the directors of each of the parties, to take all such steps and actions and prepare all such documents necessary for the implementation of the Offer on a timely basis and in accordance with an agreed timetable and in accordance with the terms of the Implementation Agreement and the requirements of applicable laws and regulations.
Break fee
As a pre-condition to HBL agreeing to announce the proposed Offer, Omega has agreed to pay a break fee of £250,000, payable by reference to the terms of the Offer by way of compensation if the proposed Offer is announced (or £500,000 if the Offer Document is posted) and:
(i) subsequently lapses, is withdrawn or is not made and before this time an independent Competing Proposal is announced which subsequently becomes unconditional in all respects or otherwise completes; or
(ii) the Omega Directors withdraw, qualify or adversely modify their statement regarding the Offer or agree or resolve to or announce their intention to recommend an independent Competing Proposal.
Non-solicitation
Subject to applicable fiduciary duties and pre-existing duties of confidentiality, the Implementation Agreement includes an undertaking from Omega not to (save to the extent the Omega Directors reasonably consider that they would be in breach of their fiduciary duties to Omega or to Omega Shareholders or would be in breach of the Omega Byelaws, the Bermuda Companies Act or the Bermuda Insurance Act), and to procure that no other member of the Omega Group or any Omega Director or employee (and use its reasonable endeavours to procure that no adviser or agent of it or them) shall, on its behalf, solicit, initiate, encourage or otherwise seek to procure any approach or re-engagement from any person.
In addition, Omega has agreed to notify HBL promptly, and in any event, within 24 hours, of any approach made or any circumstances indicating that an approach is likely to be made to Omega in relation to a Competing Proposal and to notify HBL of the material terms of such Competing Proposal. Omega has also agreed to keep HBL informed as to the progress of any such Competing Proposal.
Right to match
Omega has also agreed with HBL that, in the event Omega receives a Competing Proposal or a Competing Proposal is announced or there is a material improvement to an existing Competing Proposal, the Omega Directors will not (a) accept, approve, recommend or enter into any agreement to implement such Competing Proposal, or (b) withhold, withdraw, change, qualify or adversely modify the Omega board statement or advice to the Omega Shareholders in respect of the Offer unless HBL fails to announce within 72 hours (excluding for the purposes of calculating the 72 hour period any hours falling between 6pm on a Friday and 9am on a Monday and any public or bank holidays in England and Wales) following it being notified of such Competing Proposal by Omega its firm intention to improve the terms of the Offer, that is, so as to provide for a price per Omega Share which is equal to or more than the price per Omega Share offered under the Competing Proposal or so that such terms, in the reasonable opinion of Omega's financial advisers, otherwise provide financial value to the Omega Shareholders which is equal to or more than the value provided by the Competing Proposal or, as the case may be, revised Competing Proposal, on a like-for-like basis (so that any offer for the whole of Omega, and any cash component, of the Competing Proposal or revised Competing Proposal is likewise matched on a like-for like basis).
Material conditions
Omega and HBL have agreed that if any of the Conditions set out in paragraphs (a) to (h) and (k) of Appendix 1 to this Announcement are not satisfied or, if capable of waiver, waived by HBL before the Long-Stop Date, the Offer will not proceed.
Appointment of Mark Byrne and new strategy
Omega and HBL have agreed that Mark Byrne, Chairman of HBL, is to be appointed a director and Executive Chairman of Omega on completion of the Offer, and will lead the implementation of a new strategy for Omega (as explained above).
Further information regarding the Implementation Agreement will be set out in the Offer Document.
