424b3
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-129182
The information in
this preliminary prospectus supplement is not complete and may
be changed. A registration statement relating to these
securities has been declared effective by the Securities and
Exchange Commission. This preliminary prospectus supplement and
the accompanying prospectus are not an offer to sell these
securities and we are not soliciting offers to buy these
securities in any state where such offer or sale is not
permitted.
|
Subject to Completion
Preliminary Prospectus Supplement dated
November 28, 2005
PROSPECTUS SUPPLEMENT
(To prospectus dated November 4, 2005)
Shares
%
Series A Mandatory Convertible Preferred Shares
Platinum Underwriters Holdings, Ltd. is
offering of
our %
Series A mandatory convertible preferred shares (the
Preferred Shares) by this prospectus supplement (the
Preferred Shares Offering). The Preferred Shares
will not be redeemable.
We will pay annual dividends on each Preferred Share in the
amount of
$ .
Dividends will accrue and cumulate from the date of issuance,
and, to the extent we are legally permitted to pay dividends and
our board of directors, or an authorized committee of our board
of directors, declares a dividend payable, we will pay dividends
in cash on February 15, May 15, August 15 and November
15 of each year prior to February 15, 2009, or the
following business day if such day is not a business day, and on
February 15, 2009. The first quarterly dividend payment
will be payable on February 15, 2006 in the amount of
$ per
Preferred Share, which reflects the time from the date of
issuance through February 14, 2006.
Each Preferred Share has a liquidation preference of
$ ,
plus an amount equal to accrued, cumulated and unpaid dividends.
Each Preferred Share will automatically convert on
February 15, 2009 into
between and Common
Shares, subject to anti-dilution adjustments, depending on the
average market price per Common Share over the 20 trading
day period ending on the third trading day prior to such date.
At any time prior to February 15, 2009, holders may elect
to convert each Preferred Share
into Common
Shares, subject to anti-dilution adjustments.
Concurrently, we are offering (the Common Shares
Offering), by means of a separate prospectus
supplement, of
our Common Shares and the selling shareholder identified in that
separate prospectus supplement is offering 3,960,000 of our
Common Shares. The underwriters have an option to purchase from
Platinum Holdings a maximum
of additional
Common Shares to cover overallotments. In addition, Platinum
Underwriters Finance, Inc., our indirect wholly-owned
subsidiary, has concurrently commenced a tender offer in which
it is offering to purchase for cash any and all of its
outstanding 6.371% Senior Guaranteed Notes due 2007, which are
fully and unconditionally guaranteed by Platinum Holdings (the
Remarketed Notes), and any and all of its
outstanding Series B 6.371% Senior Guaranteed Notes due
2007, which are fully and unconditionally guaranteed by Platinum
Holdings (the Series B 6.371% Notes and
together with the Remarketed Notes, the 6.371%
Notes) and are registered under the Securities Act of
1933, as amended (the Securities Act), by means of
an Offer to Purchase dated November 28, 2005, as the same
may be amended from time to time (the Offer to
Purchase). We refer to this tender offer for the 6.371%
Notes as the Debt Tender Offer. None of these
transactions is conditioned upon the consummation of any of the
other transactions.
Prior to this Preferred Shares Offering, there has been no
public market for our Preferred Shares. We intend to apply to
have our Preferred Shares listed on the New York Stock Exchange
(NYSE) under the symbol PTP PrA. Our
Common Shares are listed on the NYSE under the symbol
PTP. The last reported sale price of our Common
Shares on the NYSE on November 22, 2005 was $30.08.
Investing in our Preferred Shares involves risks. See
Risk Factors beginning on page S-13 of this
prospectus supplement and page 4 of the prospectus dated
November 4, 2005.
|
|
|
|
|
|
|
|
|
|
|
Per Share | |
|
Total | |
|
|
| |
|
| |
Public offering price
|
|
|
$ |
|
|
|
$ |
|
Underwriting discounts and commissions
|
|
|
$ |
|
|
|
$ |
|
Proceeds, before expenses, to us
|
|
|
$ |
|
|
|
$ |
|
We have granted the underwriters an option to purchase up
to additional
Preferred Shares from us at the public offering price, less the
underwriting discount, within 30 days from the date of this
prospectus supplement to cover overallotments.
Neither the Securities and Exchange Commission (the
SEC), any state securities commission, the Registrar
of Companies in Bermuda, the Bermuda Monetary Authority nor any
other regulatory body has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement. Any representation to the contrary is a
criminal offense.
The Preferred Shares will be ready for delivery on or about
December , 2005.
Merrill Lynch & Co.
Goldman, Sachs & Co.
The date of this prospectus supplement
is ,
2005.
TABLE OF CONTENTS
Prospectus Supplement
|
|
|
|
|
|
|
Page | |
|
|
| |
|
|
|
S-ii |
|
|
|
|
S-ii |
|
|
|
|
S-1 |
|
|
|
|
S-4 |
|
|
|
|
S-5 |
|
|
|
|
S-6 |
|
|
|
|
S-8 |
|
|
|
|
S-13 |
|
|
|
|
S-28 |
|
|
|
|
S-28 |
|
|
|
|
S-29 |
|
|
|
|
S-30 |
|
|
|
|
S-31 |
|
|
|
|
S-44 |
|
|
|
|
S-53 |
|
|
|
|
S-55 |
|
|
|
|
S-58 |
|
|
|
|
S-68 |
|
|
|
|
S-69 |
|
|
|
|
S-69 |
|
|
|
|
S-69 |
|
|
|
|
S-70 |
|
Prospectus Dated November 4, 2005 |
|
|
|
2 |
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
4 |
|
|
|
|
4 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
6 |
|
|
|
|
7 |
|
|
|
|
7 |
|
|
|
|
16 |
|
|
|
|
18 |
|
|
|
|
33 |
|
|
|
|
34 |
|
|
|
|
36 |
|
|
|
|
37 |
|
|
|
|
38 |
|
|
|
|
40 |
|
|
|
|
40 |
|
|
|
|
41 |
|
|
|
|
41 |
|
|
|
|
42 |
|
S-i
You should rely only on the information contained or
incorporated by reference in this prospectus supplement or the
accompanying prospectus. We have not and the underwriters have
not authorized anyone to provide you with different information.
If anyone provides you with different or inconsistent
information, you should not rely on it. Neither we nor the
underwriters are making an offer to sell these securities in a
jurisdiction where the offer or sale is not permitted.
The information contained or incorporated by reference in this
prospectus supplement and the accompanying prospectus is
accurate only as of the dates of this prospectus supplement and
the accompanying prospectus, respectively, or, in the case of
the documents incorporated by reference, the dates of such
documents. Our business, financial condition, results of
operations and prospects may have changed since those dates.
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is a supplement to the accompanying
prospectus that is also a part of this document. This prospectus
supplement and the accompanying prospectus are part of a
Registration Statement on Form S-3 (File
No. 333-129182) that we filed with the Securities and
Exchange Commission (the SEC) using a
shelf registration process (the 2005 Shelf
Registration Statement). In this prospectus supplement, we
provide you with specific information about the terms of this
Preferred Shares Offering and certain other information. Both
this prospectus supplement and the accompanying prospectus
include important information about us, our Preferred Shares and
other information you should know before investing in our
Preferred Shares. This prospectus supplement and the
accompanying prospectus also incorporate by reference important
business and financial information about Platinum Holdings and
its subsidiaries that is not included in or delivered with these
documents. You should read both this prospectus supplement and
the accompanying prospectus as well as the additional
information described under the heading Where You Can Find
More Information on page S-69 of this prospectus
supplement and page 40 of the accompanying prospectus before
investing in our Preferred Shares. This prospectus supplement
adds, updates and changes information contained in the
accompanying prospectus and the information incorporated by
reference. To the extent that any statement that we make or
incorporate by reference in this prospectus supplement is
inconsistent with the statements made in the accompanying
prospectus or the information incorporated by reference herein
or therein, the statements made or incorporated by reference in
the accompanying prospectus are deemed modified or superseded by
the statements made or incorporated by reference in this
prospectus supplement.
We own or have rights to trademarks or trade names that we use
in conjunction with the operation of our business. In addition,
our name, logo and web site name and address are our service
marks or trademarks. Each trademark, trade name or service mark
of any other company appearing in this prospectus supplement
belongs to its holder.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus, and
the documents we incorporate by reference herein and therein,
may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934, as amended (the
Exchange Act), with respect to our beliefs, plans,
goals, expectations, and estimates. Forward-looking statements
are necessarily based on estimates and assumptions that are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
subject to change. These uncertainties and contingencies can
affect actual results and could cause actual results to differ
materially from those expressed in any forward-looking
statements made by, or on behalf of, us.
In particular, statements using words such as may,
should, estimate, expect,
anticipate, intend, believe,
predict, potential, or words of similar
import generally involve forward-looking statements. This
prospectus supplement and the accompanying prospectus and the
documents incorporated by reference herein and therein also
contain forward-looking statements with respect to our business
and
S-ii
industry, such as those relating to our strategy and management
objectives and trends in market conditions, market standing,
product volumes, investment results and pricing conditions.
In light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this
prospectus supplement and the accompanying prospectus and the
documents incorporated by reference herein and therein should
not be considered as a representation by us or any other person
that our objectives or plans will be achieved. Numerous factors
could cause our actual results to differ materially from those
in forward-looking statements, including the following:
|
|
|
(1) conducting operations in a competitive environment; |
|
|
(2) our ability to maintain our A.M. Best Company rating; |
|
|
(3) significant weather-related or other natural or
man-made disasters over which the Company has no control; |
|
|
(4) the effectiveness of our loss limitation methods and
pricing models; |
|
|
(5) the adequacy of the Companys liability for unpaid
losses and loss adjustment expenses; |
|
|
(6) the availability of retrocessional reinsurance on
acceptable terms; |
|
|
(7) our ability to maintain our business relationships with
reinsurance brokers; |
|
|
(8) general political and economic conditions, including
the effects of civil unrest, war or a prolonged U.S. or global
economic downturn or recession; |
|
|
(9) the cyclicality of the property and casualty
reinsurance business; |
|
|
(10) market volatility and interest rate and currency
exchange rate fluctuation; |
|
|
(11) tax, regulatory or legal restrictions or limitations
applicable to the Company or the property and casualty
reinsurance business generally; |
|
|
(12) changes in the Companys plans, strategies,
objectives, expectations or intentions, which may happen at any
time at the Companys discretion; and |
|
|
(13) the uncertainty as to the ultimate magnitude of our
losses pursuant to Hurricanes Katrina, Rita and Wilma. |
As a consequence, current plans, anticipated actions and future
financial conditions and results may differ from those expressed
in any forward-looking statements made by or on behalf of the
Company. The foregoing factors should not be construed as
exhaustive. Additionally, forward-looking statements speak only
as of the date they are made, and we undertake no obligation to
release publicly the results of any future revisions or updates
we may make to forward-looking statements to reflect new
information or circumstances after the date hereof or to reflect
the occurrence of future events.
S-iii
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere in this
prospectus supplement. We urge you to read this entire
prospectus supplement and the accompanying prospectus carefully,
including the Risk Factors sections. In this
prospectus supplement and the accompanying prospectus,
references to the Company, Platinum,
we, us and our refer to
Platinum Underwriters Holdings, Ltd. and its consolidated
subsidiaries, including Platinum Underwriters Finance, Inc.,
unless the context otherwise indicates. Platinum
Holdings refers solely to Platinum Underwriters Holdings,
Ltd. Platinum US refers to Platinum Underwriters
Reinsurance, Inc. Platinum UK refers to Platinum Re
(UK) Limited. Platinum Bermuda refers to
Platinum Underwriters Bermuda, Ltd. Platinum Ireland
refers to Platinum Regency Holdings. Platinum
Finance refers to Platinum Underwriters Finance, Inc.
Platinum Services refers to Platinum Administrative
Services, Inc. Common Shares refers to the common
shares of Platinum Holdings, par value $0.01 per share.
Preferred Shares refers to
the %
Series A mandatory convertible preferred shares we are
offering pursuant to this prospectus supplement and the
accompanying prospectus.
Platinum Underwriters Holdings, Ltd.
We are a leading provider of property and marine, casualty and
finite risk reinsurance coverages, through reinsurance
intermediaries, to a diverse clientele of insurers and select
reinsurers on a worldwide basis. We are a Bermuda holding
company organized in 2002 and operate through three licensed
reinsurance subsidiaries: Platinum US, Platinum Bermuda and
Platinum UK.
We have organized our worldwide reinsurance business around the
following three operating segments: Property and Marine,
Casualty and Finite Risk. In each of our operating segments, we
offer our reinsurance products to providers of commercial and
personal lines of insurance. The following table sets forth the
net premiums written by the Company for the nine months ended
September 30, 2005 and 2004, the years ended
December 31, 2004 and 2003, and the period from
November 1, 2002 through December 31, 2002 (the
2002 Period) by operating segment and by type of
reinsurance ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended | |
|
|
|
|
|
|
|
|
September 30, | |
|
Years Ended December 31, | |
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
2005 | |
|
2004 | |
|
2004 | |
|
2003 | |
|
2002 Period | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Property and Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess-of-loss
|
|
$ |
300,394 |
|
|
$ |
288,279 |
|
|
$ |
366,184 |
|
|
|
22 |
% |
|
$ |
224,715 |
|
|
|
19 |
% |
|
$ |
56,549 |
|
|
|
19 |
% |
|
Proportional
|
|
|
152,958 |
|
|
|
105,485 |
|
|
|
138,255 |
|
|
|
8 |
% |
|
|
128,193 |
|
|
|
11 |
% |
|
|
32,792 |
|
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Property and Marine
|
|
|
453,352 |
|
|
|
393,764 |
|
|
|
504,439 |
|
|
|
30 |
% |
|
|
352,908 |
|
|
|
30 |
% |
|
|
89,341 |
|
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess-of-loss
|
|
|
511,280 |
|
|
|
447,907 |
|
|
|
593,752 |
|
|
|
37 |
% |
|
|
389,992 |
|
|
|
33 |
% |
|
|
155,377 |
|
|
|
52 |
% |
|
Proportional
|
|
|
109,938 |
|
|
|
60,786 |
|
|
|
83,647 |
|
|
|
5 |
% |
|
|
84,008 |
|
|
|
7 |
% |
|
|
9,552 |
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Casualty
|
|
|
621,218 |
|
|
|
508,693 |
|
|
|
677,399 |
|
|
|
42 |
% |
|
|
474,000 |
|
|
|
40 |
% |
|
|
164,929 |
|
|
|
55 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finite Risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess-of-loss
|
|
|
51,511 |
|
|
|
163,672 |
|
|
|
270,629 |
|
|
|
16 |
% |
|
|
250,634 |
|
|
|
22 |
% |
|
|
43,844 |
|
|
|
15 |
% |
|
Proportional
|
|
|
200,863 |
|
|
|
184,999 |
|
|
|
193,546 |
|
|
|
12 |
% |
|
|
94,600 |
|
|
|
8 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Finite Risk
|
|
|
252,374 |
|
|
|
348,671 |
|
|
|
464,175 |
|
|
|
28 |
% |
|
|
345,234 |
|
|
|
30 |
% |
|
|
43,844 |
|
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess-of-loss
|
|
|
863,185 |
|
|
|
899,858 |
|
|
|
1,230,565 |
|
|
|
75 |
% |
|
|
865,341 |
|
|
|
74 |
% |
|
|
255,770 |
|
|
|
86 |
% |
|
Proportional
|
|
|
463,759 |
|
|
|
351,270 |
|
|
|
415,448 |
|
|
|
25 |
% |
|
|
306,801 |
|
|
|
26 |
% |
|
|
42,344 |
|
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
1,326,944 |
|
|
$ |
1,251,128 |
|
|
$ |
1,646,013 |
|
|
|
100 |
% |
|
$ |
1,172,142 |
|
|
|
100 |
% |
|
$ |
298,114 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-1
The Property and Marine operating segment includes principally
property and marine reinsurance coverages that are written in
the United States and international markets. This business
includes catastrophe excess-of-loss reinsurance treaties,
per-risk excess-of-loss treaties and proportional treaties. We
write a limited amount of other types of reinsurance on an
opportunistic basis.
The Casualty operating segment includes principally reinsurance
treaties that cover umbrella liability, general and product
liability, professional liability, workers compensation,
casualty clash, automobile liability, surety and trade credit.
This segment also includes accident and health reinsurance
treaties, which are predominantly reinsurance of health
insurance products. We generally write casualty reinsurance on
an excess-of-loss basis. Most frequently, we respond to claims
on an individual risk basis, providing coverage when a claim for
a single original insured reaches our attachment point. We write
some excess-of-loss treaties on an occurrence basis that respond
when all of a ceding companys claims from multiple
original insureds arising from a single claims event exceed our
attachment point. On an opportunistic basis, we may write
proportional treaties in this segment.
The Finite Risk operating segment includes principally
structured reinsurance contracts with ceding companies whose
needs may not be met efficiently through traditional reinsurance
products. The classes of risks underwritten through finite risk
contracts are fundamentally the same as the classes covered by
traditional products. Typically, the potential amount of losses
paid is finite or capped. In return for this limit on losses,
there is typically a cap on the potential profit margin
specified in the treaty. Profits above this margin are returned
to the ceding company. Thus, this type of coverage typically is
less expensive to the ceding company. The finite risk contracts
that we underwrite generally provide prospective protection,
meaning coverage is provided for losses that are incurred after
inception of the contract, as contrasted with retrospective
coverage which covers losses that are incurred prior to
inception of the contract. The three main categories of finite
risk contracts are quota share, multi-year excess-of-loss and
whole account aggregate stop loss.
Our Strategy
Our goal is to achieve attractive long-term returns for our
shareholders, while establishing Platinum as a disciplined risk
manager and market leader in selected classes of property and
casualty reinsurance, through the following strategies:
|
|
|
|
|
Operate as a Multi-Class Reinsurer. We seek to offer
a broad range of reinsurance coverage to our ceding companies.
We believe that this approach enables us to more effectively
serve our clients, diversify our risk and leverage our capital. |
|
|
|
Focus on profitability, not market share. Our management
team pursues a strategy that emphasizes profitability rather
than market share. Key elements of this strategy are prudent
risk selection, appropriate pricing and adjustment of our
business mix to respond to changing market conditions. |
|
|
|
Exercise disciplined underwriting and risk management. We
exercise underwriting and risk management discipline by (i)
maintaining a diverse spread of risk in our book of business
across product lines and geographic zones, (ii) emphasizing
excess-of-loss contracts over proportional contracts, (iii)
managing our aggregate catastrophe exposure through the
application of sophisticated property catastrophe modeling tools
and (iv) monitoring our accumulating exposures on our
non-property catastrophe exposed coverages. |
|
|
|
Operate from a position of financial strength. As of
September 30, 2005, we had a total capitalization of
$1,615,317,000. Our capital position is unencumbered by any
potential adverse development of unpaid losses for business
written prior to January 1, 2002. Our investment strategy
focuses on security and stability in our investment portfolio by
maintaining a diversified portfolio that consists primarily of
investment grade fixed-income securities. We believe these
factors, combined with our strict underwriting discipline, allow |
S-2
|
|
|
|
|
us to maintain our strong financial position and to be
opportunistic when market conditions are most attractive. |
We intend to apply to have the Preferred Shares listed on the
NYSE under the symbol PTP PrA. Platinum
Holdings Common Shares are traded under the symbol
PTP on the NYSE.
Platinum Holdings corporate headquarters are located at
The Belvedere Building, 69 Pitts Bay Road, Pembroke, HM 08,
Bermuda, and our telephone number is (441) 295-7195. Our
website address is www.platinumre.com. The information
contained on our website is not a part of this prospectus
supplement or the accompanying prospectus.
Capital Markets Transactions
In November 2002, we completed an initial public offering of
33,044,000 Common Shares (the Public Offering).
Concurrently with the completion of the Public Offering, we
completed an offering of 5,500,000 equity security units (the
ESUs) at a price of $25 per unit. Each ESU consisted
of a contract to purchase our Common Shares on November 16,
2005, and an ownership interest in a 5.25% Senior Guaranteed
Note due 2007 (the Senior Guaranteed Notes) issued
by Platinum Finance, our indirect wholly-owned subsidiary, and
fully and unconditionally guaranteed by Platinum Holdings. Also,
concurrently with the Public Offering, we and The St. Paul
Travelers Companies, Inc., formerly The St. Paul Companies, Inc.
(St. Paul), entered into several agreements for the
transfer of the continuing reinsurance business and certain
related assets of St. Paul to the Company.
In May 2005, Platinum Finance issued $250,000,000 aggregate
principal amount of Series A 7.50% Notes due June 1,
2017 fully and unconditionally guaranteed by Platinum Holdings
(the Series A 7.50% Notes), all of which have
been exchanged for $250,000,000 aggregate principal amount of
Series B 7.50% Notes due June 1, 2017 fully and
unconditionally guaranteed by Platinum Holdings (the
Series B 7.50% Notes) that have been registered
under the Securities Act. The proceeds of the Series A
7.50% Notes were used primarily to increase the capital of
Platinum Bermuda and Platinum US. We received no proceeds from
the issuance of Series B 7.50% Notes.
On August 16, 2005, pursuant to the terms of the ESUs, we
successfully completed the remarketing of $137.5 million
aggregate principal amount of the Senior Guaranteed Notes at a
price of 100.7738%. The Remarketed Notes were issued by Platinum
Finance and fully and unconditionally guaranteed by Platinum
Holdings and, pursuant to their terms, were not part of the
ESUs. Interest on the Remarketed Notes was reset to a rate of
6.371% per annum, accrues from August 16, 2005 and is
payable on May 16 and November 16 of each year, commencing
November 16, 2005. Pursuant to a separate prospectus,
Platinum Finance is currently offering to exchange up to
$137,500,000 aggregate principal amount of Remarketed Notes for
up to $137,500,000 aggregate principal amount of Series B
6.371% Notes. This exchange offer is scheduled to expire on
November 29, 2005.
On September 22, 2005, we announced that we had sold
5,839,286 of our Common Shares. The net proceeds to us were
approximately $161,865,000 at a price of $28.00 per share. All
Common Shares were offered by us and sold pursuant to the
universal shelf registration statement filed in 2004. Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (Merrill Lynch) acted as the
underwriter of that offering.
S-3
RECENT DEVELOPMENTS
Hurricane Wilma
On November 9, 2005, we issued a press release announcing
our initial loss estimate of approximately $135 million,
net of reinstatement premiums, tax benefits and retrocessional
recoveries, from Hurricane Wilma, which made landfall in Mexico
and Southern Florida in late October. Our initial loss estimate
from Hurricane Wilma is preliminary and based on portfolio
modeling, a review of individual contracts and preliminary
indications from clients and brokers and therefore the actual
impact on our results arising from Hurricane Wilma may differ
materially from our initial loss estimate.
Settlement of the Purchase Contract Component of the ESUs
On November 16, 2005, we announced the settlement of the
purchase contract component of our ESUs. Each purchase contract
provided for the sale by us of 0.9107 Common Shares at a price
of $25.00. The settlement of the purchase contracts resulted in
our sale of an aggregate of 5,008,850 Common Shares. We
received $137.5 million in proceeds from the sale. As a
result of this settlement, the ESUs (formerly NYSE: PTP PrM)
ceased to exist and are no longer traded on the NYSE.
Concurrent Transactions
Concurrently with this offering, we are, by means of a separate
prospectus supplement, conducting the Common Shares Offering, in
which we are
offering Common Shares
for net proceeds of approximately $96 million, plus net
proceeds of up to approximately an additional $30 million
if the underwriters overallotment option to purchase an
additional Common
Shares from us is exercised in full (assuming a public offering
price of $30.08 per share, the last reported sale price of
our Common Shares on the NYSE on November 22, 2005, and
after deducting assumed underwriting discounts and commissions
and expenses payable by us). Pursuant to that same separate
prospectus supplement, the selling shareholder identified
therein is also offering 3,960,000 Common Shares. Also
concurrently with this offering and the Common Shares Offering,
Platinum Finance has commenced the Debt Tender Offer by means of
an Offer to Purchase through which it is offering to purchase
for cash any and all of its 6.371% Notes. None of the
transactions is conditioned upon the consummation of any of the
other transactions.
S-4
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
our capitalization as of September 30, 2005 on an actual
basis and as adjusted to reflect (i) the concurrent
issuance of the Common Shares offered by us pursuant to a
separate prospectus supplement assuming net proceeds of
approximately $126 million and further assuming a public
offering price of $30.08 per share (the last reported sale
price of our Common Shares on the NYSE on November 22,
2005), after deducting assumed underwriting discounts and
commissions and expenses payable by us and assuming the exercise
in full of the underwriters overallotment option;
(ii) the issuance of the Preferred Shares being offered
hereby, assuming net proceeds of approximately $167 million
and further assuming a public offering price of
$ per
Preferred Share, after deducting assumed underwriting discounts
and commissions and expenses payable by us and assuming the
exercise in full of the underwriters overallotment option;
(iii) the repurchase by us of all the outstanding 6.371%
Notes pursuant to the concurrent Debt Tender Offer at an assumed
price of $1,019.5 per $1000 principal amount of
6.371% Notes, the price at which such 6.371% Notes
would be repurchased if the concurrent Debt Tender Offer were
consummated on November 23, 2005; and (iv) the
settlement of the purchase contracts which had formed a part of
our ESUs. None of these transactions is conditioned upon the
consummation of any of the other transactions. This presentation
should be read in conjunction with our condensed consolidated
financial statements and related notes included in our Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2005 which is incorporated herein by
reference.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2005 | |
|
|
| |
|
|
|
|
Adjustment | |
|
Adjustment | |
|
|
|
Adjustment | |
|
Adjustment | |
|
|
|
|
for the | |
|
for the | |
|
Adjustment | |
|
for the | |
|
for all Four | |
|
|
|
|
Common Shares | |
|
Preferred Shares | |
|
for the Debt | |
|
Settlement of the | |
|
Transactions | |
|
|
Actual | |
|
Offered by Us | |
|
Offered Hereby | |
|
Tender Offer | |
|
Purchase Contracts | |
|
Described Above | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
($ in thousands) | |
Cash and cash equivalents
|
|
$ |
391,637 |
|
|
|
126,664 |
|
|
|
167,195 |
|
|
|
(139,324 |
) |
|
|
137,500 |
|
|
|
683,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remarketed Notes(1)
|
|
|
137,500 |
|
|
|
|
|
|
|
|
|
|
|
(137,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A 7.50% Notes(2)
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt obligations
|
|
|
387,500 |
|
|
|
|
|
|
|
|
|
|
|
(137,500 |
) |
|
|
|
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
|
|
|
496 |
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
50 |
|
|
|
590 |
|
Preferred shares
|
|
|
|
|
|
|
|
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
|
57 |
|
Additional paid-in capital
|
|
|
1,092,029 |
|
|
|
126,620 |
|
|
|
167,138 |
|
|
|
|
|
|
|
137,450 |
|
|
|
1,523,237 |
|
Unearned share grant compensation
|
|
|
(2,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,108 |
) |
Accumulated other comprehensive income
|
|
|
(25,718 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,718 |
) |
Retained earnings
|
|
|
163,118 |
|
|
|
|
|
|
|
|
|
|
|
(1,824 |
) |
|
|
|
|
|
|
161,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
1,227,817 |
|
|
|
126,664 |
|
|
|
167,195 |
|
|
|
(1,824 |
) |
|
|
137,500 |
|
|
|
1,657,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization(3)
|
|
|
1,615,317 |
|
|
|
126,664 |
|
|
|
167,195 |
|
|
|
(139,324 |
) |
|
|
137,500 |
|
|
|
1,907,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per Common Share
|
|
$ |
24.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.23 |
|
|
|
(1) |
Represents the Remarketed Notes which, prior to the remarketing
thereof, had formed a part of our ESUs. We are offering by means
of a separate prospectus to exchange Series B 6.371% Notes
registered under the Securities Act for such Remarketed Notes. |
|
(2) |
Represents the issuance by Platinum Finance of $250,000,000
aggregate principal amount of Series A 7.50% Notes fully
and unconditionally guaranteed by Platinum Holdings, which notes
were exchanged on November 2, 2005 for Series B 7.50%
Notes registered under the Securities Act. |
|
(3) |
Total capitalization is comprised of shareholders equity
and total debt. |
S-5
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth certain selected financial data
of the Company as of and for the nine months ended
September 30, 2005 and 2004 and as of and for the years
ended December 31, 2004 and 2003 and as of and for the
period ended December 31, 2002 and of the reinsurance
underwriting segment of St. Paul prior to the Public Offering
(St. Paul Re) for the period from January 1,
2002 through November 1, 2002 and for the years ended
December 31, 2001 and 2000. The data for the Company as of
September 30, 2005 and for the nine months ended
September 30, 2005 and 2004 were derived from the
Companys unaudited condensed consolidated financial
statements. The data for the Company as of and for the years
ended December 31, 2004 and 2003 and as of and for the
period ended December 31, 2002 were derived from the
Companys audited consolidated financial statements. The
data for St. Paul Re for the period ended November 1, 2002
and for the years ended December 31, 2001 and 2000 were
derived from the audited combined financial statements of the
reinsurance underwriting segment of St. Paul prior to the Public
Offering (the Predecessor Business). You should read
the selected financial data in conjunction with the
Companys unaudited condensed consolidated financial
statements as of September 30, 2005 and for the nine months
ended September 30, 2005 and 2004 and the related
Managements Discussion and Analysis of Financial
Condition and Results of Operations in our Quarterly
Report on Form 10-Q for the quarterly period ended
September 30, 2005, which is incorporated herein by
reference, as well as the Companys audited consolidated
financial statements as of and for the years ended
December 31, 2004 and 2003 and as of and for the period
ended December 31, 2002, and the related
Managements Discussion and Analysis of Financial
Condition and Results of Operations in our Annual Report
on Form 10-K/ A for the year ended December 31, 2004
which is also incorporated herein by reference.
The condensed consolidated financial statements as of and for
the nine months ended September 30, 2005 and 2004 are
unaudited and include adjustments consisting of normal recurring
items that management considers necessary for a fair
presentation under U.S. GAAP. The results of operations for any
interim period are not necessarily indicative of results for the
full year.
The underwriting results and the audited historical combined
financial statements of the Predecessor Business are not
indicative of the actual results of the Company subsequent to
the Public Offering. In addition to the effect of the retention
of certain portions of the Predecessor Business by St. Paul and
the exclusion of the corporate aggregate excess-of-loss
reinsurance program of St. Paul, other factors may cause the
actual results of the Company to differ materially from the
results of the Predecessor Business.
