SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
PXRE Group Ltd.
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(Exact name of registrant as specified in its charter)
December 10, 2001
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Date of Report (Date of earliest event reported)
Bermuda 1-15259 98-0214717
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(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
12 Church Street, Suite 231, Hamilton HM 11, Bermuda
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(Address of principal executive offices) (Zip Code)
(441) 296-5858
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(Registrant's telephone number, including area code)
Item 5. Other Events.
On December 10, 2001, PXRE Group Ltd. (the "Company") entered into a
Share Purchase Agreement (the "Share Purchase Agreement") with Capital Z
Financial Services Fund II and its affiliates ("Capital Z"), investment funds
managed by Reservoir Capital Group ("Reservoir"), and Richard Rainwater
("Rainwater", and together with Capital Z and Reservoir, the "Investors"). The
Company's Board of Directors unanimously approved the transaction.
Pursuant to the Share Purchase Agreement, the Investors agreed to
purchase, for cash, an aggregate of $150 million of Series A Convertible Voting
Preferred Shares, Series B Convertible Voting Preferred Shares and Series C
Convertible Voting Preferred Shares of the Company (collectively, the "Preferred
Shares").
Each share of Series A Convertible Voting Preferred Shares, Series B
Convertible Voting Preferred Shares and Series C Convertible Voting Preferred
Shares will be convertible into Class A Convertible Voting Common Shares, Class
B Convertible Voting Common Shares and Class C Convertible Voting Common Shares
(collectively, the "Convertible Common Shares"), respectively, at a conversion
price of $15.69, which is subject to certain anti-dilution protections. This
conversion price represents a premium of approximately 14% to the 30 day
trading average of the Company's Common Shares prior to the announcement of
the transaction. The Preferred Shares will be entitled to receive a dividend at
an annual rate of 8%, which will be paid in additional Preferred Shares until
the third anniversary of the Closing and, thereafter, in cash. Except with
respect to the election of directors, the Preferred Shares and the Convertible
Common Shares will vote, together with the Common Shares of the Company, on an
as-converted basis. If not converted earlier by the Investors, $100 million
of the Preferred Shares are mandatorily convertible into Convertible Common
Shares three years following the closing of the transaction (the "Closing")
and the remaining Preferred Shares are mandatorily convertible into Convertible
Common Shares six years following the Closing. Each Convertible Common Share
is convertible into one Common Share of the Company upon a public offering of
the Convertible Common Shares or a sale of such Convertible Common Shares to
an unaffiliated third party. At the current conversion price, the Preferred
Shares issuable under the Share Purchase Agreement will be convertible into
an aggregate of approximately 9,560,229 Convertible Common Shares. As of
December 10, 2001, the Convertible Common Shares would represent approximately
45% of the outstanding Common Shares.
The Share Purchase Agreement requires the Company to seek shareholder
approval to issue the Preferred Shares, to create the Convertible Common Shares,
increase the size of the Board of Directors by 2 directors, and to amend the
Company's Bye-Laws to create a new class of Directors. The Share Purchase
Agreement also requires the Company to seek regulatory approval from the
Insurance Department of the State of Connecticut. The Share Purchase Agreement
also provides for the payment by the Company to the Investors of a termination
fee, in certain circumstances.
Following the Closing and subject to certain ownership requirements,
pursuant to the Description of Stock (Exhibit 4.1 hereto), Capital Z will
have the right to designate two directors for appointment to the Company's Board
of Directors. Reservoir and Rainwater will each have the right to designate one
director to the Company's Board of Directors. In addition, the Company may not
undertake certain actions without the consent of the holders of the Preferred
Shares.
The Company has also agreed to enter into an Investment Agreement (the
"Investment Agreement") with the Investors. The Investment Agreement contains
standstill provisions that prohibit the Investors from undertaking certain
actions and it also provides the Investors with certain registration rights.
The Description of Stock, the Share Purchase Agreement, and the
Investment Agreement are exhibits to this Report. The foregoing summary of
material terms of these documents is qualified in its entirety by reference to
those exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) The following exhibits are filed with this report:
Number Exhibit
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4.1 Description of Stock: Series A Convertible
Voting Preferred Shares ($1.00 par value per
share), Series B Convertible Voting
Preferred Shares ($1.00 par value per
share), Series C Convertible Voting
Preferred Shares ($1.00 par value per
share), Class A Convertible Voting Common
Shares ($1.00 par value per share), Class B
Convertible Voting Common Shares ($1.00 par
value per share), Class C Convertible Voting
Common Shares ($1.00 par value per share) of
PXRE Group Ltd.
10.1 Share Purchase Agreement, dated as of
December 10, 2001, among PXRE Group Ltd.,
and each of the Purchasers.
10.2 Form of Investment Agreement, between PXRE
Group Ltd., and each of the Investors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PXRE GROUP LTD.
Dated: December 11, 2001 By: /s/ Gerald L. Radke
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Gerald L. Radke
EXHIBIT INDEX
Exhibit No. Exhibit
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4.1 Description of Stock: Series A Convertible Voting
Preferred Shares ($1.00 par value per share),
Series B Convertible Voting Preferred Shares ($1.00 par
value per share), Series C Convertible Voting Preferred Shares
($1.00 par value per share), Class A Convertible Voting Common
Shares ($1.00 par value per share), Class B Convertible
Voting Common Shares ($1.00 par value per share), Class
C Convertible Voting Common Shares ($1.00 par value per
share) of PXRE Group Ltd.
10.1 Share Purchase Agreement, dated as of December 10, 2001,
among PXRE Group Ltd., and each of the Purchasers.
10.2 Form of Investment Agreement, between PXRE Group
Ltd., and each of the Investors.