11. Mark Byrne's Service Contract
Mark Byrne's appointment as Executive Chairman of Omega will be on a rolling contract which may be terminated on 24 months' notice (or payment in lieu of notice, such payment to equal Mr Byrne's basic salary for 24 months and a bonus equal to 200% of his annual basic salary). His basic salary will be £400,000 per annum and target bonus will be 150 per cent. of basic salary, the amount to be based on the meeting of quantifiable pre-agreed objectives relating to both the performance of Omega and Mr Byrne. If a change of control should occur within 24 months of his appointment and Omega terminates his employment within 12 months of such change of control, then he will be entitled to receive an additional payment of £2,000,000 (less all necessary withholdings). Mr Byrne is also entitled to benefit from a monthly cash payment of 15% of his monthly basic salary (and other fees determined by the Board) pension contribution, in addition to family private medical insurance, permanent health insurance and life assurance.
12. General
The Offer Document setting out further details of the Offer, including the Offer timetable, will be posted to Omega Shareholders (other than to persons resident in a Restricted Jurisdiction) in due course. It is currently expected that, if successful, the Offer would become or be declared unconditional in all respects towards the end of the fourth quarter of 2011.
Your attention is drawn to the further information contained in the Appendices which form part of, and should be read in conjunction with, this announcement.
The Offer will be subject to the Conditions and further terms in relation to the Offer set out in Appendix 1 to this announcement and to be set out in the Offer Document. Appendix 2 to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix 3 to this announcement contains definitions of certain expressions in this announcement.
Enquiries:
Citi(Financial Adviser to Haverford (Bermuda) Limited) Tel: +44 (0)20 7986 4000Basil GeogheganJohn SandhuCyrille Cotte
Powerscourt Tel: +44 (0)20 7250 1446(Public Relations Adviser to Haverford (Bermuda) Limited)Giles SandersonNick Dibden
Omega Tel: +44 (0)20 7767 3000John Coldman, Chairman
Richard Pexton, Chief Executive
Kinmont Tel: +44 (0)20 7087 9100
(Joint financial adviser to Omega Insurance Holdings Limited)
John O'Malley
Mat Thackery
Cenkos Tel: +44 (0)20 7382 7800
(Joint financial adviser to Omega Insurance Holdings Limited)
Ian Soanes
Haggie Financial Tel: +44 (0)20 7417 8989
(PR adviser to Omega Insurance Holdings Limited)
David Haggie
Juliet Tilley
This announcement is not intended to and does not constitute or form part of any offer to sell or subscribe for or any invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise. The Offer will be made solely pursuant to the terms of the Offer Document, which will contain the full terms and conditions of the Offer, including details of how to vote in respect of the Offer. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in the Offer Document.
This announcement does not constitute a prospectus or prospectus equivalent document.
Takeover Code disapplication
As Omega is incorporated and has its registered office in Bermuda, the Code does not apply to the Offer. Pursuant to Regulation 87 of the Omega Byelaws, the Omega Board may determine that the whole or part or the Code shall be deemed to apply to any offer for Omega. However, pursuant to the terms of the Implementation Agreement, Omega and HBL have agreed that the Code will not apply to the Offer. Omega and HBL have acknowledged that the Takeover Panel does not have jurisdiction over the Offer.
Omega Shareholders should be aware that one consequence of the Code not applying to and the Takeover Panel not having jurisdiction over the Offer is that any dispute relating to the Offer (including its Conditions) shall be judged by English law, and that any court would apply its own established sets of rules and standards of interpretation when deciding the merits of any such dispute. Accordingly, courts, when applying such rules and standards of interpretation, may not take account of, amongst other things, previous Takeover Panel rulings, practice statements and annual reports.
Notice to Overseas Shareholders
The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe any applicable requirements. This announcement has been prepared for the purpose of complying with the laws of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.
The Offer will not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities. Accordingly, copies of this announcement and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving this announcement and all documents (including custodians, nominees and trustees) relating to the Offer should observe these restrictions and should not mail or otherwise forward, distribute or send this announcement or documents relating to the Offer in or into or from any Restricted Jurisdiction.