S-6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance Underwriting Segment | |
|
|
|
|
Information of St. Paul | |
|
|
Platinum | |
|
(Predecessor Business) | |
|
|
| |
|
| |
|
|
|
|
|
|
Period From | |
|
Period from | |
|
|
|
|
Nine Months | |
|
|
|
April 19, | |
|
January 1, | |
|
|
|
|
Ended | |
|
Year Ended | |
|
2002 | |
|
2002 | |
|
Years Ended | |
|
|
September 30, | |
|
December 31, | |
|
Through | |
|
through | |
|
December 31, | |
|
|
| |
|
| |
|
December 31, | |
|
November 1, | |
|
| |
|
|
2005 | |
|
2004 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2002 | |
|
2001 | |
|
2000 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
($ in millions, except per share amounts) | |
|
($ in millions, except per share | |
|
|
|
|
amounts) | |
Statement of income data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written
|
|
$ |
1,326.9 |
|
|
|
1,251.1 |
|
|
|
1,646.0 |
|
|
|
1,172.1 |
|
|
$ |
298.1 |
|
|
$ |
1,007 |
|
|
|
1,677 |
|
|
$ |
1,073 |
|
Net premiums earned
|
|
|
1,271.9 |
|
|
|
1,015.0 |
|
|
|
1,447.9 |
|
|
|
1,067.5 |
|
|
|
107.1 |
|
|
|
1,102 |
|
|
|
1,593 |
|
|
|
1,121 |
|
Net investment income
|
|
|
92.3 |
|
|
|
58.3 |
|
|
|
84.5 |
|
|
|
57.6 |
|
|
|
5.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and LAE
|
|
|
1,043.2 |
|
|
|
736.2 |
|
|
|
1,019.8 |
|
|
|
584.2 |
|
|
|
60.4 |
|
|
|
791 |
|
|
|
1,922 |
|
|
|
811 |
|
Underwriting expenses
|
|
|
337.2 |
|
|
|
276.0 |
|
|
|
381.0 |
|
|
|
320.7 |
|
|
|
37.6 |
|
|
|
319 |
|
|
|
397 |
|
|
|
424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(8 |
) |
|
|
(726 |
) |
|
$ |
(114 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(35.0 |
) |
|
|
34.9 |
|
|
|
84.8 |
|
|
|
144.8 |
|
|
|
6.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
|
(0.80 |
) |
|
|
0.81 |
|
|
|
1.96 |
|
|
|
3.37 |
|
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
|
(0.80 |
) |
|
|
0.78 |
|
|
|
1.81 |
|
|
|
3.09 |
|
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
|
0.24 |
|
|
|
0.24 |
|
|
|
0.32 |
|
|
|
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments and cash
|
|
$ |
3,380.9 |
|
|
|
2,374.3 |
|
|
|
2,456.9 |
|
|
|
1,790.5 |
|
|
$ |
1,346.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums receivable
|
|
|
557.4 |
|
|
|
638.5 |
|
|
|
580.0 |
|
|
|
487.4 |
|
|
|
5.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
4,486.1 |
|
|
|
3,294.3 |
|
|
|
3,422.0 |
|
|
|
2,485.6 |
|
|
|
1,644.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unpaid losses and LAE
|
|
|
2,013.5 |
|
|
|
1,219.6 |
|
|
|
1,379.2 |
|
|
|
731.9 |
|
|
|
281.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unearned premiums
|
|
|
548.1 |
|
|
|
534.2 |
|
|
|
499.5 |
|
|
|
299.9 |
|
|
|
191.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt obligations
|
|
|
387.5 |
|
|
|
137.5 |
|
|
|
137.5 |
|
|
|
137.5 |
|
|
|
137.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
1,227.8 |
|
|
|
1,088.5 |
|
|
|
1,133.0 |
|
|
|
1,067.2 |
|
|
|
921.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$ |
24.75 |
|
|
|
25.30 |
|
|
|
26.30 |
|
|
|
24.79 |
|
|
$ |
21.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
S-7
THE OFFERING
|
|
|
Issuer |
|
Platinum Underwriters Holdings, Ltd. |
|
Securities Offered |
|
of
our %
Series A mandatory convertible preferred shares (plus up to
an
additional mandatory
convertible preferred shares that may be issuable upon exercise
in full of the underwriters overallotment option). |
|
Initial Offering Price |
|
$ for
each Preferred Share. |
|
Dividends |
|
The dividend payable on each Preferred Share will be
$ per
year. Dividends will accrue and cumulate from the date of
issuance, and, to the extent we are legally permitted to pay
dividends and our board of directors, or an authorized committee
of our board of directors, declares a dividend payable, we will
pay dividends in cash on each dividend payment date. The first
quarterly dividend payment will be payable on February 15,
2006 in the amount of
$ per
Preferred Share, which reflects the time from the date of
issuance through February 14, 2006. The dividend payable on
each subsequent quarterly dividend payment date will be
$ per
Preferred Share. |
|
Dividend Payment Dates |
|
February 15, May 15, August 15 and
November 15 of each year (or the following business day if
such day is not a business day) prior to the Mandatory
Conversion Date (as defined below), and on the Mandatory
Conversion Date. |
|
Record Dates |
|
The record dates for the payment of dividends on our Preferred
Shares will be the first day of the calendar month in which the
applicable dividend payment date falls. |
|
Redemption |
|
Our Preferred Shares will not be redeemable. |
|
Mandatory Conversion Date |
|
February 15, 2009, which we call the Mandatory
Conversion Date. |
|
Mandatory Conversion |
|
On the Mandatory Conversion Date, each Preferred Share will
automatically convert into a number of our Common Shares equal
to the conversion rate as described below. |
|
|
|
Holders of our Preferred Shares on the Mandatory Conversion Date
will have the right to receive the cash dividend due on such
date (including any accrued, cumulated and unpaid dividends on
our Preferred Shares as of the Mandatory Conversion Date) to the
extent we have sufficient lawful funds to pay such dividends at
such time. To the extent that any accrued, cumulated and unpaid
dividends are not paid upon mandatory conversion because we lack
sufficient lawful funds to make such payment, holders of
Preferred Shares will receive, upon such conversion, additional
Common Shares per Preferred Share equal to the value of such
accrued, cumulated and unpaid dividends. |
|
Conversion Rate |
|
The conversion rate for each Preferred Share will be not more
than one Common Share and not less
than Common
Share, depending on the applicable market value of our Common
Shares, as described below. |
|
|
|
The applicable market value of our Common Shares
means the arithmetic average of the daily volume-weighted
average price per Common Share on each of the 20 consecutive
trading days ending on the third trading day immediately
preceding the |
S-8
|
|
|
|
|
applicable conversion date. It will be calculated as described
under Description of the Series A Mandatory
Convertible Preferred Shares Mandatory
Conversion. |
|
|
|
The following table illustrates the conversion rate per
Preferred Share. |
|
|
|
|
|
|
|
Applicable Market Value on Conversion Date |
|
Conversion Rate |
|
|
|
|
|
|
|
less than or equal to $ |
|
1 |
|
|
between
$ and
$ |
|
1 to |
|
|
equal to or greater than $ |
|
to 1 |
|
|
|
|
|
The conversion rate is subject to certain adjustments, as
described under Description of the Series A Mandatory
Convertible Preferred Shares Anti-dilution
Adjustments. |
|
Early Conversion at the Option of the Holder |
|
At any time prior to the Mandatory Conversion Date, each holder
of our Preferred Shares may elect to convert each of their
Preferred Shares at the conversion rate
of Common
Share for each Preferred Share. This conversion rate is subject
to certain adjustments as described under Description of
the Series A Mandatory Convertible Preferred
Shares Anti-dilution Adjustments. Upon any
such conversion, holders of our Preferred Shares generally will
be entitled to payment for accrued, cumulated and unpaid
dividends, but not for any dividends payable in the future. |
|
Early Conversion Upon Cash Merger |
|
Prior to the Mandatory Conversion Date, if we are involved in an
amalgamation, merger or consolidation in which at least 30% of
the consideration for our Common Shares consists of cash or cash
equivalents, which we refer to as a cash merger,
then on the date specified in our notice to holders, each holder
of our Preferred Shares will have the right, at its election, to
receive such net cash, securities and other property that such
holder would have been entitled to receive if such holder had
converted such holders Preferred Shares immediately
preceding the cash merger at the conversion rate, determined in
accordance with the conversion rate described above, in effect
at such time. Upon any such conversion, holders of our Preferred
Shares generally will be entitled to payment for accrued,
cumulated and unpaid dividends, but not for any dividends
payable in the future. |
|
Anti-dilution Adjustments |
|
The conversion rate and the number of Common Shares to be
delivered upon conversion may be adjusted in the event of, among
other things, cash or share dividends or subdivisions, splits
and combinations of our Common Shares. See Description of
the Series A Mandatory Convertible Preferred
Shares Anti-dilution Adjustments. |
|
Liquidation Preference |
|
$ per
Preferred Share, plus an amount equal to the sum of all accrued,
cumulated and unpaid dividends. |
|
Voting Rights |
|
Generally, holders of our Preferred Shares will not be entitled
to any voting rights, except as required by Bermuda law, our
Bye-laws and as described under Description of the
Series A Mandatory Convertible Preferred Shares
Voting Rights. |
S-9
|
|
|
|
|
From and after the date on which our Bye-laws are amended to
delete a voting limitation that may otherwise be applicable to
the Preferred Shares (the Bye-law Amendment Date),
if dividends on the Preferred Shares and any other class or
series of Voting Parity Securities (defined in Description
of the Series A Mandatory Convertible Preferred
Shares General) then outstanding have not been
paid in an amount equal to six full quarterly dividends whether
or not consecutive, holders of the outstanding Preferred Shares,
together with the holders of all Voting Parity Securities then
outstanding, voting together as a single class, will be entitled
to elect two additional directors to our board of directors.
These voting rights will continue until all accrued, cumulated
and unpaid dividends in default on the Preferred Shares and any
class or series of Voting Parity Securities then outstanding are
paid in full. The term of office of all directors elected by the
holders of Preferred Shares and any class or series of Voting
Parity Securities will terminate immediately upon the
termination of the rights of the holders of Preferred Shares and
any class or series of Voting Parity Securities to vote for
directors. |
|
|
|
We have agreed with the underwriters in this offering that, no
later than December 31, 2006, we will present to our
shareholders for approval a resolution proposing the amendment
of the Bye-laws as described above and will recommend to the
shareholders that such resolution be approved and adopted; and,
promptly following such approval and adoption, we will so amend
the Bye-laws. If the Bye-laws have not been amended as described
above by December 31, 2006 (a Voting Default),
then, as liquidated damages for such Voting Default, for the
period from January 1, 2007 until the Bye-law Amendment
Date, additional amounts shall accrue on the outstanding
Preferred Shares at a per annum rate of 0.25% of the aggregate
liquidation preference on the outstanding Preferred Shares
during the first 90-day period following the occurrence of such
Voting Default, and at a per annum rate of 0.50% thereafter for
any remaining period during which a Voting Default continues.
Liquidated damages shall be paid on dividend payment dates to
the holders of record for the payment of dividends. |
|
|
|
In addition, from and after the Bye-law Amendment Date, we may
not take certain action (including but not limited to the
creation or issuance of any shares ranking senior to the
Preferred Shares) that would vary the rights attached to the
Preferred Shares without the written consent of the holders of
at least three-quarters of the Preferred Shares then outstanding
or the sanction of a resolution passed by a majority of the
votes cast at a separate meeting of the holders of the Preferred
Shares. We have agreed with the underwriters in this offering
that prior to the Bye-law Amendment Date, we will not take any
such action. |
|
|
|
For purposes of any vote by the holders of the Preferred Shares,
each holder of Preferred Shares will have one vote for each
Preferred Share held. |
S-10
|
|
|
Ranking |
|
Our Preferred Shares will rank as to payment of dividends and
distributions of assets upon our dissolution, liquidation or
winding-up: |
|
|
|
junior
to any class or series of our share capital the terms of which
provide that such class or series will rank senior to our
Preferred Shares; |
|
|
|
junior
to all of our existing and future indebtedness; |
|
|
|
senior
to our common shares and any other class or series of our share
capital the terms of which provide that such class or series
will rank junior to our Preferred Shares; and |
|
|
|
on
a parity with any other class or series of our share capital
(the Parity Securities); |
|
|
|
in each case, whether now outstanding or to be issued in the
future. |
|
|
|
Currently, we have no preferred shares outstanding. |
|
Use of Proceeds |
|
We expect the net proceeds to us from the Preferred Shares
Offering (assuming the exercise in full of the
underwriters overallotment option) will be approximately
$167 million (assuming a public offering price of
$ per
Preferred Share, and after deducting assumed underwriting
discounts and commissions and expenses payable by us). We expect
the net proceeds to us from the concurrent Common Shares
Offering (assuming the exercise in full of the
underwriters overallotment option) will be approximately
$126 million (assuming a public offering price of
$30.08 per share, the last reported sale price of our
Common Shares on the NYSE on November 22, 2005, and after
deducting assumed underwriting discounts and commissions and
expenses payable by us). We expect to use the combined net
proceeds to us from the Preferred Shares Offering and the
offering of Common Shares by us to make contributions to the
capital and surplus of our reinsurance operating subsidiaries
and for general corporate purposes. We will not receive any
proceeds from the sale of our Common Shares by the selling
shareholder in the concurrent Common Shares Offering. See
Use of Proceeds. |
|
Listing |
|
We intend to apply to have the Preferred Shares listed on the
NYSE under the symbol PTP PrA. |
|
Risk Factors |
|
See Risk Factors and other information included in
this prospectus supplement and the accompanying prospectuses for
a discussion of factors you should carefully consider before
deciding to invest in our Preferred Shares. |
|
Certain Tax Considerations |
|
For a discussion of the U.S. federal income tax treatment of the
conversion as well as the purchase, ownership and disposition of
our Preferred Shares, see Certain Tax Considerations
in this prospectus supplement. |
|
ERISA Considerations |
|
Purchasers of Preferred Shares must carefully consider the
restrictions on purchases of Preferred Shares set forth under
ERISA Considerations. |
|
Concurrent Common Shares Offering |
|
In our concurrent Common Shares Offering by means of a separate
prospectus supplement, we are offering |
S-11
|
|
|
|
|
Common Shares (or up
to Common
Shares if the underwriters of the Common Shares Offering
exercise in full their overallotment option) and a selling
shareholder identified therein is offering 3,960,000 Common
Shares. The Common Shares are being offered at
$ per
share. Immediately after such Common Shares Offering, there will
be
outstanding Common
Shares (assuming the exercise in full of the overallotment
option of the underwriters in the Common Shares Offering, but
excluding 4,061,573 Common Shares issuable upon exercise of
outstanding options and 148,809 Common Shares issuable to
directors and officers of the Company in exchange for share
units under compensation arrangements). |
|
Concurrent Debt Tender Offer |
|
Concurrently with the Preferred Shares Offering and Common
Shares Offering, Platinum Finance has commenced the Debt Tender
Offer in which it is offering, by means of an Offer to Purchase,
to purchase for cash any and all of its 6.371% Notes. The Debt
Tender Offer is scheduled to expire at 5:00 p.m., New York
City time, on Tuesday, December 6, 2005, unless extended.
The Debt Tender Offer is being made upon the terms, and subject
to the conditions, set forth in the Offer to Purchase. |
|
|
|
The consideration for each $1,000 principal amount of 6.371%
Notes tendered and accepted for payment pursuant to the Debt
Tender Offer (the Purchase Price) will be determined
in the manner described in the Offer to Purchase by reference to
a fixed spread of 100 basis points or 1% (the Fixed
Spread) over the yield to maturity (the Reference
Yield) based on the bid side price of the U.S. Treasury 3%
Bond due November 15, 2007 (the Reference Treasury
Security), as calculated on the second business day
preceding the date on which the Debt Tender Offer expires, plus
accrued and unpaid interest thereon up to, but not including,
the date of payment of such Purchase Price. Platinum Finance
has, or will have prior to the consummation of the Debt Tender
Offer, sufficient funds on hand to pay for all 6.371% Notes
purchased pursuant to the Debt Tender Offer. |
|
|
|
Any 6.371% Notes purchased pursuant to the Debt Tender Offer
will be paid for in same-day funds promptly after the date on
which the Debt Tender Offer expires (the Settlement
Date). Assuming the Offer is not extended, it is expected
that the Settlement Date for the Debt Tender Offer will be
Wednesday, December 7, 2005. |
None of the Preferred Shares Offering, the Common Shares
Offering or the Debt Tender Offer is conditioned on the
consummation of any of the other transactions.
S-12
RISK FACTORS
An investment in the Preferred Shares and the Common Shares
of Platinum Holdings is subject to significant risks inherent in
our business. You should carefully consider the risks and
uncertainties described in our Annual Report on Form 10-K/
A, for the year ended December 31, 2004, which is
incorporated herein by reference, the risks and uncertainties
described below and the other information included in this
prospectus supplement and the accompanying prospectus before
purchasing our Preferred Shares. If any of the events described
occur, our business and financial results could be adversely
affected in a material way. This could cause the trading price
of our Preferred Shares and our Common Shares to decline,
perhaps significantly.
This prospectus supplement and accompanying prospectus also
contain forward-looking statements about our business and
results of operations that could be impacted by various risks
and uncertainties. Our actual results could differ materially
from those anticipated in the forward-looking statements as a
result of certain factors, including the risks and uncertainties
described below and elsewhere in this prospectus supplement and
accompanying prospectus. See Special Note Regarding
Forward-Looking Statements in this prospectus supplement
and in the accompanying prospectus.
The occurrence of severe catastrophic events could have a
material adverse effect on our financial condition or results of
operations.
Because we underwrite property and casualty reinsurance and have
large aggregate exposures to natural and man-made disasters, we
expect that our loss experience generally will include
infrequent events of great severity. The frequency and severity
of catastrophe losses are inherently unpredictable.
Consequently, the occurrence of losses from a severe catastrophe
or series of catastrophes could have a material adverse effect
on our results of operations and financial condition. In
addition, catastrophes are an inherent risk of our business and
a severe catastrophe or series of catastrophes could have a
material adverse effect on our ability to write new business,
and our financial condition and results of operations, possibly
to the extent of eliminating our shareholders equity and
statutory surplus (which is the amount remaining after all
liabilities, including liabilities for losses and loss
adjustment expense (LAE), are subtracted from all
admitted assets, as determined under statutory accounting
principles prescribed or permitted by U.S. insurance regulatory
authorities). Increases in the values and geographic
concentrations of insured property and the effects of inflation
have historically resulted in increased severity of industry
losses in recent years, and, although we seek to limit our
overall exposure to risk by limiting the amount of reinsurance
we write by geographic zone, we expect that those factors will
increase the severity of catastrophe losses in the future.
Uncertainty related to estimated losses from Hurricanes
Katrina, Rita and Wilma may further impact our financial
results.
The estimated after-tax impact of Hurricanes Katrina and Rita of
approximately $274.8 million includes gross losses of
$396.9 million, recoveries from retrocessional reinsurance
of $56.1 million and reinstatement premiums earned of
$19.6 million. Losses from these hurricanes contributed
75.7 percentage points to the combined ratio for the
quarter ended September 30, 2005. On November 9, 2005,
we issued a press release announcing that we estimate our
initial losses from Hurricane Wilma, which made landfall in
Mexico and Southern Florida in late October, to be approximately
$135 million, net of reinstatement premiums, tax benefits
and retrocessional recoveries.
Our losses from Hurricanes Katrina, Rita and Wilma are estimates
based on portfolio modeling, a review of individual contracts
and preliminary indications from clients and brokers. We have
received very few claims notices to date. The unique nature of
the losses and the potential for legal and regulatory
developments to impact the magnitude of the loss is expected to
introduce significant uncertainty and delay into the loss
adjustment and settlement processes. Consequently, the actual
impact on our results arising from Hurricanes Katrina, Rita and
Wilma may differ materially from the current estimates.
In addition, our estimates with respect to Hurricane Katrina are
subject to a high level of uncertainty arising out of extremely
complex and unique causation and coverage issues associated with
the
S-13
attribution of losses to wind or flood damage or other perils
such as fire, business interruption or riot and civil commotion.
For example, the underlying policies generally do not cover
flood damage; however, water damage caused by wind may be
covered. We expect that these issues will not be resolved for a
considerable period of time and may be influenced by evolving
legal and regulatory developments.
Our actual losses from Hurricanes Katrina, Rita and Wilma may
exceed our estimates as a result of, among other things, the
receipt of additional information from clients, the attribution
of losses to coverages that for the purpose of our estimates we
assumed would not be exposed, which may be affected by class
action lawsuits or state regulatory action, and inflation in
repair costs due to the limited availability of labor and
materials, in which case our financial results could be further
materially adversely affected.
If the loss limitation methods and pricing models we employ
are not effective, our financial condition or results of
operations could be materially adversely affected.
Our property and casualty reinsurance contracts cover
unpredictable events such as hurricanes, windstorms, hailstorms,
earthquakes, volcanic eruptions, fires, industrial explosions,
freezes, riots, floods and other natural or man-made disasters.
We seek to limit our overall exposure to risk by limiting the
amount of reinsurance we write by geographic zone, peril and
type of program or contract. Our risk management uses a variety
of means, including the use of contract terms, diversification
criteria, probability analysis and analysis of comparable
historical loss experience. We estimate the impact of certain
catastrophic events using catastrophe modeling software and
contract information to evaluate our exposure to losses from
individual contracts and in the aggregate. For example, the
majority of the natural peril catastrophe reinsurance we write
relates to exposures within the United States, Europe and Japan.
Accordingly, we monitor our exposure to events that affect these
regions, such as hurricanes and earthquakes in the United
States, flood and wind in Europe and typhoons and earthquakes in
Japan.
We take an active role in the evaluation of commercial
catastrophe exposure models, which form the basis for our own
proprietary pricing models. These computer-based loss modeling
systems utilize direct exposure information obtained from our
clients and independent external data to assess each
clients potential for catastrophe losses. We believe that
modeling is an important part of the underwriting process for
catastrophe exposure pricing. However, these models depend on
the quality of the information obtained from our clients and the
external data we obtain from third parties and may prove
inadequate for determining the pricing for certain catastrophe
exposures.
Many of our reinsurance contracts do not contain an aggregate
loss limit or a loss ratio limit, which means that there is no
contractual limit to the losses that we may be required to pay
pursuant to such reinsurance contracts. Substantially all of our
property reinsurance contracts with natural catastrophe exposure
have occurrence limits that limit our exposure. Substantially
all of our high layer property, casualty and marine
excess-of-loss contracts also contain aggregate loss limits,
with limited reinstatements of an occurrence limit, which
restore the original limit under the contract after the limit
has been depleted by losses incurred on that treaty.
Various provisions of our contracts, such as limitations or
exclusions from coverage or choice of forum, may not be
enforceable in the manner we intend, due to, among other things,
disputes relating to coverage and choice of legal forum.
Underwriting is a matter of judgment, involving important
assumptions about matters that are inherently difficult to
predict and beyond our control, and for which historical
experience and probability analysis may not provide sufficient
guidance. One or more catastrophic or other events could result
in claims that substantially exceed our expectations, which
could have a material adverse effect on our financial condition
or our results of operations, possibly to the extent of
eliminating our shareholders equity and statutory surplus.
A downgrade in the rating assigned by A.M. Best to our
operating subsidiaries could adversely affect our ability to
write new business.
A.M. Best Company (A.M. Best) has assigned
a financial strength rating of A (Excellent) to our
operating subsidiaries. This rating is the third highest of
sixteen rating levels. According to
S-14
A.M. Best, a rating of A indicates
A.M. Bests opinion that a company has an excellent
ability to meet its ongoing obligations to policyholders. This
rating is subject to periodic review by A.M. Best and may
be revised downward or revoked at the sole discretion of
A.M. Best. A.M. Best may increase its scrutiny of
rated companies, revise their rating standards or take other
action. If A.M. Best revises the rating standard associated
with our current rating, our rating may be downgraded or we may
need to raise additional capital to maintain our rating.
On November 15, 2005, A.M. Best issued a press release
announcing that it had placed the financial strength rating of
A (Excellent) and issuer credit ratings of
a of Platinum US, Platinum UK and Platinum Bermuda
under review with negative implications. Concurrently,
A.M. Best noted that it had placed under review with
negative implications the issuer credit ratings of
bbb of Platinum Holdings, that it had placed under
review with negative implications Platinums Finances
bbb debt ratings on the 6.371% Notes and 7.50%
Notes, and that it had placed under review with negative
implications the indicative ratings assigned to our 2005 Shelf
Registration Statement of bbb for senior unsecured
debt, bbb- on subordinated debt and bb+
on preferred stock.
These rating actions follow our recent announcement that we
recognized $135 million in after tax losses stemming from
Hurricane Wilma. A.M. Best stated that Platinum Bermuda,
which assumes a significant amount of business from our other
operating companies, has realized a disproportionate reduction
in its capital position as a result of Hurricane Wilma. The
press release stated that intercompany reinsurance arrangements
designed to protect Platinum Bermudas capital were not
sufficient to address the frequency of hurricanes experienced in
2005. A.M. Best noted in the press release that it will
meet with our management in the near term to review our plan to
strengthen our capital and to specifically address the capital
allocation issues between our affiliate companies. Such a
meeting occurred on November 16, 2005.
Previously, A.M. Best had announced in March 2005 that it
had placed under review with negative implications the financial
strength ratings of A (Excellent) of
Platinum US, Platinum UK and Platinum Bermuda and had
downgraded and placed under review with negative implications
the debt rating of the portion of the equity security units
issued by Platinum Finance and the indicative ratings assigned
to securities available under our universal shelf registration
statement filed in 2004. A.M. Best stated that these rating
actions followed their determination that our risk-adjusted
capital position had declined more than originally estimated
from prior year levels due to the losses incurred as a result of
hurricanes in the southeastern U.S. in 2004 and the
resulting increase to our operating leverage, with Platinum
Bermuda in particular realizing a disproportionate reduction in
its risk-adjusted capital position. On May 26, 2005,
A.M. Best affirmed Platinum Holdings financial
strength rating and the issuer credit ratings of its reinsurance
subsidiaries upon Platinum Finances issuance of
$250 million aggregate principal amount of the
Series A 7.50% Notes. At the same time, A.M. Best
affirmed the issuer credit rating of Platinum Holdings and all
its existing debt ratings.
A.M. Best is generally considered to be a significant
rating agency with respect to the evaluation of insurance and
reinsurance companies. Ratings are used by ceding companies and
reinsurance intermediaries as an important means of assessing
the financial strength and quality of reinsurers. In addition, a
ceding companys own rating may be adversely affected by a
downgrade in the rating of its reinsurer. Therefore, a downgrade
of our rating may dissuade a ceding company from reinsuring with
us and may influence a ceding company to reinsure with a
competitor of ours that has a higher insurance rating.
It is increasingly common for our reinsurance contracts to
contain terms that would allow the ceding companies to cancel
the contract or require collateral to be posted for a portion of
our obligations if we are downgraded below a certain rating
level. Whether a client would exercise this cancellation right
would depend, among other factors, on the reason for such
downgrade, the extent of the downgrade, the prevailing market
conditions and the pricing and availability of replacement
reinsurance coverage. Therefore, we cannot predict in advance
the extent to which this cancellation right would be exercised,
if at all, or what effect such cancellations would have on our
financial condition or future operations, but such effect
potentially could be material.
S-15
We may from time to time secure our obligations under our
various reinsurance contracts using trusts and letters of
credit. We have entered into agreements with several ceding
companies that require us to provide collateral for our
obligations under certain reinsurance contracts with these
ceding companies under various circumstances, including where
our obligations to these ceding companies exceed negotiated
thresholds. These thresholds may vary depending on our rating
from A.M. Best or other rating agencies and a downgrade of
our ratings or a failure to achieve a certain rating may
increase the amount of collateral we are required to provide. We
may provide the collateral by delivering letters of credit to
the ceding company, depositing assets into trust for the benefit
of the ceding company or permitting the ceding company to
withhold funds that would otherwise be delivered to us under the
reinsurance contract. The amount of collateral we are required
to provide typically represents a portion of the obligations we
may owe the ceding company, often including estimates made by
the ceding company of claims that were incurred but not reported
(IBNR). Since we may be required to provide
collateral based on the ceding companys estimate, we may
be obligated to provide collateral that exceeds our estimates of
the ultimate liability to the ceding company.
On November 8, 2005, Standard & Poors
Ratings Services, a Division of the McGraw-Hill Companies, Inc.
(Standard & Poors), issued a press
release announcing that it had assigned its preliminary
BBB senior debt, BBB- subordinated debt,
and BB+ preferred stock ratings to the
Companys 2005 Shelf Registration Statement after
announcing earlier in the year that it had assigned its
BBB counterparty credit and senior debt ratings to
Platinum Holdings. The November 8, 2005 press release
stated that these ratings reflect the Companys strong
competitive position in the global reinsurance market, strong
capitalization, and moderate financial leverage. Standard &
Poors noted, however, that the Companys short tenure
as an independent company and the 2005 hurricane losses offset
these strengths and marred otherwise strong earnings.
Standard & Poors stated that although the
third-quarter hurricane losses were a significant 22% of
shareholders equity as of June 30, 2005, the Company
raised $162 million pursuant to its issuance of Common
Shares in September 2005 to bring shareholders equity as
of September 30, 2005 to $1.2 billion, which is up
from $1.1 billion as of December 31, 2004.
Standard & Poors ratings are subject to periodic
review by Standard & Poors and may be revised or
revoked in their sole discretion.
We may from time to time obtain ratings from other rating
agencies, though we are unable to predict the impact of any such
ratings at this time.
If we are required to increase our liabilities for losses and
LAE, our operating results may be adversely affected.
We are required by applicable insurance laws and regulations and
generally accepted accounting principles in the United States
(U.S. GAAP) to establish liabilities on our
consolidated balance sheet for payment of losses and LAE that
will arise from our reinsurance products. At any time, these
liabilities may prove to be inadequate to cover our actual
losses and LAE. To the extent these liabilities may be
insufficient to cover actual losses or LAE, we will have to add
to these liabilities and incur a charge to our earnings, which
could have a material adverse effect on our financial condition,
results of operations and cash flows.
The liabilities established on our consolidated balance sheet do
not represent an exact calculation of liability, but rather are
estimates of the expected cost of the ultimate settlement of
losses. All of our liability estimates are based on actuarial
and statistical projections at a given time, facts and
circumstances known at that time and estimates of trends in loss
severity and other variable factors, including new concepts of
liability and general economic conditions. Changes in these
trends or other variable factors could result in claims in
excess of the liabilities that we have established.
Unforeseen losses, the type or magnitude of which we cannot
predict, may emerge in the future. These additional losses could
arise from changes in the legal environment, catastrophic
events, extraordinary events affecting our clients such as
reorganizations and liquidations or changes in general economic
conditions.
S-16
In addition, because we, like other reinsurers, do not
separately evaluate each of the individual risks assumed under
reinsurance treaties, we are largely dependent on the original
underwriting decisions made by ceding companies. We are subject
to the risk that our ceding companies may not have adequately
evaluated the risks to be reinsured and that the premiums ceded
to us may not adequately compensate us for the risks we assume.
Under U.S. GAAP, Platinum US, Platinum UK and
Platinum Bermuda are not permitted to establish liabilities
until an event occurs which may give rise to a loss. Once such
an event occurs, liabilities are established based upon
estimates of the total losses incurred by the ceding companies
and an estimate of the portion of such loss our three operating
subsidiaries have reinsured. As a result, only liabilities
applicable to losses incurred up to the reporting date may be
established, with no allowance for the provision of a
contingency reserve to account for unexpected future losses.
Losses arising from future events will be estimated and
recognized at the time the loss is incurred. Such future losses
could be substantial.
Increased competition could adversely affect our
profitability.
The property and casualty reinsurance industry is highly
competitive. We compete with reinsurers worldwide, many of which
have greater financial, marketing and management resources than
we do. Some of our competitors are large financial institutions
that have reinsurance segments, while others are specialty
reinsurance companies. Financial institutions have also created
alternative capital market products that compete with
reinsurance products, such as reinsurance securitization.
Following the September 11, 2001 terrorist attack, a number
of individuals and companies in the reinsurance industry
established new, well-capitalized, Bermuda-based reinsurers to
benefit from improved market conditions, and a number of
existing competitors raised additional capital. Similarly,
following Hurricanes Katrina, Rita and Wilma, a number of
individuals and entities have commenced the establishment of new
Bermuda reinsurers, and many of our competitors raised
additional capital. Many of the reinsurers that entered or that
intend to enter the reinsurance markets have or could have more
capital than we have. In addition, there may be established
companies or new companies of which we are not aware that may be
planning to commit capital to this market. The full effect of
this additional capital on the reinsurance market and on the
terms and conditions of the reinsurance contracts of the types
we expect to underwrite may not be known for some time.
