HAMILTON, Bermuda, April 20, 2011 (GLOBE NEWSWIRE) -- Enstar Group Limited ("Enstar") (Nasdaq:ESGR) today announced that it has entered into a definitive agreement pursuant to which, subject to receipt of applicable regulatory approvals, affiliated funds of GS Capital Partners ("GSCP"), private equity funds managed by Goldman Sachs & Co., will invest up to $291.6 million for up to a 19.9% fully diluted economic interest in Enstar at a price of $86.00 per share. GSCP will also receive warrants to acquire an additional 2% fully diluted interest in Enstar at an exercise price of $115.00 per share. The investment will be completed in three tranches as described below. A shareholder vote will be required for the consummation of the third tranche, representing $98.7 million of the total investment. Certain current shareholders of Enstar have entered into voting agreements (the "Voting Agreements") with respect to shares representing 34.35% of the Company's outstanding voting power under which they have committed to vote all of these shares in favor of the transaction.
Dominic Silvester, Chief Executive Officer of Enstar, said, "We see tremendous opportunity in front of us to build on Enstar's unique skills and capabilities in the insurance and reinsurance run-off market. This capital raise with Goldman Sachs gives Enstar greater financial flexibility to pursue acquisitions of companies and portfolios of business in run-off for the benefit of all Enstar shareholders. We thank Goldman Sachs for their support of Enstar and look forward to a long and productive relationship with them."
In the initial closing held today, GSCP invested $110.2 million to acquire 531,345 voting ordinary shares of Enstar ("Voting Common Shares") and 749,869 newly created Series A convertible non-voting preference shares of Enstar (the "Non-Voting Preferred Shares"). The Non-Voting Preferred Shares bear no coupon and are economically equivalent to the ordinary shares of Enstar in all material respects. In connection with the initial closing, GSCP also received warrants to acquire 340,820 Non-Voting Preferred Shares. Upon the receipt of shareholder approval of certain matters related to the transaction, the warrants will automatically convert into the right to purchase a newly-created class of non-voting ordinary shares (the "Non-Voting Common Shares") in lieu of Non-Voting Preferred Shares, at the same exercise price of $115.00 per share.
Upon the receipt of certain regulatory approvals (but not before December 23, 2011), GSCP will invest an additional $82.7 million to acquire 134,184 Voting Common Shares and 827,504 non-voting shares at a second closing. Subject to the receipt of shareholder approval of certain matters related to the transaction, GSCP will acquire an additional 1,148,264 non-voting shares at a third closing for an additional $98.7 million investment. If such shareholder approval is not received, the third closing will not take place.
Sumit Rajpal, Managing Director who leads financial services investing for GSCP, said, "GS Capital Partners has a long history of investing in market-leading financial services franchises. We view Enstar as a leading player in the insurance and reinsurance run-off market and believe that our capital will help Enstar grow considerably over time."
In connection with the initial closing held today, Enstar appointed Sumit Rajpal of GSCP to Enstar's Board of Directors, effective May 16, 2011.
Enstar was advised in the transaction by Dowling & Partners Securities, LLC and Keefe, Bruyette & Woods. Goldman Sachs & Co. acted as financial advisor to GSCP.
Enstar, a Bermuda company, acquires and manages insurance and reinsurance companies in run-off and portfolios of insurance and reinsurance business in run-off, and provides management, consultancy and other services to the insurance and reinsurance industry.
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This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of Enstar and its management team. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. In particular, there can be no assurance that Enstar or GSCP will be successful in obtaining the regulatory approvals required to consummate the second and third closings described above. Similarly, if Enstar's shareholders do not approve certain matters related to the transaction, the third closing will not occur. Important risk factors regarding Enstar may be found under the heading "Risk Factors" in Enstar's Form 10-K for the year ended December 31, 2010, and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly announce any updates or revisions to any of the forward-looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements, except as required by law.