Notice to US holders of Omega Shares
The Offer is being made for securities of a Bermudian company and Omega Shareholders in the United States should be aware that this announcement, the Offer Document and any other documents relating to the Offer have been or will be prepared in accordance with UK and Bermudan law and UK disclosure requirements, format and style, all of which differ from those in the United States. Omega's financial statements, and all financial information that is included in this announcement or that may be included in the Offer Document or any other documents relating to the Offer, have been or will be prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and may not be comparable to financial statements of United States companies.
Omega and HBL are both companies incorporated under the laws of Bermuda. Most of the directors of these companies are residents of countries other than the United States. Substantially all of the assets of HBL and a majority of the assets of Omega are located outside the United States. As a result, it may not be possible for Omega Shareholders in the United States to effect service of process within the United States upon Omega or HBL or their respective officers or directors or to enforce against any of them judgements of the United States predicated upon the civil liability provisions of the federal securities laws of the United States. It may not be possible to sue Omega or HBL or their respective officers or directors in a non-US court for violations of the US securities laws. There is also substantial doubt as to enforceability in Bermuda in original actions, or in actions for the enforcement of judgments of US courts, based on the civil liability provisions of US federal securities laws.
Financial advisers
Citi, which is authorised and regulated in the UK by the FSA, is acting exclusively for HBL and no one else in connection with the Offer and will not be responsible to anyone other than HBL for providing the protections afforded to clients of Citi or for providing advice in relation to the Offer or any other matters referred to in this announcement.
Kinmont, which is authorised and regulated in the UK by the FSA, is acting exclusively for Omega and no one else in connection with the Offer and will not be responsible to anyone other than Omega for providing the protections afforded to clients of Kinmont, or for providing advice in relation to the Offer or any other matters referred to in this announcement.
Cenkos, which is authorised and regulated in the UK by the FSA, is acting exclusively for Omega and no one else in connection with the Offer and will not be responsible to anyone other than Omega for providing the protections afforded to clients of Cenkos, or for providing advice in relation to the Offer or any other matters referred to in this announcement.
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of Omega and certain plans and objectives of HBL with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning. These statements are based on assumptions and assessments made by Omega, and/or HBL in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this document. Neither Omega nor HBL assumes any obligation to update or correct the information contained in this document (whether as a result of new information, future events or otherwise), except as required by applicable law.
There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions.
Responsibility
The HBL Directors (all of whose names will be set out in the Offer Document) accept responsibility for the information contained in this announcement relating to HBL, HBL Group and themselves and their immediate families, related trusts and connected persons. To the best of the knowledge and belief of the HBL Directors (who have taken all reasonable care to ensure that such is the case), such information for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Omega Directors (all of whose names will be set out in the Offer Document) accept responsibility for the information contained in this announcement relating to the Omega Group and themselves and their immediate families, related trusts and connected persons. To the best of the knowledge and belief of the Omega Directors (who have taken all reasonable care to ensure that such is the case), such information for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
Dealing disclosure requirements
Although the Code does not apply to Omega or to the Offer, Omega Shareholders and persons considering the acquisition or disposal of any interest in Omega Shares are reminded that they are subject to the Disclosure and Transparency Rules made by the UK Listing Authority and other applicable regulatory rules regarding transactions in Omega securities.
Publication on website
A copy of this announcement will be available on Omega's website at http://www.omegauw.com, and on HBL's website at http://www.haverfordbermuda.com, by no later than 12.00 p.m. (London time) on 13 September 2011.