Competition in the types of reinsurance business that we
underwrite is based on many factors, including premium charges
and other terms and conditions offered, services provided,
ratings assigned by independent rating agencies, speed of claims
payment, claims experience, perceived financial strength and
experience and reputation of the reinsurer in the line of
reinsurance to be underwritten.
Our success depends to a significant extent upon our ability to
retain senior management and to continue to attract talented new
personnel. Competition within the reinsurance industry to
attract senior management figures, particularly in Bermuda, has
increased following the establishment of a number of new,
well-capitalized Bermuda reinsurers in the wake of Hurricanes
Katrina, Rita and Wilma. We believe these new entrants will view
established reinsurers as sources from which to hire their new
management teams. Our continued ability to compete effectively
depends in large part on our ability to retain members of senior
management and to continue to attract talented new personnel.
Traditional as well as new capital market participants from time
to time produce alternative products (such as reinsurance
securitizations, catastrophe bonds and various derivatives such
as swaps) that may compete with certain types of reinsurance,
such as property catastrophe. Over time, these numerous
initiatives could significantly affect supply, pricing and
competition in our industry.
Retrocessional reinsurance may become unavailable on
acceptable terms.
In order to limit the effect on our financial condition of large
and multiple losses, we may buy retrocessional reinsurance,
which is reinsurance for our own account. From time to time,
market conditions have limited, and in some cases have
prevented, insurers and reinsurers from obtaining the types and
amounts of reinsurance that they consider adequate for their
business needs. If we are unable or unwilling
S-17
to obtain retrocessional reinsurance, our financial position and
results of operations may be materially adversely affected by
catastrophic losses. Elimination of all or portions of our
retrocessional coverage could subject us to increased, and
possibly material, exposure or could cause us to underwrite less
business.
A retrocessionaires insolvency or its inability or
unwillingness to make payments under the terms of its
reinsurance treaty with us could have a material adverse effect
on us. Therefore, our retrocessions subject us to credit risk
because the ceding of risk to retrocessionaires does not relieve
a reinsurer of its liability to the ceding companies.
We are dependent on the business provided to us by
reinsurance brokers and we may be exposed to liability for
brokers failure to make payments to clients for their
claims; in addition, there are ongoing industry-wide
investigations relating to the conduct of insurance and
reinsurance brokers.
We market most of our reinsurance products through reinsurance
brokers. The reinsurance brokerage industry generally, and our
sources of business specifically, are concentrated. The loss of
business relationships with any of our top five brokers could
have a material adverse effect on our business. In addition,
some of these brokers have invested in new Bermuda reinsurance
companies that may compete with us.
In accordance with industry practice, we expect to frequently
pay amounts owing in respect of claims under our contracts to
reinsurance brokers, for payment over to the ceding companies.
In the event that a broker fails to make such a payment,
depending on the jurisdiction, we may remain liable to the
ceding company for the deficiency. Conversely, in certain
jurisdictions, when premiums for such contracts are paid to
reinsurance brokers for payment over to us, such premiums will
be deemed to have been paid and the ceding company will no
longer be liable to us for those amounts whether or not actually
received by us. Consequently, we assume a degree of credit risk
associated with our brokers during the payment process.
Beginning in the spring of 2004 and continuing throughout 2005,
regulatory authorities in several states commenced industry-wide
investigations relating to the conduct of insurance and
reinsurance brokers, including investigations into broker
compensation practices such as contingent commissions and other
business practices that may have created actual or potential
conflicts of interest. Various regulatory investigations into
companies such as Willis North America, Inc., a subsidiary of
Willis Group Holdings Ltd. (Willis),
Marsh & McLennan Companies (Marsh) and Aon
Corporation (Aon) led to monetary settlements of
various sizes with these companies. We were not party to any
litigation that arose in connection with any of these
investigations, and did not receive any subpoenas or information
requests with respect to any litigation.
We underwrite substantially all of our reinsurance through
brokers, including a substantial portion through Willis, Marsh
and Aon. We are unable to predict the impact, if any, that these
investigations, and any increased regulatory oversight that
might result therefrom, may have on our business.
The current investigations into finite risk reinsurance
products could have a material adverse effect on our financial
condition or results of operations.
In November and December 2004, the Company received subpoenas
from the SEC and the Office of the Attorney General for the
State of New York for documents and information relating to
certain finite risk reinsurance products. We are fully
cooperating in responding to all such requests. Other
reinsurance companies have reported receiving similar subpoenas
and requests. These investigations appear to be at a very
preliminary stage and, accordingly, we are unable to predict the
direction these investigations will take and the impact, if any,
they may have on our business.
On June 14, 2005, the Company received a grand jury
subpoena from the United States Attorney for the Southern
District of New York requesting documents relating to our finite
risk reinsurance products. The Company has been informed that
other companies in the industry have received similar subpoenas.
In the Finite Risk segment, we expect that the ongoing
investigations by the SEC, New York Attorney General and United
States Attorney for the Southern District of New York will
significantly
S-18
diminish demand for finite risk products in the short term. The
Company did not write any new or renewal contracts in the Finite
Risk segment in the six months ended September 30, 2005.
However, our existing portfolio of finite risk contracts is
expected to generate premium volume for 2005 that is
substantially the same as for 2004.
The property and casualty reinsurance business is
historically cyclical, and we expect to experience periods with
excess underwriting capacity and unfavorable pricing.
Historically, property and casualty reinsurers have experienced
significant fluctuations in operating results. Demand for
reinsurance is influenced significantly by underwriting results
of primary insurers and prevailing general economic and market
conditions, all of which affect ceding companies decisions
as to the amount or portion of risk that they retain for their
own accounts and consequently reinsurance premium rates. The
supply of reinsurance is related to prevailing prices, the
levels of insured losses and levels of industry surplus which,
in turn, may fluctuate in response to changes in rates of return
on investments being earned in the reinsurance industry. As a
result, the property and casualty reinsurance business
historically has been a cyclical industry, characterized by
periods of intense price competition due to excessive
underwriting capacity as well as periods when shortages of
capacity permitted favorable pricing. We can expect to
experience the effects of such cyclicality.
The cyclical trends in the industry and the industrys
profitability can also be affected significantly by volatile and
unpredictable developments, including what management believes
to be a trend of courts to grant increasingly larger awards for
certain damages, natural disasters (such as catastrophic
hurricanes, windstorms, tornadoes, earthquakes and floods),
fluctuations in interest rates, changes in the investment
environment that affect market prices of and income and returns
on investments and inflationary pressures that may tend to
affect the size of losses experienced by primary insurers. We
cannot predict whether market conditions will improve, remain
constant or deteriorate. A return to unfavorable market
conditions from the current favorable conditions may affect our
ability to write reinsurance at rates that we consider
appropriate relative to the risk assumed. If we cannot write
property and casualty reinsurance at appropriate rates, our
ability to transact reinsurance business would be significantly
and adversely affected.
Our invested assets are subject to market volatility and
interest rate and currency exchange rate fluctuation.
The Companys principal invested assets are fixed
maturities, which are subject to the market risk of potential
losses from adverse changes in interest rates. Depending on our
classification of our investments as available-for-sale, trading
or other assets, changes in the market value of our securities
are reflected in either our consolidated balance sheet or
statement of income. The Companys investment portfolio is
also subject to credit risk resulting from adverse changes in
the issuers ability to repay the debt. These risks could
materially adversely affect our results of operations.
The Companys principal exposure to foreign currency risk
is its obligation to settle claims in foreign currencies. The
possibility exists that the Company may incur foreign currency
exchange gains or losses as it ultimately settles claims
required to be paid in foreign currencies. To the extent the
Company does not seek to hedge its foreign currency risk or
hedges prove ineffective, the resulting impact of a movement in
foreign currency exchange rate could materially adversely affect
our results of operations.
It may be difficult to enforce service of process and
judgments against us and our officers and directors.
We are a Bermuda company and certain of our officers and
directors are residents of various jurisdictions outside the
U.S. A substantial portion of our assets and our officers and
directors, at any one time, are or may be located in
jurisdictions outside the U.S. Although we have appointed CT
Corporation System as an agent in New York, New York to receive
service of process with respect to actions against us arising
out of violations of the U.S. federal securities laws in
any federal or state court in the U.S. relating to the
transactions covered by this prospectus supplement and the
accompanying prospectus, it may be difficult for investors to
effect service of process within the U.S. on our directors and
officers who reside outside the U.S. or to enforce against us or
our directors and officers judgments of U.S. courts
predicated upon civil liability provisions of the
U.S. federal securities laws.
S-19
Platinum Holdings is a holding company and, consequently, its
cash flow is dependent on dividends, interest and other
permissible payments from its subsidiaries.
Platinum Holdings is a holding company that conducts no
reinsurance operations of its own. All operations are conducted
by its wholly owned operating subsidiaries, Platinum US,
Platinum UK and Platinum Bermuda. As a holding company,
Platinum Holdings cash flow consists primarily of
dividends, interest and other permissible payments from its
subsidiaries. Platinum Holdings depends on such payments for
general corporate purposes and to meet its obligations,
including the payment of any dividends to its shareholders,
including the holders of the Preferred Shares.
Additionally, under the Bermuda Companies Act 1981 (the
Companies Act), Platinum Holdings may declare or pay
a dividend out of distributable reserves only if it has
reasonable grounds for believing that it is, or after the
payment would be, able to pay its liabilities as they become due
and if the realizable value of its assets would thereby not be
less than the aggregate of its liabilities and issued share
capital and share premium accounts. For a discussion of the
legal limitations on our subsidiaries ability to pay
dividends to Platinum Holdings, see Business
Regulation in our Form 10-K/ A for the year ended
December 31, 2004, which is incorporated herein by
reference.
Your investment could be materially adversely affected if we
are deemed to be engaged in business in the U.S.
Platinum Holdings and Platinum Bermuda are Bermuda companies,
Platinum UK is a U.K. company, and Platinum Ireland is
an Irish company. We believe that Platinum Holdings,
Platinum UK, Platinum Bermuda and Platinum Ireland each
operate in such a manner that none of these companies will be
subject to U.S. tax (other than U.S. excise tax on reinsurance
premiums and withholding tax on certain investment income from
U.S. sources) because they are not engaged in a trade or
business in the U.S. Nevertheless, because definitive
identification of activities which constitute being engaged in a
trade or business in the U.S. is not provided by the Internal
Revenue Code of 1986, as amended (the Code), or
regulations or court decisions, the U.S. Internal Revenue
Service (the IRS) might contend that any of Platinum
Holdings, Platinum UK, Platinum Bermuda or Platinum Ireland
are/is engaged in a trade or business in the U.S. If Platinum
Holdings were determined to be engaged in a trade or business in
the U.S., it would be subject to U.S. tax at regular corporate
rates on the income that is effectively connected with the U.S.
trade or business plus an additional 30% branch
profits tax on such income remaining after the regular
tax. If Platinum Bermuda were determined to be engaged in a
trade or business in the U.S. and if Platinum Bermuda either
does not qualify for benefits under the applicable income tax
treaty with the U.S. or does qualify but such trade or business
was determined to be attributable to a permanent
establishment in the U.S. (or, with respect to investment
income, arguably even if such income were not attributable to a
permanent establishment), Platinum Bermuda would be
subject to U.S. tax at regular corporate rates on the income
that is effectively connected with the U.S. trade or business,
plus an additional 30% branch profits tax on such
income remaining after the regular tax in certain circumstances.
If Platinum UK and Platinum Ireland each qualify for
benefits under the applicable income tax treaty with the U.S.,
if Platinum UK and/or Platinum Ireland were determined to
be engaged in a trade or business in the U.S. and such trade or
business was determined to be attributable to a permanent
establishment in the U.S., Platinum UK and/or
Platinum Ireland would be subject to U.S. tax at regular
corporate rates on the income that is effectively connected with
that U.S. trade or business, plus an additional 5% branch
profits tax in the case of Platinum Ireland.
If you acquire 10% or more of the total combined voting power
of all classes of our shares, the CFC rules may apply to you.
Under the Code, each United States shareholder of a
foreign corporation that is a controlled foreign
corporation (CFC) for an uninterrupted period
of 30 days or more during a taxable year, and who owns
shares in the CFC on the last day of the CFCs taxable year
must include in its gross income for U.S. federal income
tax purposes its pro rata share of the CFCs
subpart F income, even if the subpart F
income is not distributed. For these purposes, any U.S. person
who owns, directly or indirectly through foreign persons, or is
considered to own under applicable constructive ownership rules
of the Code,
S-20
10% or more of the total combined voting power of all classes of
stock of a foreign corporation will be considered to be a
United States shareholder. Under the CFC rules, a
holder of Preferred Shares will be deemed to own an amount of
Common Shares equal to the amount into which such Preferred
Shares are convertible. Therefore, a Preferred Shareholder will
be deemed to hold the voting power of those constructively owned
Common Shares. Moreover, in certain circumstances, the holders
of Preferred Shares may, as a class, be entitled to vote for
members of our board of directors. In general, a foreign
insurance company such as Platinum UK or Platinum Bermuda is
treated as a CFC only if such United States
shareholders collectively own more than 25% of the total
combined voting power or total value of our stock for an
uninterrupted period of 30 days or more during any tax
year. Pursuant to our Bye-laws, the combined voting power of any
holder is limited to approximately 9.9% of the combined voting
power of all Common Shares. We expect that, because of the
limitations on concentration of voting power of our Common
Shares, dispersion of our share ownership, the provisions for
directed voting for the directors of Platinum Bermuda,
Platinum UK and Platinum Ireland and the restrictions on
transfer, issuance or repurchase of the Common Shares, you will
not be subject to treatment as a United States
shareholder of a CFC. In addition, because under our
Bye-laws no single shareholder is permitted to exercise as much
as 10% of the total combined voting power of the Company, you
should not be viewed as a United States shareholder
of a CFC for purposes of these rules. There can be no assurance,
however, that these rules will not apply to you. Accordingly,
U.S. persons who might, directly, indirectly or through
attribution, acquire 10% or more of the total combined voting
power of all classes of our shares should consider the possible
application of the CFC rules.
Under certain circumstances, you may be required to pay taxes
on your pro rata share of Platinum Bermudas and Platinum
UKs related person insurance income.
If Platinum UKs or Platinum Bermudas related
person insurance income (RPII) were to equal or
exceed 20% of Platinum UKs or Platinum Bermudas
gross insurance income in any taxable year and direct or
indirect insureds (and persons related to such insureds) own (or
are treated as owning directly or indirectly) 20% or more of the
voting power or value of the shares of Platinum UK or
Platinum Bermuda, a U.S. person who owns the Preferred
Shares or the Common Shares of Platinum Holdings directly or
indirectly on the last day of the taxable year would be required
to include in its income for U.S. federal income tax
purposes the shareholders pro rata share of
Platinum UKs or Platinum Bermudas RPII for the
entire taxable year, determined as if such RPII were distributed
proportionately to such United States shareholders at that date
regardless of whether such income is distributed. In addition,
U.S. tax-exempt organizations would be required to treat
RPII as unrelated business taxable income if Platinum UKs
or Platinum Bermudas RPII equaled or exceeded 20% of
Platinum UKs or Platinum Bermudas gross
insurance income in any taxable year. The amount of RPII earned
by Platinum UK or Platinum Bermuda (generally, premium and
related investment income from the direct or indirect insurance
or reinsurance of any direct or indirect U.S. shareholder
of Platinum UK or Platinum Bermuda or any person related to
such shareholder, including St. Paul) will depend on a
number of factors, including the geographic distribution of
Platinum UKs or Platinum Bermudas business and the
identity of persons directly or indirectly insured or reinsured
by Platinum UK or Platinum Bermuda. Some of the factors
which determine the extent of RPII in any period may be beyond
Platinum UKs or Platinum Bermudas control.
Consequently, Platinum UKs or Platinum Bermudas
RPII could equal or exceed 20% of its gross insurance income in
any taxable year and ownership of its shares by direct or
indirect insureds and related persons could equal or exceed the
20% threshold described above.
The RPII rules provide that if a shareholder who is a U.S.
person disposes of shares in a foreign insurance corporation
that has RPII (even if the amount of RPII is less than 20% of
the corporations gross insurance income) and in which U.S.
persons own 25% or more of the shares, any gain from the
disposition will generally be treated as ordinary income to the
extent of the shareholders share of the corporations
undistributed earnings and profits that were accumulated during
the period that the shareholder owned the shares (whether or not
such earnings and profits are attributable to RPII). In
addition, such a shareholder will be required to comply with
certain reporting requirements, regardless of the amount of
shares owned by the shareholder. These rules should not apply to
dispositions of Preferred
S-21
Shares or Common Shares because Platinum Holdings will not
itself be directly engaged in the insurance business and because
proposed U.S. Treasury regulations appear to apply only in the
case of shares of corporations that are directly engaged in the
insurance business. However, the IRS might interpret the
proposed regulations in a different manner and the applicable
proposed regulations may be promulgated in final form in a
manner that would cause these rules to apply to dispositions of
our Preferred Shares or Common Shares.
A recently published IRS Revenue Ruling could be applied to
recharacterize the insurance arrangements between Platinum US
and Platinum Bermuda.
Recently, the IRS published Revenue Ruling 2005-40 (the
Ruling), which gives guidelines for when there is
adequate risk distribution for primary insurance
arrangements to constitute insurance for U.S. federal tax
purposes. The Ruling does not address what constitutes risk
distribution in the context of reinsurance (which includes
retrocession insurance). However, if the IRS were to
successfully contend that the principles enunciated in the
Ruling apply to reinsurance (including retrocession insurance)
and find that under those principles Platinum Bermuda does not
have adequate risk distribution, this would have a negative
effect on the Company and on the value of our Preferred Shares
or Common Shares, particularly in the hands of those
shareholders who would be subject to the PFIC rules. For more
information on the potential consequences of the arrangements
between Platinum US and Platinum Bermuda failing to qualify as
insurance for U.S. federal tax purposes, see Certain Tax
Considerations in this prospectus supplement.
We may become subject to taxes in Bermuda after 2016.
We have received a standard assurance from the Bermuda Minister
of Finance, under Bermudas Exempted Undertakings Tax
Protection Act 1966, that if any legislation is enacted in
Bermuda that would impose tax computed on profits or income, or
computed on any capital asset, gain or appreciation, or any tax
in the nature of estate duty or inheritance tax, then the
imposition of any such tax will not be applicable to us or to
any of our operations or our shares, debentures or other
obligations until March 28, 2016. Consequently, if our
Bermuda tax exemption is not extended past March 28, 2016,
we may be subject to any Bermuda tax after that date. For more
information on Bermuda taxation of Platinum Holdings and
Platinum Bermuda, see Certain Tax Considerations in
this prospectus supplement and the accompanying prospectus.
Bermuda could be subject to sanctions by a number of
multinational organizations which could adversely affect Bermuda
companies.
A number of multinational organizations, including the European
Union, the Organization for Economic Cooperation and Development
(OECD), including its Financial Action Task Force,
and the Financial Stability Forum, have identified certain
countries as not participating in adequate information exchange,
engaging in harmful tax competition or not maintaining adequate
controls to prevent corruption, such as money laundering
activities. Recommendations to limit such harmful practices are
under consideration by these organizations, and a report
published on November 27, 2001 by the OECD contains an
extensive discussion of specific recommendations. The OECD has
threatened non-member jurisdictions that do not agree to
cooperate with the OECD with punitive sanctions by OECD member
countries. It is unclear what these sanctions will be and if
they will be imposed. Bermuda has committed to a course of
action to enable compliance with the requirements of these
multinational organizations, including signing a letter
committing itself to eliminate harmful tax practices by the end
of 2005 and to embrace international tax standards for
transparency, exchange of information and the elimination of any
aspects of the regimes for financial and other services that
attract business with no substantial domestic activity. However,
the action taken by Bermuda may not be sufficient to preclude
all effects of the measures or sanctions described above, which
if ultimately adopted could adversely affect Bermuda companies
such as Platinum Holdings and Platinum Bermuda.
S-22
The regulatory system under which we operate, and potential
changes thereto, could significantly and adversely affect our
business.
The business of reinsurance is regulated in most countries,
although the degree and type of regulation varies significantly
from one jurisdiction to another. Reinsurers are generally
subject to less direct regulation than primary insurers. In
Bermuda, we operate under relatively less intensive regulatory
requirements. However, in the United States and in the United
Kingdom licensed reinsurers are highly regulated and must comply
with financial supervision standards comparable to those
governing primary insurers. For a detailed discussion of the
regulatory requirements to which Platinum Holdings and its
subsidiaries are subject, see Business
Regulation in our Form 10-K/ A incorporated by
reference herein. Any failure to comply with applicable laws
could result in the imposition of significant restrictions on
our ability to do business, and could also result in fines and
other sanctions, any or all of which could materially adversely
affect our financial results and operations. In addition, these
statutes and regulations may, in effect, restrict the ability of
our subsidiaries to write new business or, as indicated above,
distribute funds to Platinum Holdings. In recent years, some
state legislatures have considered or enacted laws that may
alter or increase state authority to regulate insurance
companies and insurance holding companies. Moreover, the
National Association of Insurance Commissioners
(NAIC) and state insurance regulators regularly
reexamine existing laws and regulations, interpretations of
existing laws and the development of new laws that may be more
restrictive or may result in higher costs to us than current
statutory requirements.
Platinum Bermuda is not registered or licensed as an insurance
company in any jurisdiction outside Bermuda. Platinum Bermuda
conducts its business solely through its offices in Bermuda and
does not maintain an office, and its personnel do not conduct
any insurance activities, in the U.S. or elsewhere. Although
Platinum Bermuda does not believe it is in violation of
insurance laws of any jurisdiction outside Bermuda, inquiries or
challenges to Platinum Bermudas insurance activities may
still be raised in the future.
The offshore insurance and reinsurance regulatory framework
recently has become subject to increased scrutiny in many
jurisdictions, including the U.S. federal and various state
jurisdictions. In the past, there have been congressional and
other proposals in the United States regarding increased
supervision and regulation of the insurance industry, including
proposals to supervise and regulate reinsurers domiciled outside
the United States. If Platinum Bermuda were to become subject to
any insurance laws and regulations of the United States or any
U.S. state, which are generally more restrictive than those
applicable to it in Bermuda, Platinum Bermuda might be required
to post deposits or maintain minimum surplus levels and might be
prohibited from engaging in lines of business or from writing
specified types of policies or contracts. Complying with those
laws could have a material adverse effect on the ability of the
Company to conduct its business.
Purchasers of Preferred Shares may incur dilution.
Persons purchasing our Preferred Shares who convert their
Preferred Shares into Common Shares may incur immediate net
tangible book value dilution. In addition, the terms of our
Preferred Shares do not restrict our ability to offer a new
series of preferred shares that is on parity with the Preferred
Shares in the future or to engage in other transactions that
could dilute our Preferred Shares.
A holder of our Preferred Shares assumes the risk of a
decline in the market value of our Common Shares.
The market value of our Common Shares on February 15, 2009
may be less than our current Common Share price, which, as of
November 22, 2005, was $30.08 per share. If the market
value of our Common Shares is less than the price of our Common
Shares on the date of the Preferred Shares Offering, then
holders of each Preferred Share will receive Common Shares on
February 15, 2009 with a combined market value that is less
than the
$ initial
public offering price per share of our Preferred Shares.
Accordingly, a holder of Preferred Shares assumes the entire
risk that the market value of our Common Shares may decline. Any
decline in the market value of our Common Shares may be
substantial.
S-23
Our issuance of additional series of preferred shares could
adversely affect holders of our Common Shares and our Preferred
Shares.
Our board of directors is authorized to issue additional series
of preferred shares that are on a parity with or junior to our
Preferred Shares without requiring any action or consent on the
part of our shareholders, including holders of our Preferred
Shares. Our board of directors also has the power, without
shareholder approval, to set the terms of any such series of
preferred shares that may be issued, including voting rights,
dividend rights, preferences over Common Shares with respect to
dividends or if we liquidate, dissolve or wind up our business
and other terms. If we issue preferred shares in the future that
have preference over our Common Shares or Preferred Shares with
respect to the payment of dividends or upon our liquidation,
dissolution or winding-up, or if we issue preferred shares with
voting rights that dilute the voting power of our Common Shares
or Preferred Shares, the rights of holders of our Common Shares
or Preferred Shares or the market price of our Common Shares or
Preferred Shares could be adversely affected.
The opportunity for equity appreciation provided by an
investment in the Preferred Shares is less than that provided by
a direct investment in our Common Shares.
The number of Common Shares that are issuable upon conversion on
the Mandatory Conversion Date of our Preferred Shares will
decrease as the applicable market value per share of our Common
Shares increases to
$ and
thereafter will increase as the applicable market value
increases to
$ ,
but will not increase further thereafter. Therefore, the
opportunity for equity appreciation provided by an investment in
our Preferred Shares is less than that provided by a direct
investment in our Common Shares. The market value per share of
our Common Shares on the Mandatory Conversion Date must exceed
the threshold appreciation price of
$ before
a holder of our Preferred Shares will realize any equity
appreciation.
Our Preferred Shares have never been publicly traded and may
never be publicly traded.
Prior to this Preferred Shares Offering, there has been no
public market for our Preferred Shares. We intend to apply to
have our Preferred Shares listed on the NYSE under the symbol
PTP PrA. However, an active trading market for
these Preferred Shares may not develop or be sustained after
this Preferred Shares Offering. Although the underwriters have
advised us that they intend to facilitate secondary market
trading by making a market in our Preferred Shares, they are not
obligated to make a market in our Preferred Shares and may
discontinue market making activities at any time.
The market price of our Preferred Shares will be directly
affected by the market price of our Common Shares, which may be
volatile, and other factors.
To the extent there is a secondary market for our Preferred
Shares, we believe that the market price of our Preferred Shares
will be significantly affected by the market price of our Common
Shares. We cannot predict how our Common Shares will trade. This
may result in greater volatility in the market price of the
Preferred Shares than would be expected for nonconvertible
preferred shares. From the beginning of 2004 through
November 22, 2005, the reported high and low sales prices
for our Common Shares ranged from a low of $26.43 per share to a
high of $35.21 per share.
Our Preferred Shares provide limited conversion rate
adjustments.
The number of Common Shares that you are entitled to receive on
the Mandatory Conversion Date, or as a result of early
conversion of a Preferred Share, is subject to adjustment for
certain events, including share splits and combinations,
dividends on our shares, certain cash dividends and certain
other actions that modify our share capital structure. See
Description of the Series A Mandatory Convertible
Preferred Shares Anti-dilution Adjustments. We
will not adjust the conversion rate for other events, including
offerings of our Common Shares or preferred shares for cash or
in connection with acquisitions or employee benefit plans. As a
result, an event that adversely affects the value of our
Preferred Shares, but does not result in an adjustment to the
conversion rate, may occur. Further, we are not restricted from
issuing additional Common Shares or securities convertible into
Common Shares during the term of the
S-24
Preferred Shares and, except as required by law, have no
obligation to consider your interests for any reason. If we
issue additional Common Shares, it may materially and adversely
affect the price of our Common Shares and, because of the
relationship of the number of Common Shares to be received on
the Mandatory Conversion Date to the price of our Common Shares,
such events may adversely effect the trading price of the
Preferred Shares.
Holders of the Preferred Shares will have limited voting
rights.
Holders of the Preferred Shares will have no voting rights with
respect to most matters that generally require the approval of
voting shareholders. Holders of Preferred Shares will have
limited voting rights, under certain circumstances, in the event
that dividends are not paid on such shares or certain actions
that would vary the rights of the Preferred Shares are to be
taken or as otherwise required by Bermuda law. The Preferred
Shares place no restrictions on our business or operations, on
our ability to incur indebtedness or issue securities that rank
pari passu with the Preferred Shares, or engage in any
transactions which may adversely affect the holders of the
Preferred Shares, subject only to the limited voting rights
referred to above. See Description of the Series A
Mandatory Convertible Preferred Shares Voting
Rights.
You may be required to recognize income upon an adjustment of
the conversion rate.
In general, any adjustment to the conversion rate that increases
the interest of the holders who hold Preferred Shares in our
assets or earnings and profits will result in a constructive
dividend distribution to such holders, and such holders will be
subject to tax on this constructive dividend distribution to the
extent of our earnings and profits even though no money will
have actually been distributed. An exception to this rule
provides that changes in the conversion rate made solely to
avoid dilution of the interests of holders who hold Preferred
Shares will not result in a constructive dividend, but this
exception specifically does not cover conversion rate
adjustments that are made to compensate the holders of our
Preferred Shares for taxable cash or property distributions to
other shareholders. As a result, some of the possible
circumstances that could result in an adjustment to the
conversion rate with respect to our Preferred Shares are not
covered by this exception. For example, an increase in the
conversion rate in the event of distributions of cash,
indebtedness or assets by us will generally result in deemed
dividend treatment to holders of our Preferred Shares to the
extent of our applicable earnings and profits.
The Preferred Shares are equity and are subordinate to our
existing and future indebtedness.
The Preferred Shares are equity interests in Platinum Holdings
and do not constitute indebtedness. As such, the Preferred
Shares will rank junior to all of our existing and future
indebtedness and other non-equity claims on Platinum Holdings
with respect to assets available to satisfy claims on Platinum
Holdings, including in a liquidation of Platinum Holdings.
Additionally, unlike indebtedness, where principal and interest
would customarily be payable on specified due dates, in the case
of preferred securities like the Preferred Shares, dividends are
payable (1) only if and as declared by our board of
directors, and (2) only to the extent funds are legally
available therefor.
Our Preferred Shares will rank junior to all of our and our
subsidiaries liabilities in the event of a bankruptcy,
liquidation or winding-up of our assets.
In the event of bankruptcy, liquidation or winding-up, our
assets will be available to pay obligations on our Preferred
Shares only after all of our liabilities have been paid. In
addition, our Preferred Shares will effectively rank junior to
all existing and future liabilities of our subsidiaries,
including the reinsurance obligations of our subsidiaries. The
rights of holders of our Preferred Shares to participate in the
assets of our subsidiaries upon any liquidation or
reorganization of any subsidiary will rank junior to the prior
claims of that subsidiarys creditors and equity holders.
As of September 30, 2005, we had total consolidated
liabilities of $3,258 million. In the event of bankruptcy,
liquidation or winding-up due to losses incurred by us or
otherwise, there may not be sufficient assets remaining, after
paying our and our subsidiaries liabilities, to pay
amounts due on any or all of our Preferred Shares then issued
and outstanding.
S-25
There are limitations on the ownership, transfer and voting
rights of our Common Shares.
Holders of Preferred Shares will face several limitations,
including the following, upon the conversion of the Preferred
Shares into Common Shares on the Mandatory Conversion Date.
Under our Bye-laws, our directors are required to decline to
register any transfer of Common Shares that would result in a
person (or any group of which such person is a member)
beneficially owning, directly or indirectly, 10% or more of the
voting shares, or in the case of St. Paul and its subsidiaries,
or RenaissanceRe Holdings Ltd. (RenaissanceRe) and
its subsidiaries, beneficially owning, directly or indirectly,
25% or more of such shares or of the total combined value of our
issued shares. Similar restrictions apply to our ability to
issue or repurchase shares. The directors also may, in their
discretion, decline to register the transfer of any shares if
they have reason to believe (1) that the transfer may lead
to adverse tax or regulatory consequences in any jurisdiction or
(2) that the transfer would violate the registration
requirements of the U.S. federal securities laws or of any other
jurisdiction. These restrictions would apply to a transfer of
shares even if the transfer has been executed on the NYSE. A
transferor of Common Shares will be deemed to own those shares
for dividend, voting and reporting purposes until a transfer of
those Common Shares has been registered on our register of
shareholders. We are authorized to request information from any
holder or prospective acquiror of Common Shares as necessary to
give effect to the transfer, issuance and repurchase
restrictions referred to above, and may decline to effect any
transaction if complete and accurate information is not received
as requested.