APPENDIX 1
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE OFFER
Part A: Conditions of the Offer
The Offer will be subject to the following conditions (as amended if appropriate):
(a) valid tenders being received (and not, where permitted, withdrawn) by not later than 3.00 p.m. on the First Closing Date of the Offer (or such later time(s) and/or date(s) as HBL may decide) in respect of not less than 48,066,974 (i) of the Omega Shares to which the Offer relates, and (ii) of the voting rights attached to those shares, provided that this condition shall not be satisfied unless HBL shall have acquired or agreed to acquire, whether pursuant to the Offer or otherwise, 48,066,974 Omega Shares and provided further that this condition shall be capable of being satisfied only at a time when all other conditions have been satisfied or waived. For the purposes of this condition:
(i) Omega Shares which have been unconditionally allotted but not issued before the Offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise, shall be deemed to carry the voting rights they will carry on being entered into the Register of Members of Omega;
(ii) the expression "Omega Shares to which the Offer relates" shall mean (i) Omega Shares issued or allotted on or before the date on which the Offer is made and (ii) Omega Shares issued or allotted after that date but before the time at which the Offer closes, or such earlier date as HBL may decided (but not earlier than the date on which the Offer becomes unconditional as to acceptances or, if later, the First Closing Date of the Offer); and
(iii) if aggregate tenders pursuant to the Offer exceed 60,240,964 Omega Shares, each Omega Shareholder who has tendered a number of Omega Shares representing more than the Offer Threshold Percentage shall be scaled back on a pro-rata basis such that the total number of Omega Shares subject to the Offer does not exceed 60,240,963 Omega Shares in aggregate;
(b) the FSA having given notice in writing under section 189(4) of FSMA, in terms reasonably satisfactory to HBL, of its approval (or being treated as having given its approval by virtue of section 189(6) of FSMA) in respect of any acquisition of or increase in control (as defined in sections 181 and 182 of FSMA) over any member of the Omega Group which is a UK authorised person (as defined in section 191G(1) of FSMA), which in either case would take place as a result of the Offer or its implementation;
(c) Lloyd's having given its consent in writing under section 12 of the Lloyd's Membership Byelaw or section 43 of the Lloyd's Underwriting Byelaw (as the case may be), in terms reasonably satisfactory to HBL, in respect of any change in the controller of any member of the Omega Group which is a corporate member or a managing agent of Lloyd's which would take place as a result of the Offer or its implementation;
(d) the Delaware Insurance Commissioner having approved pursuant to the Del. Code Ann. tit. 18, A. 5003(a) any acquisition of control arising from the Offer or the waiting periods applicable thereto having terminated or expired;
(e) Mark Byrne being elected as a Director of Omega and appointed as its Executive Chairman;
(f) insofar as the Offer constitutes, or is deemed to constitute, a concentration with an EU dimension within the scope of Council Regulation (EC) 139/2004 (as amended) (the "Regulation"):
(i) the European Commission indicating, in terms satisfactory to HBL, that it does not intend to initiate proceedings under Article 6(1)(c) of the Regulation in respect of the proposed acquisition of Omega by HBL (or being deemed to have done so under Article 10(6) of the Regulation); and
(ii) in the event that any request or requests under Article 9(2) of the Regulation have been made by any European Union or EFTA states, the European Commission indicating, in terms satisfactory to HBL, that it does not intend to refer the proposed Offer, to any competent authority of a European Union or EFTA state in accordance with Article 9(3) of the Regulation; and
(iii) no indication having been made that a European Union or EFTA state may take appropriate measures to protect legitimate interests pursuant to Article 21(4) of the Regulation in relation to the proposed Offer;
(g) all necessary notifications and filings having been made and all applicable waiting periods (including any extensions thereof) under the United States Hart‑Scott‑Rodino Antitrust Improvements Act of 1976 (as amended) and the rules and regulations made thereunder having expired, lapsed or been terminated as appropriate in each case in respect of the Offer (including, without limitation, to its implementation and financing) and the acquisition or the proposed acquisition of any Omega Shares or other securities in, or control of, Omega by any member of the HBL Group;
(h) save as fairly disclosed to HBL before the date of this Announcement, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Omega Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which in consequence of the Offer or the proposed acquisition of any Omega Shares or other securities in Omega or because of a change in the control or management of Omega or otherwise, could or might result in to an extent which is material in the context of the Omega Group as a whole:
(i) any moneys borrowed by or any other indebtedness (actual or contingent) of, or grant available to any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;
(ii) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any such member thereunder being terminated or modified or affected or any obligation or liability arising or any action being taken or arising thereunder;