In addition, our Bye-laws generally provide that any person (or
any group of which such person is a member) beneficially owning,
directly or indirectly, shares carrying 10% or more of the total
voting rights attached to all of our outstanding voting shares,
will have the voting rights attached to its issued shares
reduced so that it may not exercise 10% or more of such total
voting rights. Because of the attribution provisions of the
Code, and the rules of the SEC regarding determination of
beneficial ownership, this requirement may have the effect of
reducing the voting rights of a shareholder whether or not such
shareholder directly holds 10% or more of our Common Shares.
Further, the directors have the authority to require from any
shareholder certain information for the purpose of determining
whether that shareholders voting rights are to be reduced.
Failure to respond to such a notice, or submitting incomplete or
inaccurate information, gives the directors (or their designees)
discretion to disregard all votes attached to that
shareholders Common Shares. See Description of Our
Share Capital Common Shares in this prospectus
supplement.
The insurance law of Maryland prevents any person from acquiring
control of us or of Platinum US unless that person has filed a
notification with specified information with the Maryland
Insurance Commissioner and has obtained his prior approval.
Under the Maryland statute, acquiring 10% or more of the voting
stock of an insurance company or its parent company is
presumptively considered a change of control, although such
presumption may be rebutted. Accordingly, any person who
acquires, directly or indirectly, 10% or more of the voting
securities of Platinum Holdings without the prior approval of
the Maryland Insurance Commissioner will be in violation of this
law and may be subject to injunctive action requiring the
disposition or seizure of those securities by the Maryland
Insurance Commissioner or prohibiting the voting of those
securities and to other actions determined by the Maryland
Insurance Commissioner. In addition, many U.S. state insurance
laws require prior notification of state insurance departments
of a change in control of a non-domiciliary insurance company
doing business in that state. While these pre-notification
statutes do not authorize the state insurance departments to
disapprove the change in control, they authorize regulatory
action in the affected state if particular conditions exist such
as undue market concentration. Any future transactions that
would constitute a change in control of Platinum Holdings may
require prior notification in those states that have adopted
preacquisition notification laws.
Common Shares may be offered or sold in Bermuda only in
compliance with the provisions of the Investment Business Act
2003 of Bermuda. In addition, sales of Common Shares to persons
resident in Bermuda for Bermuda exchange control purposes may
require the prior approval of the Bermuda Monetary Authority.
Consent under the Exchange Control Act 1972 (and its related
regulations) has been obtained from the Bermuda Monetary
Authority for the issue and transfer of the Preferred Shares and
the Common
S-26
Shares into which the Preferred Shares being offered pursuant to
this Preferred Shares Offering will convert on the Mandatory
Conversion Date and between non-residents of Bermuda for
exchange control purposes, provided our shares remain listed on
an appointed stock exchange, which includes the NYSE. This
prospectus supplement and the accompanying prospectus will be
filed with the Registrar of Companies in Bermuda in accordance
with Bermuda law. In giving such consent, and in accepting this
prospectus supplement and the accompanying prospectus for
filing, neither the Bermuda Monetary Authority nor the Registrar
of Companies accepts any responsibility for the financial
soundness of any proposal or for the correctness of any of the
statements made or opinions expressed herein or therein.
The Financial Services and Markets Act 2000, as amended
(FSMA), regulates changes in control of
any U.K. insurance company authorized under FSMA. Any
company or individual that (together with its or his associates)
directly or indirectly holds 10% or more of the shares in the
parent company of a U.K. authorized insurance company, or
is entitled to exercise or control the exercise of 10% or more
of the voting power in such a parent company, would be
considered a controller for the purposes of the
relevant legislation, as would a person who had significant
influence over the management of such parent company by virtue
of his shareholding in it. A purchaser of 10% or more of the
Common Shares would therefore be considered to have acquired
control of Platinum UK.
Under FSMA, any person proposing to acquire control
over a U.K. authorized insurance company must give prior
notification to the Financial Services Authority
(FSA) of his intention to do so. In addition, if an
existing controller proposes to increase its control in excess
of certain thresholds set out in FSMA, that person must also
notify the FSA in advance. The FSA would then have three months
to consider that persons application to acquire or
increase control. In considering whether to approve
such application, the FSA must be satisfied both that the person
is a fit and proper person to have such control and
that the interests of consumers would not be threatened by such
acquisition of or increase in control. Failure to
make the relevant prior application would constitute a criminal
offense.
The foregoing provisions of our Bye-laws and legal restrictions
will have the effect of rendering more difficult or discouraging
unsolicited takeover bids from third parties or the removal of
incumbent management.
U.S. persons who own our Common Shares may have more
difficulty in protecting their interests than U.S. persons who
are shareholders of a U.S. corporation.
The Companies Act, which applies to Platinum Holdings and
Platinum Bermuda, differs in certain material respects from laws
generally applicable to U.S. corporations and their
shareholders, including with respect to interested directors,
business combination transactions with affiliates, shareholder
suits, and indemnification of directors and officers. Because of
these differences, U.S. persons who own Common Shares may
have more difficulty protecting their interests in Platinum
Holdings than they would in a corporation incorporated in a
U.S. jurisdiction. For further information on Bermuda law,
see Description of Our Share Capital in this
prospectus supplement and in the accompanying prospectus.
If we do not close the concurrent Common Shares Offering, the
market price for your Preferred Shares may be adversely
affected.
The separate offerings of Preferred Shares and Common Shares are
not contingent or conditional upon each other. Consequently, we
may consummate the Preferred Shares Offering without closing the
concurrent Common Shares Offering. A failure to consummate the
concurrent Common Shares Offering may have an adverse effect on
the market price of the Preferred Shares.
S-27
USE OF PROCEEDS
We expect the net proceeds to us from the Preferred Shares
Offering (assuming the exercise in full of the
underwriters overallotment option ) will be approximately
$167 million (assuming a public offering price of
$ per Preferred Share, and after deducting assumed
underwriting discounts and commissions and expenses payable by
us). We expect the net proceeds to us from the concurrent Common
Shares Offering (assuming the exercise in full of the
underwriters overallotment option) will be approximately
$126 million (assuming a public offering price of $30.08
per share, the last reported sale price of our Common Shares on
the NYSE on November 22, 2005, and after deducting assumed
underwriting discounts and commissions and expenses payable by
us). We expect to use the combined net proceeds to us from the
Preferred Shares Offering and the concurrent offering of Common
Shares by us to make contributions to the capital and surplus of
our reinsurance operating subsidiaries and for general corporate
purposes. We will not receive any proceeds from the sale of our
Common Shares by the selling shareholder in the concurrent
Common Shares Offering.
PRICE RANGE OF COMMON SHARES
Our Common Shares have been listed on the NYSE under the symbol
PTP since they were initially offered to the public
on October 29, 2002. Prior to that time, there had not been
a market for our Common Shares. The following table shows the
high and low per share sale prices of our Common Shares, as
reported on the NYSE for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
High | |
|
Low | |
|
|
| |
|
| |
FISCAL YEAR 2002
|
|
|
|
|
|
|
|
|
Fourth Quarter (from October 29, 2002)
|
|
$ |
26.79 |
|
|
$ |
24.10 |
|
FISCAL YEAR 2003
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
26.45 |
|
|
$ |
21.29 |
|
Second Quarter
|
|
$ |
28.70 |
|
|
$ |
24.00 |
|
Third Quarter
|
|
$ |
28.55 |
|
|
$ |
25.66 |
|
Fourth Quarter
|
|
$ |
32.05 |
|
|
$ |
26.80 |
|
FISCAL YEAR 2004
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
34.20 |
|
|
$ |
29.00 |
|
Second Quarter
|
|
$ |
34.00 |
|
|
$ |
30.00 |
|
Third Quarter
|
|
$ |
31.13 |
|
|
$ |
27.43 |
|
Fourth Quarter
|
|
$ |
31.13 |
|
|
$ |
27.25 |
|
FISCAL YEAR 2005
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
32.03 |
|
|
$ |
29.02 |
|
Second Quarter
|
|
$ |
32.15 |
|
|
$ |
26.43 |
|
Third Quarter
|
|
$ |
35.21 |
|
|
$ |
27.45 |
|
Fourth Quarter (through November 22, 2005)
|
|
$ |
31.58 |
|
|
$ |
27.10 |
|
On November 22, 2005, the last reported sale price of our
Common Shares on the NYSE was $30.08. As of May 10, 2005,
there were approximately 27 holders of record of our Common
Shares.
S-28
DIVIDEND POLICY ON COMMON SHARES
The board declared a dividend for the first quarter of 2005 of
$0.08 per Common Share which was paid on March 31, 2005 to
shareholders of record at the close of business on March 1,
2005. The board declared a dividend for the second quarter of
2005 of $0.08 per Common Share which was paid on June 30,
2005 to shareholders of record at the close of business on
June 1, 2005. The board declared a dividend for the third
quarter of 2005 of $0.08 per Common Share, which was paid on
September 30, 2005 to shareholders of record at the close
of business on September 1, 2005. The board declared a
dividend of $0.08 per Common Share, which will be paid on
December 30, 2005 to shareholders of record at the close of
business on December 1, 2005. The declaration and payment
of dividends is at the discretion of the board of directors, and
depends upon our results of operations and cash flows, the
financial positions and capital requirements of
Platinum US, Platinum UK and Platinum Bermuda, general
business conditions, legal, tax and regulatory restrictions on
the payment of dividends and other factors the board of
directors deems relevant. Accordingly, there is no assurance
that dividends will be declared or paid in the future.
Currently, there is no Bermuda withholding tax on dividends paid
by Platinum Holdings.
Platinum US is subject to regulatory constraints imposed by
Maryland insurance law, Platinum UK is subject to constraints
imposed by English law, Platinum Ireland is subject to
constraints imposed by Irish law, and Platinum Bermuda is
subject to constraints imposed by Bermuda law, which constraints
affect each of their ability to pay dividends to Platinum
Holdings. See Business Regulation in our
Annual Report on Form 10-K/A for the year ended
December 31, 2004.
We have agreed to adjust the exercise price of the options
granted to St. Paul and RenaissanceRe to the extent
dividend increases exceed 10% per year; however, we do not
expect that dividend increases, if any, will exceed such rate.
S-29
BUSINESS
General
Platinum Holdings is a Bermuda holding company organized in
2002. We provide property and marine, casualty and finite risk
reinsurance coverages, through reinsurance intermediaries, to a
diverse clientele of insurers and select reinsurers on a
worldwide basis. We operate through three licensed reinsurance
subsidiaries: Platinum US, Platinum Bermuda and
Platinum UK.
Platinum UK and Platinum Bermuda were formed in 2002 and
have no prior operating history or loss reserves subject to
development prior to January 1, 2002. Platinum US had
been an inactive licensed insurance company with no underwriting
activity prior to January 1, 2002. Platinum Ireland has no
business operations other than activity necessary to maintain
its corporate existence and its ownership of Platinum Finance
and Platinum UK. Platinum Finances activities have
generally been limited to raising funds through the issuances of
the Senior Guaranteed Notes, the 6.371% Notes and the
Series A 7.50% Notes and related remarketing and exchange
offers. Platinum Services activities are limited to
providing administrative services to the Company, including
legal, finance, actuarial, information technology and human
resources services. The following chart summarizes our corporate
structure:
Platinums Strategy
Our goal is to achieve attractive long-term returns for our
shareholders, while establishing Platinum as a disciplined risk
manager and market leader in selected classes of property and
casualty reinsurance, through the following strategies:
|
|
|
|
|
Operate as a Multi-Class Reinsurer. We seek to offer a
broad range of reinsurance coverage to our ceding companies. We
believe that this approach enables us to more effectively serve
our clients, diversify our risk and leverage our capital. |
|
|
|
Focus on profitability, not market share. Our management
team pursues a strategy that emphasizes profitability rather
than market share. Key elements of this strategy are prudent |
S-30
|
|
|
|
|
risk selection, appropriate pricing and adjustment of our
business mix to respond to changing market conditions. |
|
|
|
|
|
Exercise disciplined underwriting and risk management. We
exercise underwriting and risk management discipline by
(i) maintaining a diverse spread of risk in our book of
business across product lines and geographic zones,
(ii) emphasizing excess-of-loss contracts over proportional
contracts, (iii) managing our aggregate catastrophe
exposure through the application of sophisticated property
catastrophe modeling tools and (iv) monitoring our
accumulating exposures on our non-property catastrophe exposed
coverages. |
|
|
|
Operate from a position of financial strength. As of
September 30, 2005, we had a total capitalization of
$1,615,317,000. Our capital position is unencumbered by any
potential adverse development of unpaid losses for business
written prior to January 1, 2002. Our investment strategy
focuses on security and stability in our investment portfolio by
maintaining a diversified portfolio that consists primarily of
investment grade fixed-income securities. We believe these
factors, combined with our strict underwriting discipline, allow
us to maintain our strong financial position and to be
opportunistic when market conditions are most attractive. |
DESCRIPTION OF THE SERIES A MANDATORY CONVERTIBLE PREFERRED
SHARES
The following summary sets forth the material terms and
provisions of our Preferred Shares. This description may not be
complete in all respects, and is qualified in its entirety by
reference to the pertinent sections of our Memorandum of
Association, our Bye-laws and the Certificate of Designations
creating our Preferred Shares, copies of which are available
upon request to Platinum Holdings. Requests should be directed
to: Platinum Underwriters Holdings, Ltd., The Belvedere
Building, 69 Pitts Bay Road, Pembroke HM 08,
Bermuda, (441) 295-7195, Attention: Secretary.
General
Our Memorandum of Association and Bye-laws authorize the
issuance of up to 25,000,000 preferred shares, par value
$0.01 per share. No preferred shares are currently issued
or outstanding.
Our Preferred Shares will constitute a single series of our
preferred shares, consisting
of shares
(or shares
if the underwriters exercise in full their option to purchase
additional Preferred Shares in accordance with the procedures
set forth in Underwriting). The holders of our
Preferred Shares will have no preemptive rights. All of our
Preferred Shares, when issued and paid for, will be fully paid
and non-assessable.
Our Preferred Shares will rank as follows as to payment of
dividends and distributions of assets upon our dissolution,
liquidation or winding-up:
|
|
|
|
|
junior to any class or series of our share capital the terms of
which provide that such class or series will rank senior to our
Preferred Shares (herein referred to as the Senior
Securities); |
|
|
|
junior to all of our existing and future indebtedness; |
|
|
|
senior to our Common Shares and any other class or series of our
share capital the terms of which provide that such class or
series will rank junior to our Preferred Shares (herein referred
to as the Junior Securities); and |
|
|
|
on a parity with any other class or series of our share capital
(herein referred to as the Parity Securities); |
in each case, whether now outstanding or to be issued in the
future.
We will not be entitled to issue any class or series of our
share capital ranking senior to our Preferred Shares as to
payment of dividends or distribution of assets upon our
dissolution, liquidation or winding-up without the written
consent of the holders of at least three-quarters of our
Preferred Shares and any class or series of Voting Parity
Securities then outstanding, acting as a single class, or the
sanction
S-31
of a resolution passed by a majority of the votes cast at a
separate meeting of the holders of our Preferred Shares and any
class or series of Voting Parity Securities, acting as a single
class. Voting Parity Securities means any class or
series of Parity Securities issued by the Company, the terms of
which provide that holders thereof are entitled to vote or
consent with the holders of our Preferred Shares for the
election of additional directors or on any other matter as to
which the holders of our Preferred Shares are entitled to vote
or consent. See Voting Rights below.
All references in this description to holders are to
holders of record of our Preferred Shares, unless the context
otherwise requires.
Dividends
Holders of our Preferred Shares will be entitled to receive,
when, as and if declared by our board of directors or an
authorized committee of our board, out of funds legally
available for the payment of dividends under Bermuda law, cash
dividends from the date of issuance payable quarterly in arrears
on February 15, May 15, August 15 and
November 15 of each year prior to the Mandatory Conversion
Date (as defined below) (or the following business day if such
day is not a business day), and on the Mandatory Conversion Date
(each, a Dividend Payment Date) at the annual rate
of $ per share, subject to
adjustment for stock splits, combinations, reclassifications or
other similar events involving our Preferred Shares.
Under Bermuda law, Platinum Holdings may not lawfully declare or
pay a dividend if there are reasonable grounds for believing
that it is, or would after payment of the dividend be, unable to
pay its liabilities as they become due, or that the realizable
value of its assets would, after payment of the dividend, be
less than the aggregate value of its liabilities, issued share
capital and share premium accounts.
The initial dividend on our Preferred Shares, for the first
quarterly dividend period, assuming the date of issuance
is ,
2005, will be payable on February 15, 2006, in the amount
of
$ per
share, which reflects the time from the date of issuance through
February 14, 2006. Each subsequent quarterly dividend on
our Preferred Shares will be
$ per
share per full quarterly dividend period, subject to adjustment
for stock splits, combinations, reclassifications or other
similar events involving our Preferred Shares. The amount of
dividends payable for any other period that is shorter or longer
than a full quarterly dividend period will be computed on the
basis of a 360-day year consisting of twelve 30-day months.
A dividend period is the period ending on the day before a
Dividend Payment Date and beginning on the preceding Dividend
Payment Date or, if none, the first date of issuance of our
Preferred Shares. Dividends payable on a Dividend Payment Date
will be payable to holders as they appear on our share register
on the close of business on the first calendar day of the
calendar month in which the applicable Dividend Payment Date
falls.
Dividends on our Preferred Shares shall accrue and cumulate if
we fail to pay one or more dividends on our Preferred Shares in
any amount, whether or not the reason we failed to pay such
dividends was because we did not have sufficient lawful funds to
pay such dividends.
If we do not have sufficient lawful funds to pay in full the
dividends payable on any Dividend Payment Date, we shall pay on
such date the maximum amount of such dividends that we may
lawfully pay allocated pro rata among the holders as of the
applicable record date. To the extent we have sufficient lawful
funds to do so, we shall pay to each holder in respect of the
next succeeding Dividend Payment Date, in addition to the
regularly scheduled dividend payable on such date, an amount in
cash equal to such holders pro rata share at such time of
the accrued, cumulated and unpaid dividends that were not paid
on the previous Dividend Payment Date because of a lack of
lawful funds on such previous date.
We are not obligated to and we will not pay holders of our
Preferred Shares any interest or sum of money in lieu of
interest on any dividend not paid on a Dividend Payment Date or
any other late payment. We are also not obligated to and we will
not pay holders of our Preferred Shares any dividend in
S-32
excess of the full dividends on our Preferred Shares that are
payable as described above, except as described under
Voting Rights below. However, if we fail
for any reason to pay a dividend, the dividend will accumulate
on a daily basis and will compound on a quarterly basis, until
paid.
Unless all accrued, cumulated and unpaid dividends on our
Preferred Shares for all past quarterly dividend periods shall
have been paid in full, or shall have been declared and a sum
sufficient for the payment thereof set aside, we will not:
|
|
|
|
|
declare or pay any dividend or make any distribution of assets
on any Junior Securities, other than dividends or distributions
in the form of Junior Securities and cash solely in lieu of
fractional shares in connection with any such dividend or
distribution; |
|
|
|
redeem, purchase or otherwise acquire any Junior Securities or
pay or make any monies available for a sinking fund for such
Junior Securities, other than (A) upon conversion or
exchange solely for other Junior Securities, or (B) the
purchase of fractional interests in shares of any Junior
Securities for cash pursuant to the conversion or exchange
provisions of such Junior Securities; or |
|
|
|
redeem, purchase or otherwise acquire any Parity Securities,
except upon conversion into or exchange for other Parity
Securities or Junior Securities and cash solely in lieu of
fractional shares in connection with any such conversion or
exchange; provided, however, that in the case of a redemption,
purchase or other acquisition of Parity Securities upon
conversion into or exchange for other Parity Securities
(A) the aggregate amount of the liquidation preference of
such other Parity Securities does not exceed the aggregate
amount of the liquidation preference, plus accrued, cumulated
and unpaid dividends, of the Parity Securities that are
converted into or exchanged for such other Parity Securities,
(B) the aggregate number of Common Shares issuable upon
conversion, redemption or exchange of such other Parity
Securities does not exceed the aggregate number of Common Shares
issuable upon conversion, redemption or exchange of the Parity
Securities that are converted into or exchanged for such other
Parity Securities, and (C) such other Parity Securities
contain terms and conditions (including, without limitation,
with respect to the payment of dividends, dividend rates,
liquidation preferences, voting and representation rights,
payment restrictions, anti-dilution rights, change of control
rights, covenants, remedies and conversion and redemption
rights) that are not in the good faith judgment of our board of
directors materially less favorable, taken as a whole, to us or
the holders of our Preferred Shares than those contained in the
Parity Securities that are converted or exchanged for such other
Parity Securities. |
No Redemption
Our Preferred Shares will not be redeemable.
Mandatory Conversion
Each Preferred Share, unless previously converted, will
automatically convert on February 15, 2009 (the
Mandatory Conversion Date) into a number of Common
Shares equal to the conversion rate described below. In addition
to the number of Common Shares issuable upon conversion of each
Preferred Share on the Mandatory Conversion Date, holders will
have the right to receive an amount in cash equal to all
accrued, cumulated and unpaid dividends, whether or not
declared, on our Preferred Shares for the then current dividend
period until the Mandatory Conversion Date and all prior
dividend periods, provided that we have sufficient lawful funds
to pay such dividends at such time. To the extent that we do not
have sufficient lawful funds to pay in cash all of such accrued,
cumulated and unpaid dividends, the holders of Preferred Shares
on the Mandatory Conversion Date will be entitled to receive,
upon conversion of our Preferred Shares on the Mandatory
Conversion Date, an additional number of Common Shares per
Preferred Share equal to the amount of such accrued, cumulated
and unpaid dividends per share divided by the five-day average
market price as of the Mandatory Conversion Date.
S-33
Five-day average market price as of any date means
the arithmetic average of the volume-weighted average price per
common share for each of the five trading days (as defined
below) ending on the last trading day preceding the date in
question, as reported by Bloomberg Professional Service for the
period beginning at 9:30 am, New York City time, and ending
at 4:00 pm, New York City time. If, on any trading day no
volume-weighted average price is reported for the Common Shares
by Bloomberg Professional Service, the closing price (as defined
below) of our Common Shares will be substituted for the
volume-weighted average price for such day.
The conversion rate, which is the number of Common Shares
issuable upon conversion of each Preferred Share on the
Mandatory Conversion Date, will, subject to adjustment as
described under Anti-dilution
Adjustments below, be as follows:
|
|
|
|
|
if the applicable market value (as defined below) of our Common
Shares is equal to or greater than
$ ,
which we call the threshold appreciation price, then
the conversion rate will be equal to one minus a fraction, the
numerator of which will be
$ ,
which is the difference between the threshold appreciation price
and
$ ,
which we call the reference price, and the
denominator of which will be the applicable market value of our
Common Shares; |
|
|
|
if the applicable market value of our Common Shares is less than
$ (the
threshold appreciation price) but greater than
$ (the
reference price), then the conversion rate will be equal to
$ divided
by the applicable market value of our Common Shares; and |
|
|
|
if the applicable market value of our Common Shares is less than
or equal to
$ (the
reference price), then the conversion rate will be one common
share per mandatory convertible preferred share. |
Accordingly, assuming that the market price of our Common Shares
on the Mandatory Conversion Date is the same as the applicable
market value of our Common Shares, the aggregate market value of
the shares you receive upon conversion will be:
|
|
|
|
|
greater than the liquidation preference of our Preferred Shares
if the applicable market value is greater than the threshold
appreciation price; |
|
|
|
equal to the liquidation preference if the applicable market
value is less than or equal to the threshold appreciation price
and greater than or equal to the reference price; and |
|
|
|
less than the liquidation preference if the applicable market
value is less than the reference price. |
Applicable market value means the arithmetic average
of the volume-weighted average price of our Common Shares or
securities distributed in a spin-off, as applicable, for each of
the 20 trading days ending on the third business day immediately
preceding the applicable conversion date, as reported by
Bloomberg Professional Service for the period beginning at
9:30 am, New York City time, and ending at 4:00 pm,
New York City time. If the third business day prior to the
applicable conversion date is not a trading day, the 20-day
trading period will end on the last trading day prior to the
third business day prior to the applicable conversion date. If,
on any trading day no volume-weighted average price is reported
for our Common Shares or securities distributed in a spin-off,
as applicable, by Bloomberg Professional Service, the closing
price of our Common Shares or such other securities will be
substituted for the volume-weighted average price for such day.
The reference price is
$ ,
which is the last reported sale price of our Common Shares on
the NYSE on December , 2005.
The threshold appreciation price represents an
approximately % appreciation over
the reference price.
The closing price of our Common Shares or any
securities distributed in a spin-off, as the case may be, on any
date of determination means the closing sale price or, if no
closing sale price is reported, the last reported sale price of
our Common Shares or any such securities distributed in a
spin-off, as the case may be, on the NYSE on that date. If our
Common Shares or any such securities distributed in a spin-off,
as the case may be, are not traded on the NYSE on any date of
determination, the closing price of our Common Shares or such
securities on any date of determination means the closing sale
price as
S-34
reported in the composite transactions for the principal
U.S. national or regional securities exchange on which our
Common Shares or such securities are so listed or quoted, or if
our Common Shares or such securities are not so listed or quoted
on a U.S. national or regional securities exchange, as
reported by the Nasdaq stock market, or, if no closing price for
our Common Shares or such securities is so reported, the last
quoted bid price for our Common Shares or such securities in the
over-the-counter market as reported by the National Quotation
Bureau or similar organization, or, if that bid price is not
available, the market price of our Common Shares or such
securities on that date as determined by a nationally recognized
independent investment banking firm retained by us for this
purpose.
For purposes of this prospectus supplement, all references
herein to the closing price of our Common Shares on the NYSE
shall be such closing price as reflected on the website of the
NYSE (www.nyse.com) and as reported by Bloomberg Professional
Service; provided that in the event that there is a discrepancy
between the closing sale price as reflected on the website of
the NYSE and as reported by Bloomberg Professional Service, the
closing sale price on the website of the NYSE shall govern.
A trading day means a day on which our Common Shares:
|
|
|
|
|
are not suspended from trading on at least one national or
regional securities exchange or association or over-the-counter
market at the close of business; and |
|
|
|
have traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the
primary market for the trading of our Common Shares. |
Conversion
Conversion into our Common Shares will occur on the Mandatory
Conversion Date, unless:
|
|
|
|
|
the holder of our Preferred Shares has converted its Preferred
Shares prior to the Mandatory Conversion Date, in the manner
described in Early Conversion at the Option of
the Holder below; or |
|
|
|
we are involved in an amalgamation, merger or consolidation
prior to the Mandatory Conversion Date in which our Common
Shares outstanding immediately prior to such amalgamation,
merger or consolidation are exchanged for consideration
consisting of at least 30% cash or cash equivalents, and the
holder of our Preferred Shares has converted its Preferred
Shares through an exercise of the merger early conversion right
in the manner described in Early Conversion
upon Cash Merger below. |
On the Mandatory Conversion Date, a certificate or certificates
representing Common Shares will be issued and delivered to the
holder of our Preferred Shares or such holders designee
upon presentation and surrender of the certificate or
certificates evidencing such holders Preferred Shares, if
such holders Preferred Shares are held in certificated
form, and compliance with some additional procedures.
The person or persons entitled to receive the Common Shares
issuable upon conversion of our Preferred Shares will be treated
for all purposes as the record holder(s) of such Common Shares
as of the close of business on the applicable conversion date.
Prior to the close of business on the applicable conversion
date, the Common Shares issuable upon conversion of our
Preferred Shares will not be deemed to be outstanding for any
purpose and the holders of our Preferred Shares will have no
rights with respect to the Common Shares, including voting
rights, rights to respond to tender offers for Common Shares and
rights to receive any dividends or other distributions on the
Common Shares, by virtue of holding our Preferred Shares.
Early Conversion at the Option of the Holder
Our Preferred Shares are convertible, in whole or in part at the
option of the holder, at any time prior to the Mandatory
Conversion Date, into our Common Shares at the conversion rate
of Common
Shares per Preferred Share, subject to adjustment as described
under Anti-dilution Adjustments below.
We refer to this conversion as the early conversion.
S-35
A holder that has exercised an early conversion right shall be
entitled to receive, in addition to the number of Common Shares
provided for above, an amount in cash equal to the sum of all
accrued, cumulated and unpaid dividends on each Preferred Share
being converted, whether or not declared, for the portion of the
then current dividend period until the effective date of the
early conversion and all prior dividend periods (other than
previously declared dividends on such Preferred Share payable to
a holder or holders of record as of a prior date), provided that
the we are then legally permitted to pay such dividends. Except
as described above, we will make no payment or allowance for
unpaid dividends on the Preferred Shares being converted in any
early conversion.
Early Conversion upon Cash Merger
If we are involved in an amalgamation, merger, or consolidation
prior to the Mandatory Conversion Date in which our Common
Shares outstanding immediately prior to such amalgamation,
merger or consolidation are exchanged for consideration
consisting of at least 30% cash or cash equivalents, which we
refer to as a cash merger, then the holders of our
Preferred Shares will have the right to convert their Preferred
Shares at the conversion rate determined as set forth under
Mandatory Conversion above, subject to
adjustment as described under Anti-dilution
Adjustments below. We refer to this conversion as the
merger early conversion. We or the surviving
corporation in the amalgamation, merger, or consolidation will
provide each holder of our Preferred Shares with a notice of the
occurrence of a cash merger within five business days thereof.
The notice will specify the conversion date, which shall be not
less than 20 nor more than 35 calendar days after the date
of the notice, on which the merger early conversion will be
effected and the date by which each holders merger early
conversion right must be exercised, which date shall be on, or
one business day prior to, the date on which the merger early
conversion will be effected. The notice will set forth, among
other things, the applicable conversion rate (calculated as if
the trading day immediately preceding the cash merger were the
Mandatory Conversion Date) and the kind and amount of cash,
securities and other property receivable by the holder upon
conversion. To exercise the merger early conversion right, a
holder must deliver to the transfer agent, on or before
5:00 p.m. New York City time on the date specified in the
notice, the certificates evidencing such holders Preferred
Shares, if such holders Preferred Shares are held in
certificated form. If a holder exercises the merger early
conversion right, we or the surviving corporation will deliver
or cause to be delivered to such holder on the date that the
merger early conversion is effected the net cash, securities and
other property that such holder would have been entitled to
receive if such holder had converted such holders
Preferred Shares immediately preceding the cash merger at the
conversion rate in effect at such time as described above,
assuming that such holder was not the counterparty to the cash
merger or an affiliate of such counterparty and did not exercise
any rights of election with respect to the kind or amount of
consideration to be received. If a holder does not elect to
exercise the merger early conversion right in lieu of Common
Shares, we or the surviving corporation will deliver to such
holder, on the Mandatory Conversion Date or any applicable
conversion date, such net cash, securities or other property
determined in accordance with the provisions set forth below
governing Reorganization Events (as defined below).
A holder that has exercised a merger early conversion right
shall be entitled to receive, in addition to the net cash,
securities and other property provided for above, an amount in
cash equal to the sum of all accrued, cumulated and unpaid
dividends on each Preferred Share being converted, whether or
not declared, for the portion of the then current dividend
period until the effective date of the merger early conversion
and all prior dividend periods (other than previously declared
dividends on such Preferred Share payable to a holder or holders
of record as of a prior date), provided that we are then legally
permitted to pay such dividends. Except as described above, we
will make no payment or allowance for unpaid dividends on the
Preferred Shares being converted in any merger early conversion.
Anti-dilution Adjustments
The conversion rate determined as set forth under
Mandatory Conversion above and the
number of Common Shares to be delivered upon conversion will be
adjusted if:
|
|
|
(1) We pay dividends or other distributions on our Common
Shares in our Common Shares. |
S-36
|
|
|
(2) We subdivide, split or combine our Common Shares. |
|
|
(3) We issue to all holders of our Common Shares rights or
warrants (other than rights or warrants issued pursuant to a
dividend reinvestment plan or share purchase plan or other
similar plans) entitling them, for a period of up to
45 days from the date of issuance of such rights or
warrants, to subscribe for or purchase our Common Shares at a
price per share less than the current market price
(as defined below) of our Common Shares on the date fixed for
the determination of shareholders entitled to receive such
rights or warrants. |
|
|
(4) We distribute to all holders of our Common Shares
evidences of our indebtedness, capital shares, securities, cash
or other assets, including a distribution of capital shares of
any class or series or similar equity interests, of or relating
to a subsidiary or other business unit in the case of a
spin-off, but excluding any dividend or distribution covered by
clauses (1) or (2) above, any rights or warrants referred
to in clauses (3) above or (8) below, any dividend or
distribution paid exclusively in cash, and any consideration
payable in connection with a tender or exchange offer made by
us, any of our subsidiaries or any third party. |
|
|
(5) We make a distribution consisting exclusively of cash
to all holders of our Common Shares, excluding (a) any cash
dividend on our Common Shares to the extent that the aggregate
cash dividend per Common Share does not exceed (i) $0.08 in
any fiscal quarter in the case of a quarterly dividend or
(ii) $0.32 in the prior twelve months in the case of an
annual dividend (each such number, the dividend threshold
amount), (b) any cash that is distributed in a
Reorganization Event (as defined below) or as part of a
distribution referred to in clause (4) above, (c) any
dividend or distribution in connection with our liquidation,
dissolution or winding-up, and (d) any consideration
payable in connection with a tender or exchange offer made by us
or any of our subsidiaries or any third party. |
|
|
The dividend threshold amount is subject to adjustment on an
inversely proportional basis whenever the conversion rate is
adjusted, provided that no adjustment will be made to the
dividend threshold amount for any adjustment made to the
conversion rate pursuant to this clause (5) or
clauses (3), (4), (6) or (7). |
|
|
(6) We or any of our subsidiaries successfully completes a
tender or exchange offer for our Common Shares to the extent
that the cash and the value of any other consideration included
in the payment per common share exceeds the current market price
of our Common Shares on the seventh trading day next succeeding
the last date on which tenders or exchanges may be made pursuant
to such tender or exchange offer. |
|
|
(7) Someone other than us or one of our subsidiaries makes
a payment in respect of a tender offer or exchange offer with
respect to which, as of the expiration time of the offer, our
board of directors is not recommending rejection. The adjustment
referred to in this clause (7) will only be made if: |
|
|
|
|
|
the tender offer or exchange offer is for an amount that
increases the offerors ownership of Common Shares to more
than 30% of the total Common Shares outstanding; and |
|
|
|
the tender offer or exchange offer requires payment to
shareholders of an aggregate consideration per Common Share that
exceeds the current market price per Common Share on the seventh
trading day next succeeding the last date on which tenders or
exchanges could have been made pursuant to the tender or
exchange offer. |
|
|
|
However, the adjustment referred to in this clause (7) will
not be made if, as of the closing of the offer, the offering
documents disclose a plan or an intention to cause us to engage
in an amalgamation, merger or consolidation or a sale of all or
substantially all of our assets. |
|
|
(8) To the extent that we have a shareholder rights plan in
effect with respect to our Common Shares on any conversion date,
in accordance with the terms of the shareholder rights |
S-37
|
|
|
plan, upon conversion of any of our Preferred Shares, the
holders of our Preferred Shares will receive, in addition to our
Common Shares, the rights under the shareholder rights plan. If,
however, prior to such conversion date, the rights have
separated from our Common Shares and the holders of our
Preferred Shares do not receive upon conversion, in addition to
our Common Shares, the rights under the plan, the conversion
rate will be adjusted at the time of separation as if we made a
distribution to all holders of our Common Shares as described in
clause (4) above, subject to readjustment in the event of
the expiration, termination or redemption of such rights. In
lieu of any such adjustment, we may amend our shareholder rights
plan to provide that upon conversion of our Preferred Shares,
the holders will receive, in addition to our Common Shares
issuable upon such conversion, the rights that would have
attached to such Common Shares if the rights had not been
separated from our Common Shares under our shareholder rights
plan. |
The current market price means the arithmetic
average of the volume-weighted average price per share of our
Common Shares on each of the five consecutive trading days
preceding the earlier of the day preceding the date in question
and the day before the ex date with respect to the
issuance or distribution requiring such computation, as reported
by Bloomberg Professional Service for the period beginning on
9:30 a.m., New York City time, and ending at 4:00 p.m.
New York City time; provided, however, that
(a) current market price for purposes of
clauses (6) and (7) above means the arithmetic average
of the volume-weighted average price per share of our Common
Shares for each of the ten trading days preceding the date fixed
for determination, described above and, (b) for the
purposes of determining the adjustment to the conversion rate
for the purposes of clause (4) in the event of a spin-off,
the current market price per common share means the
average of the volume-weighted average prices described above
for the first ten trading days commencing on and including the
fifth trading day following the ex date for
such distribution. For purposes of this paragraph, the term
ex date, when used with respect to any such
issuance or distribution, means the first date on which our
Common Shares trade without the right to receive such issuance
or distribution.
In the event of (a) any amalgamation, consolidation or
merger of us with or into another person (other than an
amalgamation, merger or consolidation in which we are the
continuing company and in which the Common Shares outstanding
immediately prior to the amalgamation, merger or consolidation
are not exchanged for cash, securities or other property of us
or another person), (b) any sale, transfer, lease or
conveyance to another person of all or substantially all of our
property and assets, (c) any reclassification of our Common
Shares into securities other than our Common Shares, or
(d) any statutory exchange of our securities with another
person (other than in connection with an amalgamation, merger or
acquisition) (herein referred to as Reorganization
Events), each of our Preferred Shares outstanding
immediately prior to such Reorganization Event will, without the
consent of the holders of our Preferred Shares, become
convertible into the kind of securities, cash and other property
receivable in such Reorganization Event (without interest
thereon and without any right to dividends or distributions
thereon which have a record date prior to the date such
Preferred Shares are actually converted) per Common Share by a
holder of our Common Shares that was not the counterparty to the
Reorganization Event or an affiliate of such counterparty and
did not exercise any rights of election as to the kind or amount
of consideration receivable upon such Reorganization Event.
Holders have the right to convert their Preferred Shares early
in the event of certain cash mergers as described under
Early Conversion upon Cash Merger above.
In addition, we may make such increases in the conversion rate,
determined as set forth under Mandatory
Conversion above as our board of directors deems advisable
to avoid or diminish any income tax to holders of our Common
Shares resulting from any dividend or distribution of our Common
Shares (or issuance of rights or warrants to acquire our shares)
or from any event treated as such for income tax purposes or for
any other reason.
In the event of a taxable distribution to holders of our Common
Shares that results in an adjustment of the conversion rate or
an increase in the conversion rate in our discretion, holders of
our Preferred Shares may, in certain circumstances, be deemed to
have received a distribution subject to U.S. federal income
tax as a dividend. In addition, non-U.S. holders of our
Preferred Shares may, in
S-38
certain circumstances, be deemed to have received a distribution
subject to U.S. federal withholding tax requirements.
Adjustments to the conversion rate will be calculated to the
nearest 1/10,000th of a Common Share. Prior to the Mandatory
Conversion Date, no adjustment in the conversion rate will be
required unless such adjustment would require an increase or
decrease of at least one percent in the conversion rate. If any
adjustment is not required to be made because it would not
change the conversion rate by at least one percent, then the
adjustment will be carried forward and taken into account in any
subsequent adjustment; provided that on the Mandatory Conversion
Date, adjustments to the conversion rate will be made with
respect to any such adjustment carried forward and which has not
been taken into account before such date.
No adjustment to the conversion rate need be made if holders of
our Preferred Shares may participate in the transaction that
would otherwise give rise to an adjustment, including through
the receipt of such distributed assets or securities upon
conversion of our Preferred Shares, so long as the distributed
assets or securities the holders would receive upon conversion
of our Preferred Shares, if convertible, exchangeable or
exercisable, are convertible, exchangeable or exercisable, as
applicable, without any loss of rights or privileges for a
period of at least 45 days following conversion of our
Preferred Shares.
The conversion rate will not be adjusted:
|
|
|
(a) upon the issuance of any of our Common Shares pursuant
to any present or future plan providing for the reinvestment of
dividends or interest payable on our securities and the
investment of additional optional amounts in our Common Shares
under any employee benefit plan; |
|
|
(b) upon the issuance of any of our Common Shares or rights
or warrants to purchase those shares pursuant to any present or
future employee, director or consultant benefit plan or program
of or assumed by us or any of our subsidiaries; |
|
|
(c) upon the issuance of any of our Common Shares pursuant
to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date our Preferred
Shares were first issued or pursuant to the conversion of our
Preferred Shares; |
|
|
(d) for a change in the par value or to no par value of the
Common Shares; |
|
|
(e) for accrued, cumulated and unpaid dividends; or |
|
|
(f) upon the issuance by us of any Common Shares for cash
or in connection with acquisitions (other than upon the exercise
of rights or warrants as provided in clauses (3)
or (4) in the first paragraph under
Anti-dilution Adjustments). |
We will be required, as soon as practicable after the conversion
rate is adjusted, to provide or cause to be provided written
notice of the adjustment to the holders of our Preferred Shares.
We will also be required to deliver a statement setting forth in
reasonable detail the method by which the adjustment to each
conversion rate was determined and setting forth each revised
conversion rate.
If an adjustment is made to the conversion rate, an adjustment
also will generally be made to the threshold appreciation price
and the reference price solely for the purposes of determining
which clauses of the definition of the conversion rate will
apply on the conversion date.
Fractional Shares
No fractional Common Shares will be issued as a result of any
conversion of our Preferred Shares. In lieu of any fractional
Common Share otherwise issuable in respect of any conversion, we
will pay an amount in cash (computed to the nearest cent) equal
to the same fraction of the average of the daily closing price
per common share for each of the five consecutive trading days
preceding the trading day immediately preceding the date of
conversion.
If more than one Preferred Share is surrendered for conversion
at one time by or for the same holder, the number of full Common
Shares issuable upon conversion thereof shall be computed on the
basis of the aggregate number of Preferred Shares so surrendered.
S-39
Common Share Rights
Reference is made to the Description of Our Share
Capital for a description of the rights of holders of
Common Shares to be delivered upon conversion of our Preferred
Shares.
Liquidation Rights
In the event of our voluntary or involuntary liquidation,
dissolution or winding-up, subject to the rights of holders of
any of our capital shares then outstanding ranking senior to or
on a parity with our Preferred Shares in respect of
distributions upon our liquidation, dissolution or winding-up
and before any amount shall be paid or distributed with respect
to holders of any of our capital shares then outstanding ranking
junior to our Preferred Shares in respect of distributions upon
our liquidation, dissolution or winding-up, the holders of our
Preferred Shares then outstanding will be entitled to receive,
out of our net assets legally available for distribution to
shareholders, a liquidating distribution in the amount of
$ per
share, subject to adjustment for stock splits, combinations,
reclassifications or other similar events involving our
Preferred Shares, plus an amount equal to the sum of all
accrued, cumulated and unpaid dividends for the portion of the
then-current dividend period until the payment date and all
prior dividend periods.
For the purpose of the immediately preceding paragraph, none of
the following will constitute or be deemed to constitute a
voluntary or involuntary liquidation, dissolution or winding-up
of our affairs:
|
|
|
|
|
the sale, transfer, lease or conveyance of all or substantially
all of our property and assets; |
|
|
|
the consolidation, amalgamation or merger of us with or into any
other person; or |
|
|
|
the consolidation, amalgamation or merger of any other person
with or into us. |
If amounts payable with respect to our Preferred Shares upon our
voluntary or involuntary liquidation, dissolution or winding-up
are not paid in full, the holders of our Preferred Shares and
the holders of any class or series of Parity Securities then
outstanding shall share ratably in any distribution of assets
based on the proportion of their full respective liquidation
preference to the aggregate liquidation preference of the
outstanding shares of all such series.
After the payment to the holders of our Preferred Shares of the
full amounts described above, the holders of our Preferred
Shares will have no right or claim to any of our remaining
assets.
Voting Rights
The holders of our Preferred Shares are not entitled to any
voting rights, except as required by applicable law, our
Bye-laws and as described below.
From and after the date on which our Bye-laws are amended to
delete the voting limitation described below that may otherwise
be applicable to our Preferred Shares (the Bye-law
Amendment Date), unless the approval of a greater number
of our Preferred Shares is required by law, we may not, without
the written consent of the holders of at least three-quarters of
our Preferred Shares then outstanding, or the sanction of a
resolution passed by a majority of the votes cast at a separate
meeting of the holders of our Preferred Shares then outstanding,
amend, alter or repeal any provisions of our Bye-laws or any
provisions of the Certificate of Designations creating our
Preferred Shares by way of merger, consolidation, amalgamation,
combination, reclassification or otherwise, so as to affect
adversely the rights, preferences or voting powers of the
holders of our Preferred Shares; provided, however, that any
amendment of the provisions of the Bye-laws or other action that
in either case has the effect of issuing, authorizing or
increasing the authorized amount of, or issuing or authorizing
any obligation or security convertible into or evidencing a
right to purchase, any Parity Securities or Junior Securities
shall be deemed not to affect adversely any right, preference or
voting power of the holders of our Preferred Shares.
Notwithstanding anything in the foregoing to the contrary, any
amendment, alteration or repeal of any of the provisions of our
Bye-laws or any provisions of the Certificate of Designations
creating our Preferred Shares occurring in connection with any
merger, consolidation or amalgamation of us of the type
described in clause (a) of the definition of Reorganization
Events (as defined above) or any statutory exchange of our
securities with another person (other than in connection with a
merger, amalgamation or
S-40
acquisition) of the type described in clause (d) of the
definition of Reorganization Events shall be deemed not to
adversely affect any right, preference or voting power of the
holders of our Preferred Shares; provided that, subject to a
holders merger early conversion right, in the event that
we do not survive the transaction, our Preferred Shares will
become shares of the successor person, having in respect of such
successor person the same rights, preferences or voting powers
of the holders of our Preferred Shares immediately prior to the
consummation of such merger, consolidation, amalgamation or
statutory exchange except that they shall be convertible into
the kind and amount of net cash, securities and other property
as determined in accordance with the provisions set forth above
governing Reorganization Events; and provided, further, that,
following any such merger, consolidation, amalgamation or
statutory exchange, such successor person shall succeed to and
be substituted for us with respect to, and may exercise all of
our rights and powers under, the Preferred Shares.
In addition, from and after the Bye-law Amendment Date, unless
the approval of a greater number of our Preferred Shares is
required by law, we may not, without the written consent of the
holders of at least three-quarters of our Preferred Shares and
any class or series of Voting Parity Securities then
outstanding, acting together as a single class, or the sanction
of a resolution passed by a majority of the votes cast at a
separate meeting of the holders of our Preferred Shares and any
class or series of Voting Party Securities then outstanding,
voting as a single class:
|
|
|
|
|
reclassify any of our authorized share capital into any shares
of any class, or any obligation or security convertible into or
evidencing a right to purchase such shares, ranking senior to
our Preferred Shares as to payment of dividends or distribution
of assets upon our dissolution, liquidation or winding-up; or |
|
|
|
issue, authorize or increase the authorized amount of, or issue
or authorize any obligation or security convertible into or
evidencing a right to purchase, any shares of any class or
series ranking senior to our Preferred Shares as to payment of
dividends or distribution of assets upon our dissolution,
liquidation or winding-up; provided, however, that we may issue,
authorize or increase the authorized amount of, or issue or
authorize any obligation or security convertible into or
evidencing a right to purchase, any shares of any class or
series ranking on a parity with or junior to our Preferred
Shares as to payment of dividends or distribution of assets upon
our dissolution, liquidation or winding-up without the written
consent or vote of the holders of our Preferred Shares and any
class or series of Voting Parity Securities. |
From and after the Bye-law Amendment Date, if and whenever
dividends payable on our Preferred Shares or any class or series
of Voting Parity Securities in an amount equal to six full
quarterly dividends, whether or not consecutive, are not paid or
otherwise declared and set aside for payment, the holders of our
Preferred Shares and any class or series of Voting Parity
Securities then outstanding, voting together as a single class,
shall be entitled to elect two additional directors to our board
of directors. If all accrued, cumulated and unpaid dividends in
default on our Preferred Shares and any class or series of
Voting Parity Securities then outstanding have been paid in full
or otherwise declared and set aside for payment or such shares
are no longer outstanding, the holders of our Preferred Shares
and any class or series of Voting Parity Securities will no
longer have the right to vote on directors and the term of
office of each director so elected will terminate forthwith and
the number of directors constituting our board will, without
further action, be reduced accordingly.
For purposes of determining whether the requisite number of
shares have consented or voted, any shares beneficially owned
directly or indirectly by us or any entity controlled by us will
not be counted.
We have has agreed with the underwriters in this offering that,
no later than December 31, 2006, it will present to its
shareholders for approval a resolution proposing that
Article 51(4) of the Bye-laws (which may be interpreted to
limit the voting rights of the Preferred Shares) be deleted in
its entirety and will recommend to the shareholders that such
resolution be approved and adopted; and, promptly following such
approval and adoption, Platinum Holdings will so amend the
Bye-laws. If the Bye-laws have not been so amended by
December 31, 2006 (a Voting Default), then, as
liquidated damages for such Voting Default, for the period from
January 1, 2007 until the Bye-law Amendment Date,
additional amounts, in
S-41
addition to regular dividends, shall accrue on our outstanding
Preferred Shares at a per annum rate of 0.25% of the aggregate
liquidation preference of our outstanding Preferred Shares
during the first 90-day period following the occurrence of such
Voting Default, and at a per annum rate of 0.50% thereafter for
any remaining period during which a Voting Default continues.
Liquidated damages shall be paid on Dividend Payment Dates to
the holders of record for the payment of dividends. We have
agreed with the underwriters in this offering that, prior to the
Bye-law Amendment Date, we will not take any action which would
be deemed to vary the rights attached to our Preferred Shares as
outlined above.
The holders of our Preferred Shares will have a right to vote on
any amalgamation of us as provided in Section 106(3) of the
Companies Act and to vote separately as a class as provided in
Section 106(4) of the Companies Act if the amalgamation
contains a provision which would constitute a variation of the
rights attaching to our Preferred Shares. Notwithstanding the
foregoing, holders of our Preferred Shares are not entitled to
vote on any sale of all or substantially all of our assets.
For purposes of any vote by the holders of our Preferred Shares,
each holder will have one vote for each Preferred Share held. In
any case, where the holders of our Preferred Shares are entitled
to vote as a class with holders of any class or series of voting
Parity Securities, each class or series shall have the number of
votes proportionate to the aggregate liquidation preference of
its outstanding shares.
Miscellaneous
We will at all times reserve and keep available out of our
authorized and unissued Common Shares, solely for issuance upon
the conversion of our Preferred Shares, that number of Common
Shares as shall from time to time be issuable upon the
conversion of all our Preferred Shares then outstanding. Any
Preferred Shares converted into Common Shares or otherwise
reacquired by us shall not be reissued as such, shall
automatically be retired and resume the status of authorized and
unissued preferred shares, undesignated as to series, and shall
be available for subsequent issuance.
Transfer Agent, Registrar and Paying Agent
Mellon Investor Services, LLC will act as transfer agent,
registrar and paying agent for the payment of dividends for our
Preferred Shares.
Title
We and the transfer agent, registrar and paying agent may treat
the registered holder of our Preferred Shares as the absolute
owner of our Preferred Shares for the purpose of making payment
and settling the related conversions and for all other purposes,
except as may otherwise be required by applicable law.
Book-Entry, Delivery and Form
The Depository Trust Company, or DTC, will act as securities
depositary for our Preferred Shares. Our Preferred Shares will
be issued only as fully registered securities, and except in the
limited circumstances described below, will be registered in the
name of Cede & Co. or other nominee of the depositary. One
or more fully registered global security certificates,
representing the total aggregate number of our Preferred Shares,
will be issued and deposited with or on behalf of the depositary
and will bear a legend regarding the restrictions on exchanges
and registration of transfer referred to below.
The laws of some jurisdictions require that some purchasers of
securities take physical delivery of securities in definitive
form. Those laws may impair the ability to transfer beneficial
interests in our Preferred Shares so long as our Preferred
Shares are represented by global security certificates.
The depositary is a limited-purpose trust company organized
under the New York Banking Law, a banking
organization within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a clearing
corporation within the meaning of the New York Uniform
Commercial Code and a clearing agency registered
pursuant to the provisions of Section 17A of the Exchange
Act.
The depositary holds securities that its participants deposit
with the depositary. The depositary also facilitates the
settlement among participants of securities transactions,
including transfers and pledges,
S-42
in deposited securities through electronic computerized
book-entry changes in participants accounts, thus
eliminating the need for physical movement of securities
certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and
certain other organizations. The depositary is owned by a number
of its direct participants and by the NYSE, the American Stock
Exchange LLC and the National Association of Securities Dealers,
Inc., collectively referred to as participants. Access to the
depositary system is also available to others, including
securities brokers and dealers, banks and trust companies that
clear transactions through or maintain a direct or indirect
custodial relationship with a direct participant, collectively
referred to as indirect participants. The rules applicable to
the depositary and its participants are on file with the SEC.
Except as otherwise required by applicable law, none of our
Preferred Shares represented by global security certificates may
be exchanged in whole or in part for our Preferred Shares
registered, and no transfer of global security certificates will
be made in whole or in part for our Preferred Shares registered,
and no transfer of global security certificates in whole or in
part may be registered, in the name of any person other than the
depositary or any nominee of the depositary, unless (i) the
depositary has notified us that it is unwilling or unable to
continue as depositary for the global security certificates and
we do not appoint a qualified replacement within 90 days,
(ii) the depositary has ceased to be qualified to act as
such and we do not appoint a qualified replacement within
90 days, or (iii) we decide to discontinue the use of
book-entry transfer through the depositary (or any successor
depositary). All of our Preferred Shares represented by one or
more global security certificates or any portion of them will be
registered in those names as the depositary may direct.
As long as the depositary or its nominee is the registered owner
of the global security certificates, the depositary or that
nominee will be considered the sole owner and holder of the
global security certificates and all of our Preferred Shares
represented by those certificates for all purposes under our
Preferred Shares, except as otherwise required by applicable
law. Notwithstanding the foregoing, nothing herein shall prevent
us, the transfer agent or any agent of ours or the transfer
agent from giving effect to any written certification, proxy or
other authorization furnished by the depositary or impair, as
between the depositary and its members or participants, the
operation of customary practices of the depositary governing the
exercise of the rights of a holder of a beneficial interest in
any global security certificates. The depositary or any nominee
of the depositary may grant proxies or otherwise authorize any
person to take any action that the depositary or such nominee is
entitled to take pursuant to our Preferred Shares, the
Certificate of Designations creating our Preferred Shares or our
Bye-laws.
Except in the limited circumstances referred to above or as
otherwise required by applicable law, owners of beneficial
interests in global security certificates will not be entitled
to have the global security certificates or their Preferred
Shares represented by those certificates registered in their
names, will not receive or be entitled to receive physical
delivery of certificates evidencing their Preferred Shares in
exchange and will not be considered to be owners or holders of
the global security certificates or any of our Preferred Shares
represented by those certificates for any purpose under our
Preferred Shares. All payments on our Preferred Shares
represented by the global security certificates and all related
transfers and deliveries of Common Shares will be made to the
depositary or its nominee as their holder.
Ownership of beneficial interests in the global security
certificates will be limited to participants or persons that may
hold beneficial interests through institutions that have
accounts with the depositary or its nominee. Ownership of
beneficial interests in global security certificates will be
shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by the
depositary or its nominee with respect to participants
interests or by the participants with respect to interests of
persons held by the participants on their behalf.
Procedures for conversion of the Preferred Shares on the
Mandatory Conversion Date or upon early conversion will be
governed by arrangements among the depositary, participants and
persons that may hold beneficial interests through participants
designed to permit the settlement without the physical movement
of certificates. Payments, transfers, deliveries, exchanges and
other matters relating to beneficial interests in global
security certificates may be subject to various policies and
procedures adopted by the depositary from time to time.
S-43
Neither we nor any of our agents will have any responsibility or
liability for any aspect of the depositarys or any
participants records relating to, or for payments made on
account of, beneficial interests in global security
certificates, or for maintaining, supervising or reviewing any
of the depositarys records or any participants
records relating to those beneficial ownership interests.
The information in this section concerning the depositary and
its book-entry system has been obtained from sources that we
believe to be reliable, but we do not take responsibility for
its accuracy.
Replacement of Mandatory Convertible Preferred Share
Certificates
If physical certificates are issued, we will replace any
mutilated certificate at the holders expense upon
surrender of that certificate to the transfer agent. We will
replace certificates that become destroyed, stolen or lost at
the holders expense upon delivery to us and the transfer
agent of satisfactory evidence that the certificate has been
destroyed, stolen or lost, together with an indemnity
satisfactory to the transfer agent and us.
However, we are not required to issue any certificates
representing our Preferred Shares on or after the Mandatory
Conversion Date. In place of the delivery of a replacement
certificate following the Mandatory Conversion Date, the
transfer agent, upon delivery of the evidence and indemnity
described above, will deliver the Common Shares or cash,
securities and other property required to be delivered pursuant
to the terms of our Preferred Shares formerly evidenced by the
certificate.
DESCRIPTION OF OUR SHARE CAPITAL
The following description of the share capital of Platinum
Holdings summarizes certain provisions of our Bye-laws, and is
qualified in its entirety by reference to such Bye-laws. A copy
of Platinum Holdings Bye-laws is filed as an exhibit to
Platinum Holdings Quarterly Report on Form 10-Q for
the quarter ended June 30, 2004, filed with the SEC on
August 6, 2004.
General
As of November 22, 2005 Platinum Holdings authorized
share capital consisted of: (i) 200,000,000 Common Shares,
par value $0.01 per share, of which 54,654,037 Common Shares
were outstanding and (ii) 25,000,000 preferred shares, par
value $0.01 per share, none of which were outstanding. As of
May 10, 2005, there were approximately 27 holders of record
of our Common Shares, including RenaissanceRe, which held
3,960,000 Common Shares and an option to acquire a number of
Common Shares equal to the excess of the market price per share
over $27.00 less the par value per share multiplied by the
number of Common Shares issuable upon exercise of the option,
divided by that market price per share. Based on the closing
price per share for the ten day period ending on
November 22, 2005, RenaissanceRe had the right to acquire
pursuant to the RenaissanceRe option 278,000 Common Shares
as of such date, resulting in the beneficial ownership by
RenaissanceRe of 4,238,000 Common Shares as of such date
(or 7.7% of the then outstanding Common Shares). In the
concurrent Common Shares Offering, RenaissanceRe is offering to
sell all of its 3,960,000 Common Shares pursuant to a separate
prospectus supplement and accompanying prospectus. Prior to
June 30, 2004, St. Paul owned 6,000,000 Common Shares. On
that date, those Common Shares were sold in an underwritten
public offering effected pursuant to an effective universal
shelf registration statement filed with the SEC in 2004. St.
Paul continues to hold options to acquire a number of Common
Shares determined on the same basis as the RenaissanceRe option
described above. Based on the closing price per share for the
ten day period ending on November 22, 2005, St. Paul had
the right to acquire pursuant to the St. Paul options
668,000 Common Shares (or 1.2% of the then-outstanding
Common Shares) as of such date.
Common Shares
Holders of Common Shares have no pre-emptive, redemption,
conversion or sinking fund rights, provided, however, that
pursuant to a Transfer Restrictions, Registration Rights and
Standstill Agreement between the Company and RenaissanceRe dated
as of November 1, 2002, Platinum Holdings has granted
RenaissanceRe the preemptive rights specified therein.
RenaissanceRe has waived its preemptive rights in connection
with this offering. Such preemptive rights will terminate at
such time that RenaissanceRe
S-44
beneficially owns less than 6.25% of the outstanding Common
Shares. Subject to the limitation on voting rights described
below, holders of Common Shares are entitled to one vote per
share on all matters submitted to a vote of holders of Common
Shares. Most matters to be approved by holders of Common Shares
require approval by a simple majority vote. The holders of at
least 75% of the Common Shares voting in person or by proxy at a
meeting must approve an amalgamation with another company. In
addition, a resolution to remove our independent registered
public accounting firm before the expiration of its term of
office must be approved by at least two-thirds of the votes cast
at a meeting of the shareholders of Platinum Holdings. The
quorum for any meeting of our shareholders is two or more
persons holding or representing more than 50% of the outstanding
Common Shares on an unadjusted basis. Our board of directors has
the power to approve our discontinuation from Bermuda to another
jurisdiction. The rights attached to any class of shares, common
or preferred, may be varied with the consent in writing of the
holders of at least three-fourths of the issued shares of that
class or by a resolution passed by a majority of the votes cast
at a separate general meeting of the holders of the shares of
the class in accordance with the Companies Act.
In the event of a liquidation, winding-up or dissolution of
Platinum Holdings, whether voluntary or involuntary or for the
purpose of a reorganization or otherwise or upon any
distribution of capital, the holders of Common Shares are
entitled to share equally and ratably in the assets of Platinum
Holdings, if any, remaining after the payment of all of its
debts and liabilities and the liquidation preference of any
outstanding preferred shares. All outstanding Common Shares are
fully paid and nonassessable. Authorized but unissued shares
may, subject to any rights attaching to any existing class or
classes of shares, be issued at any time and at the discretion
of the board of directors without the approval of the
shareholders of Platinum Holdings with such rights, preferences
and limitations as the board of directors may determine.
Limitation on Voting Rights
Each Common Share has one vote on a poll of the shareholders,
except that, if and for as long as the number of issued
Controlled Shares (as defined below) of any person would
constitute 10% or more of the combined voting power of the
issued Common Shares of Platinum Holdings (after giving effect
to any prior reduction in voting power as described below), each
issued Controlled Share, regardless of the identity of the
registered holder thereof, will confer a fraction of a vote as
determined by the following formula:
(T C)/(9.1 x C)
|
|
|
Where: (1)
|
|
T is the aggregate number of votes conferred by all
the issued Common Shares immediately prior to that application
of the formula with respect to such issued Controlled Shares,
adjusted to take into account any prior reduction taken with
respect to any issued Controlled Shares pursuant to the
sequencing provision described below; and |
|
(2) |
|
C is the number of issued Controlled Shares
attributable to that person. Controlled Shares of
any person refers to all Common Shares, and all shares of any
other class of shares of Platinum Holdings conferring voting
rights, owned by that person, whether (i) directly,
(ii) with respect to persons who are U.S. persons, by
application of the attribution and constructive ownership rules
of Sections 958(a) and 958(b) of the Code, or
(iii) beneficially, directly or indirectly, within the
meaning of Section 13(d)(3) of the Exchange Act and the
rules and regulations thereunder. |
The formula will be applied successively as many times as may be
necessary to ensure that no person will be a 10% Shareholder (as
defined below) at any time (the sequencing
provision). For the purposes of determining the votes
exercisable by shareholders as of any date, the formula first
will be applied to the Common Shares of each shareholder in
declining order based on the respective numbers of
S-45
total Controlled Shares attributable to each shareholder. Thus,
the formula will be applied first to the votes of Common Shares
held by the shareholder to whom the largest number of total
Controlled Shares is attributable and thereafter sequentially
with respect to the shareholder with the next largest number of
total Controlled Shares. The formula will be applied iteratively
thereafter to ensure that no person will be a 10% Shareholder.