(iii) any assets or interests of any such member being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged;
(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member;
(v) the rights, liabilities, obligations or interests of any such member in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;
(vi) the value of any such member or its financial or trading position or prospects being prejudiced or adversely affected;
(vii) any such member ceasing to be able to carry on business under any name under which it presently does so; or
(viii) the creation of any liability, actual or contingent, by any such member,
and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Omega Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, could result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this condition;
(i) no government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, association, institution or any other body or person whatsoever in any jurisdiction (each a "Third Party") having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or enacted, made or proposed any statute, regulation, decision or order, or having taken any other steps which would or might reasonably be expected to:
(i) require, prevent or delay the divestiture, or materially alter the terms envisaged for any proposed divestiture by any member of the HBL Group or any member of the Omega Group of all or any portion of their respective businesses, assets or property or impose any limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own any of their respective assets or properties or any part thereof which, in any such case, is material in the context of the HBL Group or the Omega Group in either case taken as a whole;
(ii) require, prevent or delay the divestiture by any member of the HBL Group of any Omega Shares or other securities in Omega;
(iii) impose any limitation on, or result in a delay in, the ability of any member of the HBL Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of Omega Shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Omega Group or the HBL Group or to exercise management control over any such member;
(iv) otherwise adversely affect the business, assets, profits or prospects of any member of the HBL Group or of any member of the Omega Group in a manner which is adverse to and material in the context of the HBL Group or the Omega Group in either case taken as a whole;
(v) make the Offer or its implementation or the acquisition or proposed acquisition by HBL or any member of the HBL Group of any Omega Shares or other securities in, or control of Omega void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, delay or otherwise interfere with the same, or impose additional conditions or obligations with respect thereto, or otherwise challenge or interfere therewith;
(vi) require any member of the HBL Group or the Omega Group to offer to acquire any Omega Shares or other securities (or the equivalent) or interest in any member of the Omega Group or the HBL Group owned by any third party or require any number of the HBL Group to make a mandatory offer under Rule 9 of the Code;
(vii) impose any limitation on the ability of any member of the Omega Group to co-ordinate its business, or any part of it, with the businesses of any other members which is adverse to and material in the context of the group concerned taken as a whole; or
(viii) result in any member of the Omega Group ceasing to be able to carry on business under any name under which it presently does so,
and all applicable waiting and other time periods during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Offer or the acquisition or proposed acquisition of any Omega Shares having expired, lapsed or been terminated;
(j) all necessary filings or applications having been made in connection with the Offer and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Offer or the acquisition by any member of the HBL Group of any Omega Shares or other securities in, or control of, Omega and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals reasonably deemed necessary or appropriate by HBL or any member of the HBL Group for or in respect of the Offer including without limitation, its implementation and financing, or the proposed acquisition of any Omega Shares or other securities in, or control of, Omega by any member of the HBL Group having been obtained in terms and in a form satisfactory to HBL from all appropriate Third Parties or persons with whom any member of the Omega Group has entered into contractual arrangements and all such authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals together with all authorisations orders, recognitions, grants, licences, confirmations, clearances, permissions and approvals necessary or appropriate to carry on the business of any member of the Omega Group remaining in full force and effect and all filings necessary for such purpose have been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Offer becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with; and
(k) save as fairly disclosed to HBL before the date of this Announcement, and except as publicly announced by Omega in accordance with the Listing Rules, Disclosure Rules or Transparency Rules prior to the Announcement Date, no member of the Omega Group having, since 31 December 2010:
(i) save as between Omega and wholly-owned subsidiaries of Omega or for Omega Shares issued pursuant to the exercise of options granted under the Omega Share Option Schemes, issued, authorised or proposed the issue of additional shares of any class;