In each case, calculations are made on the basis of the
aggregate number of votes conferred by the issued Common Shares
as of such date, as reduced by the application of the formula to
any issued Common Shares of any shareholder with a larger number
of total Controlled Shares as of such date. A 10%
Shareholder means a person who owns, in the aggregate,
(i) directly, (ii) with respect to persons who are
U.S. persons, by application of the attribution and constructive
ownership rules of Sections 958(a) and 958(b) of the Code,
or (iii) beneficially, directly or indirectly, within the
meaning of Section 13(d)(3) of the Exchange Act, shares of
Platinum Holdings carrying 10% or more of the total combined
voting rights attaching to the issued Common Shares and the
issued shares of any other class or classes of shares of
Platinum Holdings.
Because of the voting limitation described in the preceding
paragraph, in the event that a shareholder acquires 10% or more
of the combined voting power of Platinum Holdings issued
Common Shares and the issued shares of any other class or
classes of shares of Platinum Holdings and thereby becomes a 10%
Shareholder, the Common Shares so acquired would have reduced
voting rights. Thereafter, should that 10% Shareholder dispose
of some or all of the Common Shares it owned, the reduced voting
rights with respect to the Common Shares disposed of by that 10%
Shareholder would be eliminated and those Common Shares
thereafter would be entitled to full voting rights, subject to
future dilution to avoid creating a 10% Shareholder. Therefore,
the voting power of the Common Shares held by all of our
shareholders other than the 10% Shareholder could be diluted
upon any such disposition by that 10% Shareholder.
Our directors are empowered to require any shareholder to
provide information as to that shareholders beneficial
ownership of Common Shares, the names of persons having
beneficial ownership of the shareholders Common Shares,
relationships, associations or affiliations with other
shareholders or any other facts the directors may deem relevant
to a determination of the number of Controlled Shares
attributable to any person. Our directors may disregard the
votes attached to the Common Shares of any holder failing to
respond to such a request or submitting incomplete or untrue
information.
Our directors retain certain discretion to make such final
adjustments to the aggregate number of votes attaching to the
Common Shares of any shareholder that they consider fair and
reasonable in all the circumstances to ensure that no person
will be a 10% Shareholder at any time.
Restrictions on Transfer
Our Bye-laws contain several provisions restricting the
transferability of Common Shares. Our directors are required to
decline to register a transfer of Common Shares if they have
reason to believe that the result of such transfer would be
(i) that any person other than a St. Paul Person or a
RenaissanceRe Person (as defined below) would become or continue
to be a 10% Shareholder or (ii) that a St. Paul Person or a
RenaissanceRe Person would become or continue to be a United
States 25% Shareholder (as defined below), in each case without
giving effect to the limitation on voting rights described
above. Similar restrictions apply to Platinum Holdings
ability to issue or repurchase Common Shares. St. Paul
Person means any of St. Paul and its affiliates and a
RenaissanceRe Person means any of RenaissanceRe and
its affiliates. A United States 25% Shareholder
means a U.S. person who owns, directly or by application of the
constructive ownership rules of Sections 958(a) and 958(b)
of the Code, 25% or more of either (i) the total combined
voting rights attaching to the issued Common Shares and the
issued shares of any other class of Platinum Holdings or
(ii) the total combined value of the issued Common Shares
and any other issued shares of Platinum Holdings, determined
pursuant to Section 957 of the Code. Only for the purposes
of these provisions of our Bye-laws, it is assumed that all
RenaissanceRe Persons are U.S. Persons.
Our directors also may, in their absolute discretion, decline to
register the transfer of any Common Shares if they have reason
to believe (i) that the transfer may expose us, any of our
subsidiaries,
S-46
any shareholder or any person ceding insurance to any of our
subsidiaries to adverse tax or regulatory treatment in any
jurisdiction or (ii) that registration of the transfer
under the Securities Act or under any U.S. state securities laws
or under the laws of any other jurisdiction is required and such
registration has not been duly effected. In addition, our
directors may decline to approve or register a transfer of
Common Shares unless all applicable consents, authorizations,
permissions or approvals of any governmental body or agency in
Bermuda, the United States or any other applicable jurisdiction
required to be obtained prior to such transfer shall have been
obtained.
Our directors are empowered to request information from any
holder or prospective acquiror of Common Shares as necessary to
give effect to the transfer, issuance and repurchase
restrictions described above, and may decline to effect any
transaction if complete and accurate information is not received
as requested.
Conyers Dill & Pearman, our Bermuda counsel, has advised us
that while the precise form of the restrictions on transfer
contained in our Bye-laws is untested, as a matter of general
principle, restrictions on transfer are enforceable under
Bermuda law and are not uncommon. A proposed transferee will be
permitted to dispose of any Common Shares purchased that violate
the restrictions and as to the transfer of which registration is
refused. The proposed transferor of those Common Shares will be
deemed to own those Common Shares for dividend, voting and
reporting purposes until a transfer of such Common Shares has
been registered on the register of shareholders of Platinum
Holdings.
If the directors refuse to register a transfer for any reason,
they must notify the proposed transferor and transferee within
thirty days of such refusal. Our Bye-laws also provide that our
board of directors may suspend the registration of transfers for
any reason and for such periods as it may determine, provided
that it may not suspend the registration of transfers for more
than 45 days in any period of 365 consecutive days.
Our directors may designate our Chief Executive Officer to
exercise their authority to decline to register transfers or to
limit voting rights as described above, or to take any other
action, for as long as the Chief Executive Officer is also a
director.
The voting restrictions and restrictions on transfer described
above may have the effect of delaying, deferring or preventing a
change in control of Platinum Holdings.
Preferred Shares
Pursuant to our Bye-laws and Bermuda law, our board of directors
by resolution may establish one or more series of preferred
shares having a number of shares, designation, relative voting
rights, dividend rates, liquidation and other rights,
preferences, limitations and powers as may be fixed by the board
of directors without any further shareholder approval which, if
any preferred shares are issued, may include restrictions on
voting and transfer intended to avoid having us become a
controlled foreign corporation for U.S. federal
income tax purposes. Any rights, preferences, powers and
limitations as may be established could also have the effect of
discouraging an attempt to obtain control of the Company. The
issuance of preferred shares could adversely affect the voting
power of the holders of our Common Shares, deny such holders the
receipt of a premium on their Common Shares in the event of a
tender or other offer for the Common Shares and depress the
market price of the Common Shares.
Article 51(4) of our Bye-laws currently provides that if
preferred shares are issued that confer any voting rights, the
provisions of the Bye-laws that contain limitations on voting
rights will be amended to apply to such preferred shares.
Pursuant to this prospectus supplement, the Company is hereby
offering Preferred
Shares (assuming the exercise in full of the underwriters
overallotment option). We have agreed with the underwriters
that, no later than December 31, 2006, we will present to
our shareholders for approval a resolution proposing that
Article 51(4) be deleted in its entirety and will recommend
to the shareholders that such resolution be approved and
adopted; and, promptly following such approval and adoption, we
will so amend our Bye-laws. See Description of the
Series A Mandatory Convertible Preferred Shares
Voting Rights below for a brief summary of the voting
rights of the Preferred Shares if our Bye-laws are amended to
delete Article 51(4). For a description of the terms of
S-47
our Preferred Shares being offered hereby, see Description
of the Series A Mandatory Convertible Preferred
Shares in this prospectus supplement.
Bye-laws
Our Bye-laws provide for our corporate governance, including the
establishment of share rights, modification of those rights,
issuance of share certificates, imposition of a lien over shares
in respect of unpaid amounts on those shares, calls on shares
which are not fully paid, forfeiture of shares, the transfer of
shares, alterations of capital, the calling and conduct of
general meetings of shareholders, proxies, the appointment and
removal of directors, conduct and power of directors, the
payment of dividends, the appointment of an auditor and our
winding-up.
Our Bye-laws provide that our board of directors shall be
elected annually and shall not be staggered. Shareholders may
only remove a director for cause prior to the expiration of that
directors term at a special meeting of shareholders at
which a majority of the holders of shares voting thereon vote in
favor of that action.
Our Bye-laws also provide that if our board of directors in its
absolute discretion determines that share ownership by any
shareholder may result in adverse tax, regulatory or legal
consequences to us, any of our subsidiaries or any other
shareholder, then we will have the option, but not the
obligation, to repurchase all or part of the shares held by such
shareholder to the extent the board of directors determines it
is necessary to avoid such adverse or potential adverse
consequences. The price to be paid for such shares will be the
fair market value of such shares.
Differences in Corporate Law
The Companies Act differs in certain material respects from laws
generally applicable to U.S. corporations and their
shareholders. Set forth below is a summary of certain
significant provisions of the Companies Act (including
modifications adopted pursuant to our Bye-laws) applicable to
us, which differ in certain respects from provisions of Delaware
corporate law, which is the law that governs many U.S. public
companies. The following statements are summaries and do not
purport to deal with all aspects of Bermuda law that may be
relevant to us and our shareholders.
Duties of Directors. Under Bermuda law, at common law,
members of a board of directors owe a fiduciary duty to the
company to act in good faith in their dealings with or on behalf
of the company and exercise their powers and fulfill the duties
of their office honestly. This duty has the following essential
elements:
|
|
|
|
|
a duty to act in good faith in the best interests of the Company; |
|
|
|
a duty not to make a personal profit from opportunities that
arise from the office of director; |
|
|
|
a duty to avoid conflicts of interest; and |
|
|
|
a duty to exercise powers for the purpose for which such powers
were intended. |
The Companies Act imposes a duty on directors and officers of a
Bermuda company:
|
|
|
|
|
to act honestly and in good faith with a view to the best
interests of the company; and |
|
|
|
to exercise the care, diligence and skill that a reasonably
prudent person would exercise in comparable circumstances. |
In addition, the Companies Act imposes various duties on
directors and officers of a company with respect to matters of
management and administration of the company.
The Companies Act provides that in any proceedings for
negligence, default, breach of duty or breach of trust against
any director or officer, if it appears to a court that such
director or officer is or may be liable in respect of the
negligence, default, breach of duty or breach of trust, but that
he has acted honestly and reasonably, and that, having regard to
all the circumstances of the case, including those connected
with his appointment, he ought fairly to be excused for the
negligence, default, breach of duty or breach of trust, that
court may relieve him, either wholly or partly, from any
liability on such terms as the court may think fit. This
provision has been interpreted to apply only to actions brought
by or on
S-48
behalf of the company against such directors and officers. Our
Bye-laws, however, provide that shareholders waive all claims or
rights of action that they might have, individually or by or in
the right of Platinum Holdings, against any director or officer
of the Company on account of any action taken by such director
or officer, or the failure of such director or officer to take
any action in the performance of his duties with or for the
Company, except this waiver does not extend to any matter in
respect of fraud or dishonesty on the part of such director or
officer.
Under Delaware law, the business and affairs of a corporation
are managed by or under the direction of its board of directors.
In exercising their powers, directors are charged with a
fiduciary duty of care to protect the interests of the
corporation and a fiduciary duty of loyalty to act in the best
interests of its stockholders.
The duty of care requires that directors act in an informed and
deliberative manner and inform themselves, prior to making a
business decision, of all material information reasonably
available to them. The duty of care also requires that directors
exercise care in overseeing and investigating the conduct of
corporate employees. The duty of loyalty may be summarized as
the duty to act in good faith, not out of self-interest, and in
a manner which the director reasonably believes to be in the
best interests of the stockholders.
A party challenging the propriety of a decision of a board of
directors bears the burden of rebutting the applicability of the
presumptions afforded to directors by the business
judgment rule. If the presumption is not rebutted, the
business judgment rule attaches to protect the directors and
their decisions, and their business judgments will not be second
guessed. Where, however, the presumption is rebutted, the
directors bear the burden of demonstrating the entire fairness
of the relevant transaction. Notwithstanding the foregoing,
Delaware courts subject directors conduct to enhanced
scrutiny in respect of defensive actions taken in response to a
threat to corporate control and approval of a transaction
resulting in a sale of control of the corporation.
Interested Directors. Our Bye-laws provide that
transactions we enter into in which a director has an interest
are not voidable by us, nor can the interested director be
liable to us for any profit realized pursuant to such
transactions, provided the nature of the interest is disclosed
at the first opportunity at a meeting of directors, or in
writing to the directors. Under Delaware law, such a transaction
would not be voidable if (i) the material facts as to the
interested directors relationship or interests are
disclosed or are known to the board of directors and the board
in good faith authorized the transaction by the affirmative vote
of a majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum,
(ii) the material facts as to the directors
relationship or interest and as to the transaction are disclosed
or are known to the shareholders entitled to vote on the
transaction and the transaction is specifically approved in good
faith by vote of the shareholders or (iii) the transaction
is fair to the corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee of
the board of directors or the shareholders. Under Delaware law,
the interested director could be held liable for a transaction
in which that director derived an improper personal benefit.
Dividends and Distributions. Bermuda law permits the
declaration and payment of dividends and the making of
distributions from contributed surplus by a company only if
there are no reasonable grounds for believing that the company
is, or would after the payment be, unable to pay its liabilities
as they become due, or the realizable value of the
companys assets would be less, as a result of the payment,
than the aggregate of its liabilities and its issued share
capital and share premium accounts. The excess of the
consideration paid on issue of shares over the aggregate par
value of such shares must (except in limited circumstances) be
credited to a share premium account. Share premium may be
distributed in limited circumstances, for example to pay up
unissued shares which may be distributed to shareholders in
proportion to their holdings, but is otherwise subject to
limitation. In addition, our ability to pay dividends is subject
to Bermuda insurance laws and regulatory constraints. Our
Bye-laws permit the board of directors to declare, in accordance
with the Companies Act, a dividend to be paid to its
shareholders, in proportion to the number of shares held by the
shareholders, and such dividend may be paid in cash or wholly or
partly in specie, in which case the board of directors may fix
the value for distribution in specie of any assets.
S-49
Under Delaware law, subject to any restrictions contained in the
companys certificate of incorporation, a company may pay
dividends out of surplus or, if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. Delaware law also provides
that dividends may not be paid out of net profits at any time
when capital is less than the capital represented by the issued
and outstanding stock of all classes having a preference upon
the distribution of assets.
Amalgamations, Mergers and Similar Agreements. We may
acquire the business of another Bermuda company or a company
incorporated outside Bermuda and carry on such business when it
is within the objects of our memorandum of association. In the
case of an amalgamation, we may amalgamate with another Bermuda
company or with an entity incorporated outside Bermuda. A
shareholder who did not vote in favor of the amalgamation may
apply to a Bermuda court for a proper valuation of his or her
shares if he or she is not satisfied that fair value has been
offered for those shares. The court ordinarily would not
disapprove the transaction on that ground absent evidence of
fraud or bad faith. Under Delaware law, with certain exceptions,
a merger, consolidation or sale of all or substantially all the
assets of a corporation must be approved by the board of
directors and the holders of a majority of the outstanding
shares entitled to vote thereon. Under Delaware law, a
stockholder of a corporation participating in certain major
corporate transactions may, under certain circumstances, be
entitled to appraisal rights pursuant to which the stockholder
may receive cash in the amount of the fair value of the shares
held by that stockholder (as determined by a court) in lieu of
the consideration that stockholder would otherwise receive in
the transaction. Delaware law does not provide stockholders of a
corporation with voting or appraisal rights when the corporation
acquires another business through the issuance of its stock or
other consideration (i) in exchange for the assets of the
business to be acquired, (ii) in exchange for the
outstanding stock of the corporation to be acquired;
(iii) in a merger of the corporation to be acquired with a
subsidiary of the acquiring corporation or (iv) in a merger
in which the corporations certificate of incorporation is
not amended and the corporation issues less than 20% of its
common stock outstanding prior to the merger.
Takeovers. Bermuda law provides that if the acquiring
party is a company, it may compulsorily acquire all the shares
of the target company, by acquiring pursuant to a tender offer
90% of the shares or class of shares not already owned by, or by
a nominee for, the acquiring party (the offeror), or any of its
subsidiaries. If an offeror has, within four months after the
making of an offer for all the shares or class of shares not
owned by, or by a nominee for, the offeror, or any of its
subsidiaries, obtained the approval of the holders of 90% or
more of all the shares to which the offer relates, the offeror
may, at any time within two months beginning with the date on
which the approval was obtained, require by notice any
nontendering shareholder to transfer its shares on the same
terms as the original offer. In those circumstances,
nontendering shareholders will be compelled to sell their shares
unless the Supreme Court of Bermuda (on application made within
a one-month period from the date of the offerors notice of
its intention to acquire such shares) orders otherwise. Where
one or more parties holds not less than 95% of the shares or a
class of shares of a company, such holder(s) may, pursuant to a
notice given to the remaining shareholders or class of
shareholders, acquire the shares of such remaining shareholders
or class of shareholders. When this notice is given, the
acquiring party is entitled and bound to acquire the shares of
the remaining shareholders on the terms set out in the notice,
unless a remaining shareholder, within one month of receiving
such notice, applies to the Supreme Court of Bermuda for an
appraisal of the value of their shares. This provision only
applies where the acquiring party offers the same terms to all
holders of shares whose shares are being acquired.
Delaware law provides that a parent corporation, by resolution
of its board of directors and without any shareholder vote, may
merge with any subsidiary of which it owns at least 90% of the
outstanding shares of each class of stock that is entitled to
vote on the transaction. Upon any such merger, dissenting
stockholders of the subsidiary would have appraisal rights.
Shareholders Suit. The rights of shareholders under
Bermuda law are not as extensive as the rights of shareholders
under legislation or judicial precedent in many U.S.
jurisdictions. Class actions and derivative actions are
generally not available to shareholders under the laws of
Bermuda. The Bermuda
S-50
courts, however, would ordinarily be expected to permit a
shareholder to commence an action in the name of a company to
remedy a wrong to the company where the act complained of is
alleged to be beyond the corporate power of the company or
illegal, or would result in a violation of the companys
memorandum of association or bye-laws. Furthermore,
consideration would be given by the court to acts that are
alleged to constitute a fraud against the minority shareholders
or where an act requires the approval of a greater percentage of
shareholders than actually approved it. The winning party in
such an action generally would be able to recover a portion of
attorneys fees incurred in connection with such action.
When the affairs of a company are being conducted in a manner
which is oppressive or prejudicial to the interests of some part
of the shareholders, one or more shareholders may apply to the
Supreme Court of Bermuda, which may make such order as it sees
fit, including an order regulating the conduct of the
companys affairs in the future or ordering the purchase of
the shares of any shareholders by other shareholders or by the
company.
Our Bye-laws contain a provision by virtue of which our
shareholders waive any claim or right of action that they have,
both individually and on our behalf, against any director or
officer in relation to any action or failure to take action by
such director or officer, except in respect of any fraud or
dishonesty of such director or officer.
Class actions and derivative actions generally are available to
stockholders under Delaware law for, among other things, breach
of fiduciary duty, corporate waste and actions not taken in
accordance with applicable law. In such actions, the court has
discretion to permit the winning party to recover
attorneys fees incurred in connection with such action.
Indemnification of Directors. Our Bye-laws indemnify our
directors and officers in their capacity as such in respect of
any loss arising or liability attaching to them by virtue of any
rule of law in respect of any negligence, default, breach of
duty or breach of trust of which a director or officer may be
guilty in relation to us other than in respect of his own fraud
or dishonesty, which is the maximum extent of indemnification
permitted under the Companies Act. Under Delaware law, a
corporation may indemnify a director or officer of the
corporation against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred in defense of an action, suit or proceeding
by reason of such position if (i) the director or officer
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and
(ii) with respect to any criminal action or proceeding, if
the director or officer had no reasonable cause to believe his
conduct was unlawful.
Inspection of Corporate Records. Members of the general
public have the right to inspect our public documents available
at the office of the Registrar of Companies in Bermuda, which
will include our memorandum of association (including our
objects and powers) and alterations to our memorandum of
association, including any increase or reduction of our
authorized capital. Our shareholders have the additional right
to inspect our Bye-laws, minutes of general meetings and our
audited financial statements, which must be presented to the
annual general meeting of shareholders. Our register of
shareholders is also open to inspection by shareholders without
charge, and to members of the public for a fee. We are required
to maintain a share register in Bermuda but may establish a
branch register outside Bermuda. We are required to keep at our
registered office a register of our directors and officers which
is open for inspection by members of the public without charge.
Bermuda law does not, however, provide a general right for
shareholders to inspect or obtain copies of any other corporate
records. Delaware law permits any stockholder to inspect or
obtain copies of a corporations stockholder list and its
other books and records for any purpose reasonably related to
such persons interest as a stockholder.
Enforcement of Judgments and Other Matters. We have been
advised by Conyers Dill & Pearman, our Bermuda counsel, that
there is doubt as to whether the courts of Bermuda would enforce
(1) judgments of United States courts obtained in actions
against us or our directors and officers, as well as the experts
named in this prospectus who reside outside the United States
predicated upon the civil liability provisions of the United
States federal securities laws and (2) original actions
brought in Bermuda against us or our directors and officers, as
well as the experts named in this prospectus who reside outside
the United States predicated solely upon United States federal
securities laws. There is no treaty in effect between the United
States and Bermuda providing for such enforcement, and there are
grounds upon
S-51
which Bermuda courts may not enforce judgments of United States
courts. Certain remedies available under the laws of U.S.
jurisdictions, including certain remedies available under the
U.S. federal securities laws, would not be allowed in Bermuda
courts as contrary to Bermudas public policy.
Shareholder Proposals. Under Bermuda law, the Companies
Act provides that shareholders may, as set forth below and at
their own expense (unless a company otherwise resolves), require
a company to give notice of any resolution that the shareholders
can properly propose at the next annual general meeting and/or
to circulate a statement prepared by the requesting shareholders
in respect of any matter referred to in a proposed resolution or
any business to be conducted at a general meeting. The number of
shareholders necessary for such a requisition is either that
number of shareholders representing at least 5% of the total
voting rights of all shareholders having a right to vote at the
meeting to which the requisition relates or not less than 100
shareholders. Delaware law does not include a provision
restricting the manner in which nominations for directors may be
made by stockholders or the manner in which business may be
brought before a meeting.
Calling of Special Shareholders Meetings. Under our
Bye-laws, a special general meeting may be called by our
Chairman or by any two directors or and director and the
secretary or by the board of directors. Under Bermuda law, a
special meeting may also be called by the shareholders when
requisitioned by the holders of at least 10% of the paid up
voting share capital of Platinum Holdings as provided by the
Companies Act. Delaware law permits the board of directors or
any person who is authorized under a corporations
certificate of incorporation or Bye-laws to call a special
meeting of stockholders.
Approval of Corporate Matters by Written Consent. Under
Bermuda law, the Companies Act provides that shareholders may
take action by written consent with 100% shareholders consent
required. Delaware law permits stockholders to take action by
the consent in writing by the holders of outstanding stock
having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting of
stockholders at which all shares entitled to vote thereon were
present and voted.
Amendment of Memorandum of Association. Bermuda law
provides that the memorandum of association of a company may be
amended by a resolution passed at a general meeting of
shareholders of which due notice has been given. The holders of
an aggregate of not less than 20% in par value of a
companys issued share capital or any class thereof have
the right to apply to the Bermuda courts for an annulment of any
amendment of the memorandum of association adopted by
shareholders at any general meeting, other than an amendment
which alters or reduces a companys share capital as
provided in the Companies Act. Where such an application is
made, the amendment becomes effective only to the extent that it
is confirmed by the Bermuda court.
Under Delaware law, amendment of the certificate of
incorporation of a company must be made by a resolution of the
board of directors setting forth the amendment, declaring its
advisability, and either calling a special meeting of the
stockholders entitled to vote or directing that the amendment
proposed be considered at the next annual meeting of the
stockholders. Delaware law requires that, unless a different
percentage is provided for in the certificate of incorporation,
a majority of the outstanding shares entitled to vote thereon is
required to approve the amendment of the certificate of
incorporation at the stockholders meeting. If the amendment
would alter the number of authorized shares or otherwise
adversely affect the rights or preference of any class of a
companys stock, Delaware law provides that the holders of
the outstanding shares of such affected class should be entitled
to vote as a class upon the proposed amendment, regardless of
whether such holders are entitled to vote by the certificate of
incorporation. However, the number of authorized shares of any
class may be increased or decreased, to the extent not falling
below the number of shares then outstanding, by the affirmative
vote of the holders of a majority of the stock entitled to vote,
if so provided in the companys certificate of
incorporation or any amendment that created such class or was
adopted prior to the issuance of such class or that was
authorized by the affirmative vote of the holders of a majority
of such class of stock.
Amendment of Bye-laws. Consistent with the Companies Act,
our Bye-laws provide that the no Bye-law may be rescinded,
altered or amended, and no new Bye-law shall be made, until it
has been
S-52
approved by a resolution of our board of directors and by a
resolution of our shareholders. Under Delaware law, holders of a
majority of the voting power of a corporation and, if so
provided in the certificate of incorporation, the directors of
the corporation, have the power to adopt, amend and repeal the
bylaws of a corporation.
CONCURRENT TRANSACTIONS
Common Shares Offering
In our concurrent Common Shares Offering that is being conducted
pursuant to a separate prospectus supplement, a selling
shareholder identified therein is offering 3,960,000 Common
Shares and we are
offering Common
Shares
(or Common
Shares if the underwriters of the Common Shares Offering
exercise in full their overallotment option). Common Shares sold
in the concurrent Common Shares Offering will be sold at a price
of
$ per
share. Immediately after such Common Shares Offering, there will
be
outstanding Common
Shares (assuming the exercise in full of the overallotment
option of the underwriters, but excluding 4,061,573 Common
Shares issuable upon exercise of outstanding options and
148,809 Common Shares issuable to directors and officers of
the Company in exchange for share units under compensation
arrangements). We will not receive any proceeds from the
offering and sale of Common Shares by the selling shareholder
named in the prospectus supplement being used in the Common
Shares Offering. See Use of Proceeds. Merrill Lynch
and Goldman, Sachs & Co. (Goldman Sachs), two of
the underwriters in the Common Shares Offering, are also acting
as underwriters in this offering and will receive customary fees
for such service. This foregoing description is qualified in its
entirety by reference to the prospectus supplement pursuant to
which the Common Shares will be offered, which prospectus
supplement we will file with the SEC.
Debt Tender Offer
Concurrently with the Preferred Shares Offering pursuant to this
prospectus supplement and accompanying prospectus and the Common
Shares Offering pursuant to a separate prospectus supplement,
Platinum Finance has commenced the Debt Tender Offer in which it
is offering, by means of an Offer to Purchase, to purchase for
cash any and all of its 6.371% Notes. The Debt Tender Offer is
scheduled to expire at 5:00 p.m., New York City time, on
December 6, 2005, unless extended. The Debt Tender Offer is
being made upon the terms, and subject to the conditions, set
forth in the Offer to Purchase. Goldman Sachs and Merrill Lynch,
who are underwriters in both this offering and the concurrent
Common Shares Offering, will also act as dealer managers for the
Debt Tender Offer (the Dealer Managers).
The Debt Tender Offer is subject to the satisfaction or waiver,
in the sole discretion of Platinum Finance, of certain
conditions. Platinum Finance reserves the right to extend the
expiration time from time to time for any reason.
The Purchase Price for the 6.371% Notes purchased pursuant to
the Debt Tender Offer will be calculated in a manner intended to
result in a price on the Settlement Date equivalent to a yield
to maturity equal to the sum of (a) the yield to maturity
(calculated in accordance with standard market practice)
corresponding to the Bid-Side Price (defined below) of the
Reference Treasury Security on the second business day preceding
the date on which the Offer expires and (b) the Fixed
Spread (such sum, the Tender Offer Yield). As used
herein, the term Bid-Side Price of the Reference
Treasury Security on any day means the bid-side price of such
Reference Treasury Security, as displayed on the Bloomberg
Government Pricing Monitor Page PX1 as of 2:00 P.M.,
New York City time, on that day (or, if the Dealer Managers
determine that such page is not operational or is displaying
inaccurate information at that time, the bid-side price of such
Reference Treasury Security, determined at or around
2:00 P.M., New York City time, on that day by such other
means as the Dealer Managers may consider to be appropriate
under the circumstances).
Specifically, the Purchase Price for any 6.371% Notes purchased
pursuant to the Debt Tender Offer will equal (a) the value
per $1,000 principal amount of such 6.371% Notes, assuming such
6.371% Notes will be repaid in full at maturity at 100% of their
principal amount plus accrued interest, of all remaining
payments of principal thereof and premium, if any, and interest
thereon to be made through
S-53
maturity, discounted to the Settlement Date (in a manner
consistent with the methodology underlying the formula for the
Purchase Price set forth in Annex A to the Offer to
Purchase) at a discount rate equal to the Tender Offer Yield,
minus (b) accrued and unpaid interest per $1,000 principal
amount to but excluding such Settlement Date.
Assuming a hypothetical Settlement Date of December 7, 2005
and the Reference Yield which would have been in effect had it
been measured on November 22, 2005, the following table
sets forth the resulting hypothetical Reference Yield, Tender
Offer Yield, Purchase Price and accrued and unpaid interest per
$1,000 principal amount of 6.371% Notes for the Debt Tender
Offer:
|
|
|
|
|
|
|
Resulting Hypothetical Percentage |
|
|
or Amount Per $1,000 Principal |
|
|
Amount of 6.371% Notes* |
|
|
|
Reference Yield
|
|
|
4.298 |
% |
Tender Offer Yield
|
|
|
5.298 |
% |
Purchase Price
|
|
$ |
1,019.51 |
|
Accrued and Unpaid Interest
|
|
$ |
3.72 |
|
|
|
* |
Actual percentages and amounts will differ from those set forth
in this table. |
None of the Preferred Shares Offering, the Common Shares
Offering or the Debt Tender Offer is conditioned on the
consummation of any of the other transactions.
S-54
UNDERWRITING
We intend to offer Preferred Shares through the underwriters.
Merrill Lynch is acting as a representative of the underwriters
named below; we have agreed to sell to the underwriters, and the
underwriters severally have agreed to purchase from us, the
number of Preferred Shares listed opposite their names below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Underwriter |
|
|
|
Shares |
|
|
|
|
|
|
|
|
|
Merrill Lynch, Pierce, Fenner &
Smith Incorporated |
|
|
|
|
|
|
|
|
Goldman, Sachs & Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The underwriters have agreed to purchase all of the Preferred
Shares (other than those covered by the overallotment option
described below) sold under the underwriting agreement if any of
these Preferred Shares are purchased. If an underwriter
defaults, the underwriting agreement provides that the purchase
commitments of the non-defaulting underwriters may be increased
or the underwriting agreement may be terminated.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act, or
to contribute to payments the underwriters may be required to
make in respect of those liabilities.
The underwriters are offering the Preferred Shares, subject to
prior sale, when, as and if issued to and accepted by them,
subject to approval of legal matters by their counsel, including
the validity of the Preferred Shares and other conditions
contained in the underwriting agreement, such as the receipt by
the underwriters of officers certificates and legal
opinions. The underwriters reserve the right to withdraw, cancel
or modify offers to the public and to reject orders in whole or
in part.
Commissions and Discounts
The representative has advised us that the underwriters propose
initially to offer the Preferred Shares to the public at the
public offering price on the cover page of this prospectus
supplement and to dealers at that price less a concession not in
excess of
$ per
share. The underwriters may allow, and the dealers may re-allow,
a discount not in excess of
$ per
share to other dealers. After the public offering, the public
offering price, concession and discount may be changed.
The following table shows the public offering price,
underwriting discount and proceeds before expenses to us. The
information assumes either no exercise or full exercise by the
underwriters of their overallotment option.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share | |
|
Without Option | |
|
With Option | |
|
|
| |
|
| |
|
| |
Public offering price
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Underwriting discount
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Proceeds, before expenses, to us
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The expenses of the offering, not including the underwriting
discount, are assumed to be
$ million
and are payable by us.