(ii) save as between Omega and wholly-owned subsidiaries of Omega or for the grant of options under the Omega Share Option Schemes, issued or agreed to issue, authorised or proposed the issue of securities convertible into shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities;
(iii) other than to another member of the Omega Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;
(iv) save for intra-Omega Group arrangements, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business;
(v) save for intra-Omega Group arrangements, made or authorised or proposed or announced an intention to propose any change in its loan capital;
(vi) issued, authorised or proposed the issue of any debentures or (save for intra-Omega Group arrangements), save in the ordinary course of business, incurred or increased any indebtedness or become subject to any contingent liability;
(vii) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;
(viii) implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other Offer or arrangement otherwise than in the ordinary course of business or entered into or changed the terms of any contract with any director or senior executive;
(ix) entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, Offer or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or could be materially restrictive on the businesses of any member of the Omega Group or the HBL Group or which involves or could involve an obligation of such a nature or magnitude or which is other than in the ordinary course of business and which is material in the context of the Omega Group taken as a whole;
(x) (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;
(xi) entered into any contract, Offer or arrangement which would be restrictive on the business of any member of the Omega Group or the HBL Group other than to a nature and extent which is normal in the context of the business concerned;
(xii) waived or compromised any claim otherwise than in the ordinary course of business;
(xiii) entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any Offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the Offers, matters or events referred to in this condition;
(xiv) having made or agreed or consented to any change to:
(1) the terms of the trust deeds constituting the pension scheme(s) established by any member of the Omega Group for its directors, employees or their dependents;
(2) the contributions payable to any such scheme(s) or to the benefits which accrue or to the pensions which are payable thereunder;
(3) the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or
(4) the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made;
(xv) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Omega Group; or
(xvi) having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel (if the Code had applied to Omega) or the approval of Omega Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Code,
and, for the purposes of paragraphs (iii),(iv), (v) and (vi) of this condition, the term "Omega Group" shall mean Omega and its wholly-owned subsidiaries.
For the purposes of these conditions the "Omega Group" means Omega and its subsidiary undertakings, associated undertakings and any other undertaking in which Omega and/or such undertakings (aggregating their interests) have a significant interest and the "HBL Group" means HBL and its subsidiary undertakings, associated undertakings and any other undertaking in which HBL and/or such undertakings (aggregating their interests) have a significant interest and for these purposes "subsidiary undertaking" and "undertaking" have the meanings given by the Companies Act 2006, "associated undertaking" has the meaning given by paragraph 19 of Schedule 6 to the UK Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 other than paragraph 19(1)(b) of Schedule 6 to those Regulations which shall be excluded for this purpose, and "significant interest" means a direct or indirect interest in ten per cent. or more of the equity share capital (as defined in the Companies Act 2006).
HBL reserves the right to waive, in whole or in part, all or any of conditions (a) to (k) above, except for conditions (a) to (e).
Conditions (a) to (e) must be fulfilled by, and conditions (f) to (k) (inclusive) fulfilled or waived by, midnight on the 21st day after the later of the First Closing Date of the Offer and the date on which condition (a) is fulfilled (or in each such case such later date as HBL may decide). HBL shall be under no obligation to waive or treat as satisfied any of conditions (b), (f), (g) and (i) to (k) (inclusive) by a date earlier than the latest date specified above for the satisfaction thereof, notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment.
The Offer will lapse if it is referred to the Competition Commission before 3.00 p.m. on the First Closing Date of the Offer or the date on which the Offer becomes or is declared unconditional as to acceptances, whichever is the later.
The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.
This Offer will be governed by English law and be subject to the jurisdiction of the English courts and the Bermudan courts, to the conditions set out above, the further terms set out below, and in the formal Offer Document and related Form of Tender. The Offeror will comply with the applicable rules and regulations of the FSA and the London Stock Exchange and with applicable US federal tender offer rules and securities laws (except to the extent that exemptive relieve has been granted by the US Securities Exchange Commission.