Overallotment Option
We have granted an option to the underwriters to purchase up
to additional
Preferred Shares at the public offering price on the cover page
of this prospectus supplement, less the underwriting discount.
The underwriters may exercise this option for 30 days from
the date of this prospectus supplement solely to cover any over
allotments. If the underwriters exercise this option, each will
be obligated, subject to conditions contained in the
underwriting agreement, to purchase a number of additional
Preferred Shares proportionate to that underwriters
initial amount reflected in the above table.
S-55
No Sales of Similar Securities
We and our executive officers and directors have agreed with the
underwriters not to offer, sell, contract to sell or otherwise
dispose of any of the Preferred Shares or Common Shares or any
of our other securities that are substantially similar to the
Preferred Shares or Common Shares, any securities that are
convertible into or exchangeable for, or represent the right to
receive, Preferred Shares or Common Shares or any such
substantially similar securities or to file any registration
statement with the SEC under the Securities Act relating to any
such securities, during the period from the date of this
prospectus supplement continuing through the date 90 days
after the date of this prospectus supplement, except with the
prior written consent of Merrill Lynch. This agreement does not
prohibit us from issuing any securities issued pursuant to the
concurrent public offering of our Common Shares, any securities
issuable upon the conversion of the Preferred Shares offered
hereby or any securities issued pursuant to director or employee
stock option or benefit plans existing on, or upon the exercise,
conversion or exchange of convertible or exchangeable securities
or options outstanding as of, the date of this prospectus
supplement.
New York Stock Exchange Listing
We intend to apply to list the Preferred Shares on the NYSE
under the symbol PTP PrA. In order to meet the
requirements for listing on the NYSE, the underwriters intend to
sell Preferred Shares to at least 400 beneficial holders and to
meet certain other distribution requirements required by the
NYSE. We have been advised by the underwriters that they intend
to make a market in the Preferred Shares. The underwriters are
not obligated to do so and may discontinue their market making
at any time without notice. There can be no assurance that an
active trading market will develop for the Preferred Shares or
that the Preferred Shares will trade at or above the initial
public offering price in the public market subsequent to this
offering.
Price Stabilization, Short Positions
Until the distribution of the Preferred Shares is completed, SEC
rules may limit underwriters and selling group members from
bidding for and purchasing our Preferred Shares. However, the
representative may engage in transactions that stabilize the
price of the Preferred Shares, such as bids or purchases to peg,
fix or maintain that price.
If the underwriters create a short position in the Preferred
Shares in connection with this offering, i.e., if they
sell more Preferred Shares than are listed on the cover page of
this prospectus supplement, the representative may reduce that
short position by purchasing Preferred Shares in the open
market. The representative may also elect to reduce any short
position by exercising all or part of the overallotment option
described above. Purchases of our Preferred Shares to stabilize
its price or to reduce a short position may cause the price of
our Preferred Shares to be higher than it might be in the
absence of such purchases.
The representative may also impose a penalty bid on underwriters
and selling group members. This means that if the representative
purchases Preferred Shares in the open market to reduce the
underwriters short position or to stabilize the price of
such Preferred Shares, they may reclaim the amount of the
selling concession from the underwriters and selling group
members who sold those Preferred Shares. The imposition of a
penalty bid may also affect the price of the Preferred Shares in
that it discourages resales of those Preferred Shares.
Neither we nor any of the underwriters make any representation
or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of
the Preferred Shares. In addition, neither we nor any of the
underwriters makes any representation that the representative
will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.
Selling Restrictions
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), each underwriter has
represented and agreed
S-56
that with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member
State (the Relevant Implementation Date) it has not
made and will not make an offer of Preferred Shares to the
public in that Relevant Member State prior to the publication of
a prospectus in relation to the Preferred Shares which has been
approved by the competent authority in that Relevant Member
State or, where appropriate, approved in another Relevant Member
State and notified to the competent authority in that Relevant
Member State, all in accordance with the Prospectus Directive,
except that it may, with effect from and including the Relevant
Implementation Date, make an offer of Preferred Shares to the
public in that Relevant Member State at any time:
|
|
|
|
|
to legal entities which are authorised or regulated to operate
in the financial markets or, if not so authorised or regulated,
whose corporate purpose is solely to invest in securities; |
|
|
|
to any legal entity which has two or more of (i) an average
of at least 250 employees during the last financial year;
(ii) a total balance sheet of more than
43,000,000 and
(iii) an annual net turnover of more than
50,000,000, as
shown in its last annual or consolidated accounts; or |
|
|
|
in any other circumstances which do not require the publication
by the Issuer of a prospectus pursuant to Article 3 of the
Prospectus Directive. |
For the purposes of this provision, the expression an
offer of Preferred Shares to the public in relation
to any Preferred Shares in any Relevant Member State means the
communication in any form and by any means of sufficient
information on the terms of the offer and the Preferred Shares
to be offered so as to enable an investor to decide to purchase
or subscribe the Preferred Shares, as the same may be varied in
that Relevant Member State by any measure implementing the
Prospectus Directive in that Relevant Member State and the
expression Prospectus Directive means Directive 2003/71/ EC and
includes any relevant implementing measure in each Relevant
Member State.
Each underwriter has represented and agreed that:
|
|
|
|
|
it has not made and will not make an offer of the Preferred
Shares to the public in the United Kingdom prior to the
publication of a prospectus in relation to the Preferred Shares
and the offer that has been approved by the FSA or, where
appropriate, approved in another Member State and notified to
the FSA, all in accordance with the Prospectus Directive, except
that it may make an offer of the Preferred Shares to persons who
fall within the definition of qualified investor as
that term is defined in Section 86 (7) of FSMA, or
otherwise in circumstances which do not result in an offer of
transferable securities to the public in the United Kingdom
within the meaning of FSMA; |
|
|
|
it has only communicated or caused to be communicated and will
only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning
of Section 21 of FSMA) received by it in connection with
the issue or sale of any Preferred Shares in circumstances in
which Section 21(1) of FSMA does not apply to it; and |
|
|
|
it has complied and will comply with all applicable provisions
of FSMA with respect to anything done by it in relation to the
Preferred Shares in, from or otherwise involving the United
Kingdom. |
The Preferred Shares may not be offered or sold by means of any
document other than to persons whose ordinary business is to buy
or sell shares or debentures, whether as principal or agent, or
in circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap. 32) of
Hong Kong, and no advertisement, invitation or document relating
to the Preferred Shares may be issued, whether in Hong Kong or
elsewhere, which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong Kong
(except if permitted to do so under the securities laws of Hong
Kong) other than with respect to Preferred Shares which are or
are intended to be disposed of only to persons outside Hong Kong
or only to professional investors within the meaning
of the Securities and Futures Ordinance (Cap. 571) of Hong
Kong and any rules made thereunder.
S-57
This prospectus supplement has not been registered as a
prospectus with the Monetary Authority of Singapore.
Accordingly, this prospectus supplement and any other document
or material in connection with the offer or sale, or invitation
for subscription or purchase, of the Preferred Shares may not be
circulated or distributed, nor may the Preferred Shares be
offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to
persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures
Act, Chapter 289 of Singapore (the SFA),
(ii) to a relevant person, or any person pursuant to
Section 275(1A), and in accordance with the conditions,
specified in Section 275 of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
Where the Preferred Shares are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries rights and interest in
that trust shall not be transferable for 6 months after
that corporation or that trust has acquired the Preferred Shares
under Section 275 except: (1) to an institutional
investor under Section 274 of the SFA or to a relevant
person, or any person pursuant to Section 275(1A), and in
accordance with the conditions, specified in Section 275 of
the SFA; (2) where no consideration is given for the
transfer; or (3) by operation of law.
The Preferred Shares have not been and will not be registered
under the Securities and Exchange Law of Japan (the Securities
and Exchange Law) and each underwriter has agreed that it will
not offer or sell any Preferred Shares, directly or indirectly,
in Japan or to, or for the benefit of, any resident of Japan
(which term as used herein means any person resident in Japan,
including any corporation or other entity organized under the
laws of Japan), or to others for re-offering or resale, directly
or indirectly, in Japan or to a resident of Japan, except
pursuant to an exemption from the registration requirements of,
and otherwise in compliance with, the Securities and Exchange
Law and any other applicable laws, regulations and ministerial
guidelines of Japan.
Internet Distribution
Merrill Lynch will be facilitating internet distribution for
this offering to certain of its internet subscription customers.
Merrill Lynch intends to allocate a limited number of Preferred
Shares for sale to its online brokerage customers. An electronic
prospectus supplement and the accompanying prospectus are
available on the internet web site maintained by Merrill Lynch.
Other than the prospectus supplement and the accompanying
prospectus in electronic format, the information on the Merrill
Lynch web site is not part of this prospectus supplement or the
accompanying prospectus.
Other Relationships
Merrill Lynch and Goldman Sachs, the underwriters in this
offering, and their respective affiliates have, from time to
time, performed, and may in the future perform, various
financial advisory and investment banking services for us, for
which they received or will receive customary fees and expenses
and may have from time to time engaged in, and may in the future
engage in, ordinary course business transactions with us.
Merrill Lynch and Goldman Sachs are also acting as underwriters
in the concurrent Common Shares Offering and will receive
customary fees for such service. Goldman Sachs and Merrill Lynch
are also acting as Dealer Managers for the concurrent Debt
Tender Offer and will receive customary fees for such services.
Sagent Advisors Inc. has provided structuring advice to us in
connection with this offering.
CERTAIN TAX CONSIDERATIONS
The following discussion of the taxation of Platinum Holdings,
Platinum US, Platinum UK, Platinum Bermuda and
Platinum Ireland and the taxation of our shareholders is based
upon current law and supplements the accompanying prospectus.
Legislative, judicial or administrative changes may occur which
could affect this discussion, possibly on a retroactive basis.
This discussion does not address special
S-58
classes of shareholders, such as shareholders that own directly,
or indirectly through certain foreign entities or through the
constructive ownership rules of the Code, 10% or more of the
voting power or value of Platinum Holdings. Except for matters
where it is explicitly stated that we will not receive an
opinion of counsel, the statements as to U.S. federal income tax
law set forth below are the opinion of Dewey Ballantine LLP, our
U.S. counsel, as to such tax laws (subject to the
qualifications, assumptions and factual determinations set forth
in such statements). The statements as to Bermuda tax law set
forth below are the opinion of Conyers, Dill & Pearman, our
Bermuda counsel, as to such tax laws (subject to the
qualifications and assumptions set forth in such statements).
You are urged to consult your own tax advisor as to the tax
consequences of ownership and disposition of the offered
securities. This discussion is limited to the tax consequences
of ownership and disposition of Preferred Shares (and the Common
Shares into which the Preferred Shares are convertible). Tax
considerations applicable to other types of securities will be
described in the related prospectus supplement.
TAXATION OF THE COMPANY, PLATINUM US, PLATINUM UK, PLATINUM
BERMUDA AND PLATINUM IRELAND
BERMUDA TAXATION
Under current Bermuda law, there is no income tax, capital gains
tax or withholding tax payable by us or Platinum Bermuda. We and
Platinum Bermuda have received from the Bermuda Minister of
Finance a standard assurance under Bermudas Exempted
Undertakings Tax Protection Act 1966, to the effect that if such
taxes are imposed they will not be applicable to us, Platinum
Bermuda or any of our or their operations, or the shares,
debentures or other obligations of us or Platinum Bermuda, until
March 28, 2016. This assurance does not preclude the
application of any tax or duty to persons that are
ordinarily resident in Bermuda (we and Platinum
Bermuda are not ordinarily resident in Bermuda) or a
tax payable by us or Platinum Bermuda in respect of real
property owned or leased by us or Platinum Bermuda in Bermuda.
UNITED STATES FEDERAL TAXATION
We have structured, operated and intend to continue to operate
Platinum Holdings, Platinum UK, Platinum Ireland and Platinum
Bermuda in such a manner that they will not be considered to be
engaged in a trade or business within the U.S. for U.S. federal
income tax purposes. However, whether or not a person is engaged
in a trade or business in the U.S. is a question of fact.
Moreover, there are no definitive standards under the Code or
regulations for determining whether particular activities
carried on in the U.S. constitute a trade or business and the
various judicial and administrative interpretations, while
helpful, are based upon the particular facts and circumstances
before the court or the IRS. It is therefore not possible for us
to be certain that our activities and those of our subsidiaries
will not be deemed to cause some or all of the non-U.S.
companies to be engaged in a trade or business in the U.S. with
respect to some or all of their income-producing activities. If
the IRS were to contend successfully that we, Platinum UK,
Platinum Bermuda and/or Platinum Ireland are engaged in a trade
or business in the U.S., such entity or entities would be
subject to U.S. federal income tax, as well as its branch
profits tax in certain circumstances, on our or their income
that is deemed to be effectively connected with the
conduct of that trade or business unless such entity were
entitled to relief under the permanent establishment provision
of an applicable tax treaty, as discussed below. Such income
tax, if imposed, would be computed in a manner generally
analogous to that applied to a domestic corporation, provided
that such corporation files a timely so-called
protective U.S. federal income tax return. Moreover,
if a return should have been, but is not, filed, penalties may
be assessed for failure to file tax returns. We,
Platinum UK, Platinum Bermuda and Platinum Ireland have
been filing, and intend to continue to file,
protective U.S. federal income tax returns. The
federal tax rates currently are a maximum of 35% for a
corporations income that is effectively connected with a
U.S. trade or business and 30% for the branch profits tax.
The branch profits tax is a surrogate for the U.S. tax on
dividends paid by a U.S. corporation to a nonresident
shareholder and is imposed on net income deemed to have been
withdrawn from the U.S. by a U.S. branch of a foreign
corporation after subtracting the regular corporate tax and
making certain other adjustments. The branch profits tax is
sometimes reduced or eliminated pursuant to an applicable tax
treaty.
S-59
Under the income tax treaty between Bermuda and the U.S. (the
Bermuda Treaty), Platinum Bermuda is not subject to
U.S. income tax on any net premium income found to be
effectively connected with a U.S. trade or business unless that
trade or business is conducted through a permanent establishment
in the U.S. It is unclear whether the Bermuda Treaty is equally
applicable to investment income. Moreover, the Bermuda Treaty
does not reduce or eliminate the U.S. branch profits tax.
Because of the factual nature of, and the lack of definitive
parameters for determining the existence of, a permanent
establishment and the lack of clarity in the Bermuda Treaty with
respect to its applicability to investment income, it is not
possible to say with certainty that Platinum Bermuda will not
have a permanent establishment in the U.S. or whether the
Bermuda Treaty protects investment income not attributable to a
U.S. permanent establishment from U.S. taxation.
Platinum Bermuda is entitled to the benefits of the Bermuda
Treaty if:
|
|
|
|
|
more than 50% of Platinum Bermudas shares are beneficially
owned, directly or indirectly, by Bermuda residents or U.S.
citizens or residents; and |
|
|
|
Platinum Bermudas income is not used in substantial part
to make disproportionate distributions to, or to meet certain
liabilities to, persons who are not Bermuda residents or U.S.
citizens or residents. |
Under the income tax treaty between the United Kingdom and the
U.S. (the U.K. Treaty), Platinum UK will not be
subject to United States income tax on any income found to be
effectively connected with a U.S. trade or business unless that
trade or business is conducted through a permanent establishment
in the U.S., Platinum UK will be entitled to the benefits
of the U.K. Treaty if, broadly,
|
|
|
|
|
during at least half of the days during the relevant taxable
period, at least 50% of Platinum UKs stock is
beneficially owned, directly or indirectly, by citizens or
residents of the U.S. and the U.K., and Platinum UKs
income is not used in substantial part to make certain payments,
or to meet certain liabilities to, persons who are not U.S. or
U.K. residents; or |
|
|
|
with respect to specific items of income, profit or gain derived
from the U.S., if such income, profit or gain is considered to
be derived in connection with, or incidental to,
Platinum UKs business conducted in the U.K. |
Under the income tax treaty between Ireland and the United
States (the Irish Treaty), Platinum Ireland is not
subject to United States income tax on any income determined to
be effectively connected with a U.S. trade or business unless
that trade or business is conducted through a permanent
establishment in the U.S., Platinum Ireland will generally be
entitled to the benefits of the Irish Treaty if:
|
|
|
|
|
at least 50 percent of the shares of Platinum Holdings,
measured by both vote and value, are owned by U.S. citizens or
residents; and |
|
|
|
amounts paid or accrued by Platinum Ireland (i) to persons
that are neither qualified persons, nor residents or citizens of
the United States and (ii) that are deductible for income
tax purposes in that fiscal year in Ireland (but not including
arms length payments in the ordinary course of business
for services or tangible property and payments in respect of
certain bank debt) do not exceed 50 percent of Platinum
Irelands gross income. |
Because of the factual nature of, and the lack of definitive
parameters for, determining the existence of a permanent
establishment, counsel will not render an opinion with respect
to whether Platinum Ireland will have a permanent establishment
in the U.S.
Foreign corporations not engaged in a trade or business in the
U.S. are nonetheless subject to U.S. withholding tax at a rate
of 30% of the gross amount of certain fixed or
determinable annual or periodical gains, profits and
income derived from sources within the U.S. (such as
dividends and certain interest on investments), subject to
reduction by applicable treaties. Dividends paid by Platinum
Finance to Platinum Ireland will be subject to withholding at a
rate of 5%, provided that Platinum Ireland is entitled to the
benefits of the Irish Treaty as described above and certain
other requirements are met. If Platinum Ireland is not entitled
to the benefits of the Irish Treaty and/or certain other
requirements are
S-60
not met, dividends paid by Platinum Finance to Platinum Ireland
will be subject to withholding at a rate of 30%.
The U.S. also imposes an excise tax on insurance and reinsurance
premiums paid to foreign insurers or reinsurers with respect to
risks located in the U.S. The rate of tax applicable to premiums
paid to Platinum Bermuda is 1% for reinsurance premiums. The
excise tax does not apply to premiums paid to Platinum UK,
provided that Platinum UK is entitled to the benefits of
the UK Treaty and certain other requirements are met.
Platinum Finance and Platinum US are U.S. corporations and will
be subject to taxation in the U.S. at regular corporate rates.
Finally, statements made in this prospectus supplement and the
accompanying prospectuses regarding the taxation of Platinum
Holdings, Platinum US and Platinum Bermuda and the taxation
of our shareholders are predicated on the retrocession
arrangements between Platinum US and Platinum Bermuda
qualifying as insurance for U.S. federal tax
purposes. Recently, the U.S. Internal Revenue Service (the
IRS) published Revenue Ruling 2005-40 (the
Ruling) in which it explains its view as to when,
with respect to an arrangement with a primary insurer, there is
adequate risk distribution (one of the two criteria
for determining whether an arrangement constitutes insurance for
U.S. federal income tax purposes) for the arrangement to qualify
as insurance. The Ruling does not address what constitutes risk
distribution in the context of reinsurance (which includes
retrocession insurance). However, if the IRS were to
successfully contend that the principles enunciated in the
Ruling apply to reinsurance (including retrocession insurance)
and that under those principles Platinum Bermuda does not have
adequate risk distribution for its retrocession contracts to
constitute insurance for federal tax purposes, among the
possible consequences would be that: (i) amounts paid to
date and hereafter by Platinum US to Platinum Bermuda
potentially are subject to a 30% withholding tax, (ii) the
Bermuda Treaty does not apply, thus increasing the risk that the
business profits of Platinum Bermuda are subject to taxation in
the United States, (iii) the gross income of
Platinum US possibly is not reduced by the amount of
premiums paid to Platinum Bermuda, and (iv) the
passive foreign investment company
(PFIC) rules (see discussion below) likely are
applicable. (It would follow, however, that (i) the excise
tax on reinsurance premiums would not apply and (ii) the
related person insurance income (RPII)
rules would not apply.) Such an outcome would be likely to
negatively impact the Company and the value of our Preferred and
Common Shares, particularly in the hands of those shareholders
who would be subject to the PFIC rules. You are urged to consult
your own tax advisor as to the potential application of the
Ruling to the Company and its potential impact on the value of
the Preferred and Common Shares.
TAXATION OF SHAREHOLDERS
BERMUDA TAXATION
Currently, there is no Bermuda withholding tax on dividends paid
by us.
UNITED STATES TAXATION OF U.S. AND NON-U.S. SHAREHOLDERS
U.S. SHAREHOLDERS
General. Except as otherwise noted, the following
discussion is the opinion of Dewey Ballantine LLP, our U.S. tax
counsel, as to the material U.S. federal income tax consequences
relating to the acquisition, ownership and disposition of
Preferred and Common Shares. This discussion is based on the
Code, Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in
effect and available on the date hereof. Legislative, judicial
or administrative changes may occur which could affect the
opinions and conclusions expressed in this discussion, possibly
on a retroactive basis. This discussion applies to you only if
you purchase your Preferred Shares in this offering, you hold
your Preferred Shares (and the Common Shares into which the
Preferred Shares are convertible) as capital assets and you are:
|
|
|
|
|
an individual who is a citizen or resident of the U.S.; |
S-61
|
|
|
|
|
an entity created or organized under the laws of the U.S. or any
state thereof, including the District of Columbia, that is
treated as a corporation for U.S. federal income tax purposes; |
|
|
|
an estate whose income is subject to U.S. federal income tax
regardless of its source; or |
|
|
|
a trust if a U.S. court can exercise primary supervision over
the trusts administration and one or more U.S. persons are
authorized to control all substantial decisions of the trust. |
This discussion does not deal with the U.S. federal income tax
consequences applicable to all categories of investors, some of
which (such as broker-dealers, investors who hold Preferred
Shares as part of hedging or conversion transactions and
investors whose functional currency is not the U.S. dollar) may
be subject to special rules. Further, this discussion does not
address the U.S. federal estate, gift, or alternative minimum
tax consequences of the acquisition, ownership or disposition of
Preferred or Common Shares.
Prospective investors are urged to consult their own tax
advisors with respect to their particular circumstances and with
respect to the effects of U.S. federal, state, local or other
laws to which they may be subject.
Dividends. Subject to the discussion below relating to
the potential application of the controlled foreign
corporation (CFC), RPII, and PFIC rules,
distributions with respect to your Preferred Shares (and the
Common Shares into which they are converted) will be treated as
ordinary dividend income to the extent of the Companys
current or accumulated earnings and profits as determined under
U.S. federal income tax law. Such dividends will not be eligible
for the dividends received deduction allowed to U.S.
corporations under the Code. Any such dividends received by
individual U.S. holders generally are subject to a reduced
maximum tax rate through December 31, 2008 of 15%. The rate
reduction does not apply to dividends received in respect of
short-term or hedged positions in the Preferred Shares (or the
Common Shares into which they are converted) and in certain
other situations. In addition, the rate reduction does not apply
to PFICs. The amount of any distribution in excess of our
current and accumulated earnings and profits will not be treated
as dividend income and will first be applied to reduce your tax
basis in the Preferred Shares (or the Common Shares into which
they are converted), and any amount in excess of tax basis will
be treated as gain from the sale or exchange of your Preferred
Shares (or the Common Shares into which they are converted).
Redemptions of Shares. A redemption of the Preferred
Shares (or the Common Shares into which they are converted) for
cash will be treated as a dividend if the Company has sufficient
earnings and profits, unless the redemption satisfies one of the
tests set forth in the Code enabling the redemption to be
treated as a sale or exchange. If the redemption is treated as a
sale or exchange, the U.S. federal income tax consequences will
be as discussed below in Sales, Exchanges, or Other
Dispositions Shares, if it is treated as a dividend, the
U.S. federal income tax consequences will be as discussed above
in Dividends. A redemption will be treated as a sale
or exchange only if it (1) is substantially
disproportionate, (2) constitutes a complete
termination of the holders stock interest in the
Company, (3) is not essentially equivalent to a
dividend or (4) represents a distribution in
redemption of a non-corporate shareholder and is in partial
liquidation of the Company. In determining whether any of these
requirements are met, in addition to the shares of the Company
that you actually own, you may be deemed to own other shares of
the Company by application of certain constructive ownership
rules. Because the determination as to whether any of these
tests is satisfied will depend on the facts and circumstances as
of the time the redemption occurs, prospective investors are
advised to consult their own tax advisors with respect to their
particular circumstances.
Mandatory or Optional Conversion into Common Shares.
Except as discussed below, as a general rule, a U.S. holder will
not recognize gain or loss in respect of the receipt of Common
Shares upon the conversion of Preferred Shares.
Cash received in lieu of a fractional common share generally
will be treated as a payment in a taxable exchange for such
fractional common share, and gain or loss will be recognized on
the receipt of cash in an amount equal to the difference between
the amount of cash received and the amount of adjusted tax basis
allocable to the fractional common share.
S-62
Upon any conversion by a U.S. holder of Preferred Shares into
Common Shares prior to or on the mandatory conversion date, any
amount received in cash with respect to accrued but unpaid
dividends will be treated as dividend income, a return of
capital or capital gain under the rules discussed above under
Dividends.
Except as discussed below, the adjusted tax basis of Common
Shares received on conversion will equal the adjusted tax basis
of the Preferred Shares converted (reduced by the portion of
adjusted tax basis allocated to any fractional Common Shares
exchanged for cash and subject to downward adjustment, if any,
described below), and the holding period of such Common Shares
received on conversion generally will include the period during
which the U.S. holder held its converted Preferred Shares.
If we do not have sufficient surplus to pay all accrued,
cumulated and unpaid dividends in cash by the mandatory
conversion date, and as a result upon conversion of the
Preferred Shares on the mandatory conversion date a U.S. holder
receives additional Common Shares (see Description of the
Series A Mandatory Convertible Preferred Shares
Mandatory Conversion), the U.S. holder will be treated as
receiving a distribution with respect to our Preferred Shares in
an amount equal to the fair market value of such additional
Common Shares. In general, this receipt of additional Common
Shares will be treated in the manner described above under
Dividends. The basis of any such additional shares
received in connection with a mandatory conversion will equal
fair market value at the time of receipt.
U.S. holders should be aware that the tax treatment described
above in respect of the payments made in respect of future
dividends is not certain and may be challenged by the IRS on
grounds that the cash received attributable to future dividends
represents a taxable dividend to the extent we have earnings and
profits at the time of conversion (or, alternatively, as
ordinary income). Under this characterization, the U.S. holder
would be taxable on cash received on account of future dividends
even if it realized a loss on its early conversion of our
Preferred Shares into our Common Shares.
A U.S. holders right potentially to receive a greater
number of shares of our Common Shares at the mandatory
conversion date or pursuant to an early conversion upon a cash
merger as compared to the number of Common Shares that such
holder would receive upon conversion at an earlier date could be
viewed as a constructive distribution of stock to such holder
under Section 305 of the Code, which, if so treated, would
be subject to tax as a dividend to the extent of our current and
accumulated earnings and profits. While the matter is not free
from doubt due to lack of authority directly on point, we intend
to take the position that such a right on the part of the holder
of our mandatory convertible preferred stock to receive a
greater number of shares of common stock, as described in this
paragraph, should not result in a constructive distribution of
stock.
Adjustment of Conversion Rate. Under certain
circumstances, adjustments to the conversion rate, for example
to reflect our issuance of certain rights, warrants, evidences
of indebtedness, securities or other assets to holders of Common
Shares, may result in constructive distributions under
Section 305(c) of the Code to U.S. holders of our mandatory
convertible preferred stock includable in income in the manner
described under Dividends, above.
Sales, Exchanges, or Other Dispositions of Shares.
Subject to the discussion below relating to the potential
application of Code section 1248 and the PFIC rules, you will
recognize a gain or loss for U.S. federal income tax purposes
upon the sale or exchange of your Preferred or Common Shares
equal to the difference between the amount realized upon such
sale or exchange and your basis in the Preferred or Common
Shares that are sold or exchanged. If your holding period for
the Preferred Shares (or the Common Shares into which they are
converted) is more than one year, any such gain will be subject
to U.S. tax at the current maximum marginal tax rate thereon of
15% for individuals and 35% for corporations. As discussed above
under Mandatory or Optional Conversion into Common
Shares, the holding period of Common Shares received on
conversion generally will include the period during which the
U.S. holder held its converted Preferred Shares.
Classification of Platinum Holdings, Platinum UK, Platinum
Bermuda or Platinum Ireland as a Controlled Foreign
Corporation. Each United States shareholder of a
foreign corporation that is a controlled foreign
corporation (CFC) for an uninterrupted period
of 30 days or more during a taxable
S-63
year, and who owns shares in the CFC directly or indirectly
through foreign entities on the last day of the CFCs
taxable year must include in its gross income for U.S. federal
income tax purposes its pro rata share of the CFCs
subpart F income, even if the subpart F
income is not distributed. If Platinum Holdings, Platinum
Bermuda, Platinum Ireland and/or Platinum UK is deemed to be a
CFC, substantially all of Platinum Holdings income and
that of each of Platinum Bermuda and Platinum Ireland will be
subpart F income. Any U.S. corporation, citizen, resident
or other U.S. person who owns, directly or indirectly through
foreign persons, or is considered to own (by application of the
rules of constructive ownership set forth in Code
section 958(b), applying to family members, partnerships,
estates, trusts or controlled corporations or holders of certain
options, including for these purposes, holders of our equity
security units) 10% or more of the total combined voting power
of all classes of stock of the foreign corporation will be
considered to be a 10% U.S. Shareholder. Because the
Preferred Shares are convertible to Common Shares at the option
of the holder, under the CFC rules, a U.S. holder of
Preferred Shares will be deemed to constructively own an amount
of Common Shares (and the associated voting power) equal to the
amount of Common Shares into which the Preferred Shares are
convertible. A foreign insurance company such as Platinum UK or
Platinum Bermuda is treated as a CFC (other than for purposes of
related person insurance income, as described below) only if its
10% U.S. Shareholders collectively own more than 25% of the
total combined voting power or total value of the
corporations stock. Because of the limitations on
concentration of voting power of our Common Shares the (the
Voting Dilution Provision), the dispersion of our
share ownership, and the restrictions on transfer, issuance or
repurchase of Common Shares all as described in
Description of Our Share Capital in the accompanying
prospectus, you should not be subject to treatment as a 10% U.S.
Shareholder. Further, we believe that these restrictions should
apply to the constructive ownership of Common Shares by holders
of Preferred Shares pursuant to the CFC rules. However, these
prophylactic provisions have not been tested in court and it is
possible that they could be challenged by the Internal Revenue
Service and found to be ineffective in preventing CFC status
from arising.
In addition, as discussed in Description of the
Series A Mandatory Convertible Preferred Shares
Voting Rights in this prospectus supplement, the Company
has agreed with the underwriters in this offering that, no later
than December 31, 2006, it will present to the
Companys shareholders for approval a resolution proposing
that Article 51(4) of the Companys Bye-laws (which
may be interpreted to limit the voting rights of Preferred
Shares) be deleted in its entirety and will recommend to the
shareholders that such resolution be approved and adopted; and,
promptly following such approval and adoption, the Company will
so amend the Bye-laws. Thereafter, if the Company fails to pay
dividends in an amount equal to six full quarterly dividends,
whether or not consecutive, the holders of the Preferred Shares,
together with the holders of all Voting Parity Securities then
outstanding, voting together as a single class, will be entitled
as a class to elect two additional directors to the
Companys board of directors (the Preferred Share
Class Vote). In analyzing whether a particular class
of stock is voting stock, the right to elect directors is a
determinative factor, regardless of whether that right is only
excercisable as a class (as would be the case with the Preferred
Share Class Vote). Therefore, if the class of holders of
Preferred Shares receive the right to elect two directors and a
holder of Preferred Shares holds either (1) at least 50% of
the Preferred Shares or (2) a sufficient combination of the
Companys Common Shares and Preferred Shares, such a
Preferred Shareholder could be a 10% U.S. Shareholder. Moreover,
under such circumstances, it is possible that such a 10% U.S.