Part B: Certain further terms of the Offer
The Offer will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, internet or e-mail) of interstate or foreign commerce of, or of any facility of a national securities exchange of, the Canada, Japan or Australia and the Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within Canada, Japan or Australia.
Omega Shares which will be acquired under the Offer will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.
HBL reserves the right to withdraw the Offer and/or revise the maximum tender price (and capped price at which any Omega Shares are issued by Omega to HBL, which will be the same as the maximum tender price), if either (i) circumstances arise as a result of which it is necessary or appropriate for the Omega interim results for the first half of 2011 to be amended, other than by reason of a Restatement Event, or (ii) one or more natural catastrophes occurs between the release of this Announcement and completion of the Offer, as a result of which it is reasonable to assume claims for losses exceeding US$10 billion will be made on insurance companies, and with a reasonable estimated cost to the Omega Group of over five per cent. of net tangible asset value.
APPENDIX 2
BASES AND SOURCES
SOURCES OF INFORMATION AND BASES OF CALCULATION
In this announcement:
1. Unless otherwise stated financial information relating to the Omega Group has been extracted or derived (without any adjustment) from the audited annual report and accounts for Omega for the year ended 31 December 2010 and Omega's announcement dated 31 August 2011 of its half year interim results for 2011 (which are unaudited).
2. As at the close of business on 9 September 2011, being the last business day prior to the date of this announcement, Omega had in issue 244,229,862 Omega Shares. The International Securities Identification Number for Omega Shares is BMG6765P1095.
3. Unless otherwise stated, all prices and closing prices for Omega Shares are closing middle market quotations derived from the London Stock Exchange Daily Official List (SEDOL).
4. The premium calculations to the price per Omega Share have been calculated by reference to:
·; a price of 66 pence per Omega Share, being the closing price on 9 September 2011, the last business day prior to the date of this announcement and
·; the 30 calendar day volume weighted average price to the period ended 9 September 2011 of 62 pence per Omega Share (as sourced from Bloomberg).
APPENDIX 3
DEFINITIONS
"Announcement" | means this announcement; |
"Announcement Date" | 12 September 2011; |
"associated undertaking" | has the meaning given by paragraph 19 of Schedule 6 to the UK Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008; |
"Bermuda Companies Act" | means the Companies Act 1981 of Bermuda (as amended from time to time); |
"Bermuda Insurance Act" | means the Insurance Act 1978 of Bermuda (as amended from time to time); |
"Business Day" | means a day, (other than a Saturday, Sunday, public or bank holiday) on which banks in London, US and Bermuda are generally open for business in London or Bermuda; |
"Byelaws" | means the byelaws of Omega from time to time; |
"Cenkos" | means Cenkos Securities plc; |
"Citi" | means Citigroup Global Markets Limited; |
"Code" | the UK Takeover Code; |
"Competing Proposal" | means any proposal, or possible proposal, put forward formally, in respect of or for: (i) an offer (including a partial or tender offer and whether or not subject to pre-conditions), or possible offer, put forward by a third party (which is not acting in concert with HBL) for at least 25 per cent. of the issued ordinary share capital of Omega; (ii) the sale, or possible sale, (in one transaction or a series of transactions) of the whole of the assets or undertaking of the Omega Group, or any part of the same which is material in the context of the Omega Group or the Offer; (iii) a merger, acquisition or other business combination, scheme of arrangement, exchange offer or liquidation involving Omega or all or substantially all of the business of the Omega Group; or (iv) the acquisition of, or the acquisition of the voting rights in respect of, 25 per cent. or more of Omega Shares then in issue, in each case which is not proposed by HBL (or a member of the HBL Group or a person acting in concert therewith) and howsoever it is proposed that such proposal or possible proposal be implemented; |
"Closing Price" | the closing middle market quotations of an Omega Share derived from the Daily Official List of the London Stock Exchange; |
"Companies Act 2006" | the UK Companies Act 2006, as amended; |
"Conditions" | the conditions of the Offer set out in Appendix 1 to this announcement; |
"Effective Date" | the date on which the Offer becomes or is declared unconditional in all respects in accordance with its terms; |
"First Closing Date" | means 21 days from the date of the Offer Document; |
"Form of Tender" | means the form of tender and authority relating to the Offer; |
"FSA" | the UK Financial Services Authority; |
"FSMA" | means the UK Financial Services and Markets Act 2002 as amended from time to time; |
"HBL" | means Haverford (Bermuda) Limited, incorporated in Bermuda with registered number BM87-565-9765; |
"HBL Directors" | means the directors of HBL from time to time; |
"HBL Group" | means HBL and its subsidiary and associated undertakings; |
"Implementation Agreement" | means the agreement entered into by HBL and Omega on or about the date of this announcement which sets out various matters in relation to the Offer; |
"Invesco" | means Invesco Asset Management Ltd; |
"Kinmont" | means Kinmont Limited; |
"Listing Rules" | means the rules and regulations made by the FSA in its capacity as the UKLA under FSMA, and contained in the UKLA's publication of the same name; |
"Lloyd's" | means the Society and Corporation of Lloyd's created and governed by the Lloyd's Acts 1871 to 1982, including the Council of Lloyd's (and its delegates and other persons through whom the Council may act), as the context may require; |
"Lloyd's Membership Byelaw" | means the Lloyd's Membership Byelaw made by the Council of Lloyd's on 7 December 2005 (as amended from time to time); |
"Lloyd's Underwriting Byelaw" | means the Lloyd's Underwriting Byelaw made by the Council of Lloyd's on 4 June 2003 (as amended from time to time); |
"London Stock Exchange" | means the London Stock Exchange plc; |
"Long-Stop Date" | 31 January 2012 (or such other date as Omega and HBL may agree); |
"Offer" | means the partial cash offer to be made by or on behalf of HBL to acquire up to 60,240,964 Omega Shares in issue on the terms and subject to the conditions set out in this announcement and to be set out in the Offer Document and in the Form of Tender and, where the context admits, any subsequent revision, variation, extension or renewal of such offer; |
"Offer Document" | means the document to be sent to Omega Shareholders which will contain, inter alia, the terms and conditions of the Offer and certain information about Omega and HBL; |
"Offer Price" | means up to 83 pence in cash per Omega Share; |
"Offer Threshold Percentage" | the exact proportion 60,240,964 bears to the issued share capital of Omega of 244,229,862; |
"Official List" | the official list maintained by the UK Listing Authority; |
"Omega" | Omega Holdings Limited, incorporated in Bermuda with registered number BM 500731; |
"Omega Board" | means the board of Omega Directors from time to time; |
"Omega Directors" | means the directors of Omega from time to time; |
"Omega Group" | means Omega and its subsidiary and associated undertakings; |
"Omega Shareholders" | the holders of Omega Shares from time to time and "Omega Shareholder" shall be construed accordingly; |
"Omega Share Option Schemes" | means the Omega Long Term Incentive Plan and the Executive Plan; |
"Omega Shares" | means the common shares of par value $0.10 each in the capital of Omega; |
"Overseas Shareholders" | means Omega Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom; |
"Panel" | the Panel on Takeovers and Mergers; |
"Restatement Event" | means any amendment, change or restatement to the Omega interim results for the first half of 2011 which is made due to any change of law, rules or regulation or any change in applicable accounting or actuarial rules or standards or in the published rules or requirements of any relevant authority; |
"Restricted Jurisdiction" | means any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Offer is sent or made available to Omega Shareholders in that jurisdiction; |
"subsidiary" | has the meaning given in the Companies Act 2006; |
"subsidiary undertaking" | has the meaning given in the Companies Act 2006; |
"UK" or "United Kingdom" | the United Kingdom of Great Britain and Northern Ireland; |
"UK Listing Authority" | means the FSA as the competent authority for listing in the United Kingdom; and |
"US" or "United States" | the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia. |