Shareholder or 10% U.S. Shareholders collectively could own more
than 25% of the total value of the Companys shares.
Further, under the Bye-laws currently in effect, it is unclear
whether the limitation on voting rights provision (as described
in Description of Our Share Capital Limitation
on Voting Rights in the accompanying prospectus) would
apply to limit the voting rights attributable to the Preferred
Share Class Vote to ensure that no holder of Preferred
Shares could become a 10% U.S. Shareholder.
Again, there can be no assurance that these ownership
limitations will be effective. Because of this uncertainty, all
U.S. persons considering an investment in Preferred Shares are
urged to consult their own tax advisor as to the effects of the
application of the CFC rules to the Preferred Shares (and the
Common Shares into which they are convertible).
S-64
Related Person Insurance Income. Related Person Insurance
Income (RPII) is defined as any insurance
income earned by a RPII CFC attributable to
policies of insurance or reinsurance with respect to which the
person (directly or indirectly) insured is a RPII
Shareholder or a related person to such a
shareholder. In general, and subject to certain limitations,
insurance income is income (including premium and
investment income) attributable to the issuing of any insurance
or reinsurance contract in connection with risks located in a
country other than the country under the laws of which the
RPII CFC is created or organized and which would be
taxed under the portions of the Code relating to insurance
companies if the income were the income of a domestic insurance
company. The term RPII Shareholders includes all
U.S. persons who own, directly or indirectly, any amount of
shares of a foreign corporation that generates insurance income
in a given year if United States persons collectively own
directly, indirectly or constructively 25% or more of the shares
of the foreign corporation, measured by vote or value (a
RPII CFC). The term related person for
this purpose means someone who controls or is controlled by the
RPII Shareholder or someone who is controlled by the same person
or persons which control the RPII Shareholder. Control is
measured by either more than 50% in value or more than 50% in
voting power of stock, applying certain constructive ownership
principles. A corporations pension plan is ordinarily not
a related person with respect to the corporation
unless the pension plan owns, directly or indirectly through the
application of certain constructive ownership rules, more than
50%, measured by vote or value, of the stock of the corporation.
A holder of Preferred or Common Shares of Platinum Holdings will
be deemed to own the stock of Platinum UK and Platinum Bermuda
and will, consequently, be a RPII Shareholder. Unless an
exception applies, it is likely that Platinum UK and Platinum
Bermuda will each be treated as a RPII CFC.
RPII Exceptions. The special RPII rules do not apply if:
|
|
|
|
|
Direct or indirect insureds and persons related to such
insureds, whether or not U.S. persons, are treated at all
times during the taxable year as owning less than 20% of the
voting power and less than 20% of the value of the stock of
Platinum UK or Platinum Bermuda, as applicable, |
|
|
|
RPII, determined on a gross basis, is less than 20% of
Platinum UKs or Platinum Bermudas gross
insurance income for the taxable year, as applicable, |
|
|
|
Platinum UK or Platinum Bermuda elects to be taxed on its RPII
as if the RPII were effectively connected with the conduct of a
United States trade or business and to waive all treaty benefits
with respect to RPII and meets certain other requirements, or |
|
|
|
Platinum UK or Platinum Bermuda elects to be treated as a United
States corporation. |
Platinum UK and Platinum Bermuda have not made and do not intend
to make either of the elections described above. Additionally,
the Company believes there is a risk that persons related to
insureds will own, directly or indirectly, more than 20% of the
value of the stock of Platinum UK and Platinum Bermuda. Thus,
the second exception may be the only one available.
Computation of RPII. The Company will seek information
from our insureds and reinsureds or take such other steps as we
deem necessary to determine if either Platinum Bermuda or
Platinum UK was a RPII CFC in a taxable year. For any
taxable year in which Platinum UKs or Platinum
Bermudas gross RPII is 20% or more of its gross insurance
income for the year, we may also seek information from our
shareholders as to whether direct or indirect owners of our
shares at the end of the year are U.S. persons so that the RPII
may be determined and apportioned among such persons. To the
extent we are unable to determine whether a direct or indirect
owner of shares is a U.S. person, we may assume that such owner
is not a U.S. person, thereby increasing the per share RPII
amount for all RPII Shareholders.
Apportionment of RPII to United States Shareholders. If
Platinum UKs or Platinum Bermudas RPII for any
future taxable year is 20% or more of its gross insurance
income, every RPII Shareholder directly or indirectly owning
Preferred or Common Shares on the last day of that year will be
required to include in gross income its share of
Platinum UKs or Platinum Bermudas RPII for such
year, whether or not distributed. A U.S. person owning Preferred
or Common Shares during our taxable year but not on the
S-65
last day of the taxable year for which Platinum Bermuda and/or
Platinum UK is a controlled foreign corporation within the
meaning of the RPII provisions of the Code, which would normally
be December 31, is not required to include in gross income
any part of Platinum UKs or Platinum Bermudas
RPII. Correspondingly, a U.S. person directly or indirectly
owning Preferred or Common Shares on the last day of the taxable
year in which Platinum UK or Platinum Bermuda is a RPII CFC
is required to include in its income its pro rata share of the
RPII for the entire year, even though it did not own the
Preferred or Common Shares for the entire year.
Information Reporting. Each U.S. person who is a direct
or indirect shareholder of Platinum Holdings on the last day of
our taxable year must attach to the income tax or information
return it would normally file for the period which includes that
date a Form 5471 if Platinum UK or Platinum Bermuda is
a RPII CFC for any continuous thirty-day period during its
taxable year, whether or not any net RPII income is required to
be reported. Platinum UK or Platinum Bermuda, as the case
may be, will not be considered to be a RPII CFC and, therefore,
Form 5471 will not be required, for any taxable year in
which Platinum UKs or Platinum Bermudas gross
RPII constitutes less than 20% of its gross insurance income.
For any year in which Platinum UKs or Platinum
Bermudas gross RPII constitutes 20% or more of its gross
insurance income, we intend to provide Form 5471 to our
direct or indirect United States shareholders for attachment to
the returns of such shareholders. The amounts of the RPII
inclusions may be subject to adjustment based upon subsequent
IRS examination. A tax-exempt organization will be required to
attach Form 5471 to its information return in the
circumstances described above. Failure to file Form 5471
may result in penalties. In addition, U.S. persons who at any
time acquire 10% or more of our shares will have an independent
obligation to file Form 5471.
Tax-Exempt Shareholders. Tax-exempt entities will be
required to treat certain subpart F insurance income,
including RPII, that is includible in income by the tax-exempt
entity as unrelated business taxable income.
Distributions; Basis; Exclusion of Distributions from Gross
Income. A RPII Shareholders tax basis in its Preferred
or Common Shares will be increased by the amount of any RPII
that the shareholder includes in income. The shareholder may
exclude from income the amount of any distribution by us to the
extent of the RPII included in income for the year in which the
distribution was paid or for any prior year. The RPII
Shareholders tax basis in its Preferred or Common Shares
will be reduced by the amount of such distributions that are
excluded from income. While, in certain circumstances, a RPII
Shareholder may be able to exclude from income distributions
with respect to RPII that a prior shareholder included in
income, that exclusion will not generally be available to
holders who purchase Preferred Shares in this offering or in the
public trading markets and are therefore unable to identify the
previous shareholder and demonstrate that such shareholder had
previously included the RPII in income.
Uncertainty as to Application of RPII. Regulations
interpreting the RPII provisions of the Code exist only in
proposed form. It is not certain whether these regulations will
be adopted in their proposed form or what changes might
ultimately be made or whether any such changes, as well as any
interpretation or application of the RPII rules by the IRS, the
courts or otherwise, might have retroactive effect. Accordingly,
the meaning of the RPII provisions and their application to
Platinum UK and Platinum Bermuda is uncertain. In addition,
there can be no assurance that the IRS will not challenge any
determinations by Platinum UK or Platinum Bermuda as to the
amount, if any, of RPII that should be includible in your income
or that the amounts of the RPII inclusions will not be subject
to adjustment based upon subsequent IRS examination. All U.S.
persons considering investment in Preferred Shares should
consult their tax advisors as to the effects of these
uncertainties.
Code Section 1248. Code section 1248 provides
that if a U.S. person disposes of stock in a foreign corporation
and such person was a 10% U.S. Shareholder of the corporation at
any time during the five-year period ending on the date of
disposition when the corporation was a CFC, any gain from the
sale or exchange of the shares may be treated as ordinary income
to the extent of the CFCs earnings and profits during the
period that the shareholder held the shares (with certain
adjustments). A 10% U.S. Shareholder may in certain
circumstances be required to report a disposition of shares of a
CFC by attaching IRS Form 5471 to the United States income
tax or information return that it would normally
S-66
file for the taxable year in which the disposition occurs. Code
section 953(c)(7) generally provides that section 1248
also will apply to the sale or exchange of shares in a foreign
corporation if the foreign corporation would be taxed as an
insurance company if it were a domestic corporation, regardless
of whether the shareholder is a 10% U.S. Shareholder or whether
RPII constitutes 20% or more of the corporations gross
insurance income. Existing Treasury regulations do not address
whether Code section 1248 and the requirement to file
Form 5471 would apply if the foreign corporation is not a
CFC but the foreign corporation has a subsidiary that is a CFC
or that would be taxed as an insurance company if it were a
domestic corporation (although, as discussed above, shareholders
of 10% or more of the shares of the Company will have an
independent obligation to file Form 5471 in respect of the
taxable year in which they reach the 10% threshold). Code
section 1248 and the requirement to file Form 5471 should
not apply to dispositions of Preferred Shares because
(i) we should not have any U.S. shareholders that own
directly, indirectly or constructively 10% or more of the voting
power of the Preferred Shares, and (ii) we are not directly
engaged in the insurance business and, under proposed
regulations, Code sections 953 and 1248 appear to be
applicable only in the case of shares of corporations that are
directly engaged in the insurance business. However, the IRS
might interpret the proposed regulations in a different manner
and the proposed regulations may be amended or promulgated in
final form so as to provide that Code section 1248 and the
requirement to file Form 5471 will apply to dispositions of
Preferred Shares.
Passive Foreign Investment Companies. Sections 1291
through 1298 of the Code contain special rules applicable to
foreign corporations that are PFICs. In general, a foreign
corporation will be a PFIC during a given year if:
|
|
|
|
|
75% or more of its income constitutes passive income or |
|
|
|
50% or more of its assets produce passive income. |
If we were to be characterized as a PFIC during a given year,
our United States shareholders would be subject to a penalty tax
at the time of their sale at a gain of, or receipt of an
excess distribution with respect to, their Preferred
or Common Shares, unless such shareholders elected to be taxed
on their pro rata share of our earnings whether or not such
earnings were distributed or elected to be taxed on the
investment in Preferred Shares on a mark-to-market basis. In
general, a shareholder receives an excess
distribution if the amount of the distribution is more
than 125% of the average distribution with respect to the stock
during the three preceding taxable years (or shorter period
during which the taxpayer held the stock). In general, the
penalty tax is equivalent to an interest charge on taxes that
are deemed due during the period the United States shareholder
owned the shares, computed by assuming that the excess
distribution or gain (in the case of a sale) with respect to the
shares was taxed in equal portions at the highest applicable tax
rate on ordinary income throughout the shareholders period
of ownership. Moreover, dividends paid by a PFIC to a
non-corporate US shareholder are not eligible for the reduced
tax rate of 15%. The interest charge is equal to the applicable
rate imposed on underpayments of United States federal income
tax for such period.
For the above purposes, passive income is defined to
include income of the kind which would be foreign personal
holding company income under Code section 954(c), and
generally includes interest, dividends, annuities and other
investment income. The PFIC statutory provisions, however,
contain an express exception for income derived in the
active conduct of an insurance business by a corporation which
is predominantly engaged in an insurance business ....
This exception is intended to ensure that income derived by a
bona fide insurance company is not treated as passive income,
except to the extent such income is attributable to financial
reserves in excess of the reasonable needs of the insurance
business. We expect, for purposes of the PFIC rules, that each
of Platinum UK and Platinum Bermuda will be predominantly
engaged in an insurance business and is unlikely to have
financial reserves in excess of the reasonable needs of its
insurance business. The PFIC statutory provisions contain a
look-through rule stating that, for purposes of determining
whether a foreign corporation is a PFIC, such foreign
corporation shall be treated as if it received directly
its proportionate share of the income ... and as if it
held its proportionate share of the assets ... of
any other corporation in which it owns at least 25% by value of
the stock. While no explicit guidance is provided by the
statutory
S-67
language, under this look-through rule we should be deemed to
own the assets and to have received the income of our insurance
subsidiaries directly for purposes of determining whether we
qualify for the insurance exception. This interpretation of the
look-through rule is consistent with the legislative intention
generally to exclude bona fide insurance companies from the
application of PFIC provisions; there can, of course, be no
assurance as to what positions the IRS or a court might take in
the future. All U.S. persons considering investment in Preferred
Shares should consult their own tax advisors as to the effects
of the PFIC rules.
Other. Except as discussed below with respect to backup
withholding, dividends paid by us will not be subject to U.S.
withholding tax.
NON-U.S. SHAREHOLDERS
Subject to certain exceptions, non-U.S. persons will be subject
to United States federal income tax on dividend distributions
with respect to, and gain realized from the sale or exchange of,
Preferred or Common Shares only if such dividends or gains are
effectively connected with the conduct of a trade or business
within the U.S.
ALL SHAREHOLDERS
Information reporting to the IRS by paying agents and custodians
located in the United States will be required with respect to
payments of dividends on the Preferred or Common Shares to
U.S. persons. Thus, you may be subject to backup
withholding with respect to dividends paid by such persons,
unless you:
|
|
|
|
|
are a corporation or come within certain other exempt categories
and, when required, demonstrate this fact, or |
|
|
|
provide a taxpayer identification number, certify as to no loss
of exemption from backup withholding and otherwise comply with
applicable requirements of the backup withholding rules. |
Backup withholding is not an additional tax and may be credited
against your regular federal income tax liability.
Prospective investors are urged to consult their own tax
advisors with respect to their particular circumstances and with
respect to the effects of U.S. federal, state, local or other
laws to which they may be subject.
ERISA CONSIDERATIONS
We and certain of our affiliates may be considered a party
in interest within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (ERISA), or
a disqualified person within the meaning of
Section 4975 of the Code with respect to employee benefit
plans. Prohibited transactions within the meaning of ERISA or
the Code may arise, for example, if the Preferred Shares are
acquired by or with the assets of a pension or other employee
benefit plan with respect to which we or any of our affiliates
is a service provider, unless the Preferred Shares are acquired
pursuant to an applicable exemption from the prohibited
transaction rules.
Accordingly, by its acquisition and holding of the Preferred
Shares, each holder of the Preferred Shares will be deemed to
have represented that either (i) it has not used the assets
of any benefit plan, or any entity deemed to hold assets of a
benefit plan, for purposes of acquiring the Preferred Shares or
(ii) if the assets of a benefit plan are used to acquire
the Preferred Shares, either directly or indirectly, the
acquisition and holding of the Preferred Shares do not, and will
not, constitute a non-exempt prohibited transaction under
Section 406 of ERISA, Section 4975 of the Code or any
similar rules by reason of the applicability to such purchase
and holding of a class exemption issued by the U.S. Department
of Labor.
The issuance of Preferred Shares by us pursuant to the Preferred
Shares Offering to a plan is in no respect a representation by
us that such an investment meets all relevant legal requirements
with
S-68
respect to investments by plans generally or any particular
plan, or that such an investment is appropriate for plans
generally or any particular plan.
Any party considering acquiring the Preferred Shares pursuant to
the Preferred Shares Offering on behalf of, or with the assets
of, any benefit plan should consult with its counsel to confirm
that such investment will satisfy the requirements of ERISA, the
Code and the Department of Labor Regulations applicable to plans
and that such purchaser can make the deemed representations set
forth above.
LEGAL MATTERS
The validity of the Preferred Shares under Bermuda law will be
passed upon for the Company by Conyers Dill & Pearman,
Hamilton, Bermuda. Certain legal matters in connection with the
offering will be passed upon for the Company by Dewey Ballantine
LLP, New York, New York, and the underwriter is being advised as
to certain matters by Fried, Frank, Harris, Shriver &
Jacobson LLP, New York, New York, in each case in reliance on
the opinions of Conyers Dill & Pearman with respect to
Bermuda law.
EXPERTS
The consolidated balance sheets of Platinum Holdings as of
December 31, 2004 and 2003 and the related consolidated
statements of income and comprehensive income,
shareholders equity and cash flows for the years ended
December 31, 2004 and 2003 and the period from
April 19, 2002 (date of inception) to December 31,
2002, and all related financial statement schedules, and
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2004,
included in our Annual Reports on Form 10-K and
Form 10-K/ A, and incorporated by reference herein, have
been audited by KPMG LLP, independent registered public
accounting firm, as set forth in their reports appearing
therein. These consolidated financial statements and financial
statement schedules and managements assessment of the
effectiveness of internal control over financial reporting
referred to above are included in reliance upon such reports of
KPMG LLP, which are incorporated by reference herein, given upon
the authority of such firm as experts in accounting and auditing.
The combined statements of underwriting results and identifiable
underwriting cash flows of The St. Paul Companies, Inc.
Reinsurance Underwriting Segment (Predecessor) for
the period from January 1, 2002 through November 1,
2002 included in our Annual Reports on Form 10-K and
Form 10-K/A and incorporated by reference herein, have been
audited by KPMG LLP, independent registered public accounting
firm, as set forth in their report appearing therein. The
combined statements referred to above are included in reliance
upon such reports of KPMG LLP, which are incorporated by
reference herein given upon the authority of such firm as
experts in accounting and auditing. The audit report covering
Predecessors combined statements contains an explanatory
paragraph that states that the combined statements are not
intended to be a complete presentation of Predecessors or
St. Pauls financial position, results of operations,
or cash flows.
WHERE YOU CAN FIND MORE INFORMATION
We have filed the 2005 Shelf Registration Statement on
Form S-3 (Registration No. 333-129182) under the
Securities Act with the SEC with respect to the Preferred Shares
offered for sale by us pursuant to this prospectus supplement
and accompanying prospectus (the 2005 Shelf Registration
Statement). This prospectus supplement and the
accompanying prospectus, filed as part of the 2005 Shelf
Registration Statement, do not contain all of the information
set forth in the registration statement and its exhibits and
schedules, portions of which have been omitted as permitted by
the rules and regulations of the SEC. For further information
about us and the securities, we refer you to the 2005 Shelf
Registration Statement and to its exhibits and schedules.
Statements in this prospectus supplement and the accompanying
prospectus about the contents of any contract, agreement or
other document are not necessarily complete and, in each
instance, we refer you to the copy of such contract, agreement
or document filed or incorporated by reference as an exhibit to
the 2005 Shelf Registration Statement, with each such statement
being qualified in all respects by reference to the document to
which it refers. Anyone may inspect the 2005 Shelf Registration
Statement and its exhibits and schedules included in either or
both without charge at the
S-69
public reference facilities the SEC maintains at 100 F
Street, N.E., Washington, D.C. 20549. You may obtain copies of
all or any part of these materials from the SEC upon the payment
of certain fees prescribed by the SEC. You may obtain further
information about the operation of the SECs Public
Reference Room by calling the SEC at 1-800-SEC-0330. You may
also inspect these reports and other information without charge
at a web site maintained by the SEC. The address of this site is
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the
information we file with them, which means that we can disclose
important information to you by referring you to those
documents. The information incorporated by reference is
considered to be part of this prospectus supplement, and later
information that we file with the SEC will automatically update
and supersede this information. Platinum Holdings incorporates
by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d)
of the Exchange Act until the offering of Preferred Shares
pursuant to this prospectus supplement and the accompanying
prospectus is complete.
|
|
|
SEC Filings (File No. 001-31341) |
|
Period |
|
|
|
Annual Report on Form 10-K and as amended on
Form 10-K/ A |
|
Year Ended December 31, 2004 (including information
specifically incorporated by reference into Platinum
Holdings Form 10-K from Platinum Holdings
definitive Proxy Statement for its 2005 annual general meeting
of shareholders) |
Quarterly Reports on Form 10-Q |
|
Quarters Ended March 31, 2005 and September 30, 2005 |
Quarterly Report on Form 10-Q and as amended on
Form 10-Q/ A |
|
Quarter Ended June 30, 2005 |
Current Reports on Form 8-K |
|
(i) filed on January 11, 2005; February 23, 2005,
April 14, 2005, April 28, 2005, May 18, 2005 and
August 9, 2005 under Items 1.01 and 9.01; (ii) filed
on February 23, 2005 and June 23, 2005 under
Item 5.02; (iii) filed on May 13, 2005 under
Items 1.01 and 1.02; (iv) filed on May 24, 2005,
September 22, 2005 and November 21, 2005 under
Items 1.01, 8.01 and 9.01; (v) filed on May 27,
2005, August 17, 2005 and October 24, 2005 under
Items 1.01, 2.03, 8.01 and 9.01; (vi) filed on
June 15, 2005, August 2, 2005, September 15,
2005, October 6, 2005 and November 10, 2005 under
Items 8.01 and 9.01; (vii) filed on July 29, 2005
only with respect to information filed under Item 8.01 and
only Exhibit 99.3 under Item 9.01; (viii) filed
on October 28, 2005 only with respect to the information
filed under Items 1.01, 5.02 and only Exhibits 10.1, 10.2,
10.3 and 99.3 under Item 9.01 and (ix) filed on
November 3, 2005 under Items 1.01, 2.03 and 9.01. |
You may request a copy of these filings, at no cost, by writing
or calling us at the following address or telephone number:
Platinum Underwriters Holdings, Ltd.
The Belvedere Building
69 Pitts Bay Road
Pembroke, HM 08, Bermuda
(441) 295-7195
Attention: Secretary
Exhibits to the filings will not be sent, however, unless those
exhibits have specifically been incorporated by reference in
this prospectus supplement and the accompanying prospectus.
S-70
PROSPECTUS
$750,000,000
Platinum Underwriters Holdings, Ltd.
Common Shares, Preferred Shares, Depositary Shares, Debt
Securities,
Warrants to Purchase Common Shares, Warrants to Purchase
Preferred Shares,
Warrants to Purchase Debt Securities, Purchase Contracts,
Purchase Units and Full
and Unconditional Guarantee of Platinum Finance Debt
Securities
Platinum Underwriters Finance, Inc.
Debt Securities Fully and Unconditionally
Guaranteed by Platinum Underwriters Holdings, Ltd.
Platinum Holdings may offer and sell, from time to time:
|
|
|
|
|
common shares; |
|
|
|
preferred shares; |
|
|
|
depositary shares representing common shares, preferred shares
or debt securities; |
|
|
|
senior or subordinated debt securities; |
|
|
|
warrants to purchase common shares, preferred shares or debt
securities; and |
|
|
|
purchase contracts and purchase units. |
Platinum Finance, a holding company incorporated in Delaware, is
our wholly-owned indirect subsidiary. Platinum Finance may offer
and sell, from time to time, senior or subordinated debt
securities fully and unconditionally guaranteed by Platinum
Holdings.
The specific terms and initial public offering prices of these
securities will be provided in supplements to this prospectus.
You should read this prospectus and any supplement carefully
before you invest.
Investing in these securities involves certain risks. See
Risk Factors on page 4.
These securities may be sold to or through underwriters and also
to other purchasers or through agents. The names of any
underwriters or agents and the specific terms of a plan of
distribution will be stated in an accompanying prospectus
supplement.
These securities may be sold in one or more offerings up to a
total dollar amount of $750,000,000.
The common shares of Platinum Holdings are traded on the New
York Stock Exchange under the symbol PTP. Other than
for these common shares, there is no market for the other
securities Platinum Holdings or Platinum Finance may offer.
NONE OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION, THE REGISTRAR OF COMPANIES IN BERMUDA,
THE BERMUDA MONETARY AUTHORITY OR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus may not be used to consummate sales of offered
securities unless accompanied by a prospectus supplement.
The date of this prospectus is November 4, 2005.
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
2 |
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
4 |
|
|
|
|
4 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
6 |
|
|
|
|
7 |
|
|
|
|
7 |
|
|
|
|
16 |
|
|
|
|
18 |
|
|
|
|
33 |
|
|
|
|
34 |
|
|
|
|
36 |
|
|
|
|
37 |
|
|
|
|
38 |
|
|
|
|
40 |
|
|
|
|
40 |
|
|
|
|
41 |
|
|
|
|
41 |
|
|
|
|
42 |
|
IMPORTANT INFORMATION ABOUT THIS PROSPECTUS
You should rely only on the information contained in this
document or to which we have referred you. We have not
authorized anyone to provide you with information that is
different. If anyone provides you with different or inconsistent
information, you should not rely on it. This document may only
be used where it is legal to sell these securities. The
information contained or incorporated by reference in this
document is accurate only as of the date of this document.
Consent under the Exchange Control Act 1972 (and its related
regulations) has been obtained from the Bermuda Monetary
Authority for the issue and transfer of our offered securities
to and between non-residents of Bermuda for exchange control
purposes provided our common shares remain listed on an
appointed stock exchange, which includes the New York Stock
Exchange. The issue and transfer of in excess of 20% of our
shares involving any persons regarded as resident in Bermuda for
exchange control purposes requires prior authorization from the
Bermuda Monetary Authority. This prospectus will be filed with
the Registrar of Companies in Bermuda in accordance with Bermuda
law. In granting such consent and in accepting this prospectus
for filing, neither the Bermuda Monetary Authority nor the
Registrar of Companies in Bermuda accepts any responsibility for
our financial soundness or the correctness of any of the
statements made or opinions expressed in this prospectus.
References in this prospectus to dollars or
$ are to the lawful currency of the United States of
America, unless the context otherwise requires.
2
AVAILABLE INFORMATION
This prospectus is part of a registration statement that we have
filed with the Securities and Exchange Commission (the
SEC) using a shelf registration process,
relating to the common shares, preferred shares, depositary
shares, debt securities and any related guarantees, warrants,
purchase contracts and purchase units described in this
prospectus. This means:
|
|
|
|
|
Platinum Holdings and/or Platinum Finance may issue securities
covered by this prospectus from time to time, up to a total
initial offering price of $750,000,000; |
|
|
|
Platinum Holdings and/or Platinum Finance will provide a
prospectus supplement each time these securities are offered
pursuant to this prospectus; and |
|
|
|
the prospectus supplement will provide specific information
about the terms of that offering and also may add to, update or
change information contained in this prospectus. |
This prospectus provides you with a general description of the
securities Platinum Holdings and/or Platinum Finance may offer.
This prospectus does not contain all of the information set
forth in the registration statement as permitted by the rules
and regulations of the SEC. For additional information regarding
Platinum Holdings and/or Platinum Finance and the offered
securities, please refer to the registration statement. Each
time Platinum Holdings and/or Platinum Finance sells securities,
Platinum Holdings and/or Platinum Finance will provide a
prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may
also add, update or change information contained in this
prospectus. You should read both this prospectus and any
prospectus supplement together with additional information
described under the heading Where You Can Find More
Information. In this prospectus, references to the
Company, Platinum, we,
us and our refer to Platinum
Underwriters Holdings, Ltd. and its consolidated subsidiaries,
including Platinum Underwriters Finance, Inc., unless the
context otherwise indicates. Platinum Holdings
refers solely to Platinum Underwriters Holdings, Ltd.
Platinum US refers to Platinum Underwriters
Reinsurance, Inc. Platinum UK refers to Platinum Re
(UK) Limited. Platinum Bermuda refers to
Platinum Underwriters Bermuda, Ltd. Platinum Ireland
refers to Platinum Regency Holdings. Platinum
Finance refers to Platinum Underwriters Finance, Inc.
PLATINUM UNDERWRITERS HOLDINGS, LTD.
Platinum Holdings is a leading provider of property and marine,
casualty and finite risk reinsurance coverages, through
reinsurance intermediaries, to a diverse clientele of insurers
and select reinsurers on a worldwide basis. Platinum operates
through three licensed reinsurance subsidiaries: Platinum US,
Platinum Bermuda and Platinum UK. Our principal executive
offices are located at The Belvedere Building, 69 Pitts Bay
Road, Pembroke, Bermuda HM 08. Our telephone number is
(441) 295-7195.
For further information regarding Platinum, including financial
information, you should refer to our recent filings with the SEC.
PLATINUM UNDERWRITERS FINANCE, INC.
Platinum Finance, a holding company, is our wholly-owned
indirect subsidiary and owns all of the stock of Platinum US and
Platinum Administrative Services, Inc. Platinum Finances
activities have generally been limited to raising funds for
Platinum US through the issuance of the Series A
7.50% Notes due June 1, 2017 which are fully and
unconditionally guaranteed by Platinum Holdings (the
Series A 7.50% Notes) and which have been exchanged in
full for Series B 7.50% Notes due June 1, 2017
which have been registered under the Securities Act of 1933, as
amended (the Securities Act), and which have been fully and
unconditionally guaranteed by Platinum Holdings (the
Series B 7.50% Notes, and collectively with the
Series A 7.50% Notes, the 7.50% Notes), and the
issuance of the 5.25% Senior Guaranteed Notes of Platinum
Finance, which are fully and unconditionally guaranteed by
Platinum Holdings (which we refer to as the Senior Notes) that
were successfully remarketed and now, as remarketed notes, have
an interest rate of 6.371% per annum and are due
November 16, 2007 (which we refer to as the Remarketed
Notes).
3
Pursuant to a separate prospectus, Platinum Finance is currently
offering to exchange up to $137,500,000 aggregate principal
amount of the Remarketed Notes for up to $137,500,000 of Series
B 6.371% Notes, which have been fully and unconditionally
guaranteed by Platinum Holdings and registered under the
Securities Act (the Series B 6.371% Notes and, together with the
Remarketed Notes, the 6.371% Notes). Platinum Finances
principal executive offices are located at 2 World Financial
Center, 225 Liberty Street, Suite 2300, New York, NY 10281.
Platinum Finances telephone number is (212) 238-9600.
RISK FACTORS
Investing in our securities involves risk. Please see the risk
factors described in our Annual Report on Form 10-K for our
most recent fiscal year, which are incorporated by reference in
this prospectus. Before making an investment decision, you
should carefully consider these risks as well as other
information we include or incorporate by reference in this
prospectus. The risks and uncertainties we have described are
not the only ones facing our company. Additional risks and
uncertainties not presently known to us or that we currently
deem immaterial may also affect our business operations.
Additional risk factors may be included in a prospectus
supplement relating to a particular series or offering of
securities.
GENERAL DESCRIPTION OF THE OFFERED SECURITIES
Platinum Holdings may from time to time offer under this
prospectus, separately or together:
|
|
|
|
|
common shares, which we would expect to list on the New York
Stock Exchange; |
|
|
|
preferred shares, the terms and series of which would be
described in the related prospectus supplement, including the
ability to convert or exchange the preferred shares into common
shares; |
|
|
|
depositary shares, each representing a fraction of a common
share or a particular series of preferred shares, which will be
deposited under a deposit agreement among us, a depositary
selected by us and the holders of the depository receipts; |
|
|
|
senior debt securities; |
|
|
|
subordinated debt securities, which will be subordinated in
right of payment to our senior indebtedness; |
|
|
|
warrants to purchase common shares and warrants to purchase
preferred shares, which will be evidenced by share warrant
certificates and may be issued under the share warrant agreement
independently or together with any other securities offered by
any prospectus supplement and may be attached to or separate
from such other offered securities; |
|
|
|
warrants to purchase debt securities, which will be evidenced by
debt warrant certificates and may be issued under the debt
warrant agreement independently or together with any other
securities offered by any prospectus supplement and may be
attached to or separate from such other offered securities; |
|
|
|
guarantees of Platinum Finances debt securities |
|
|
|
purchase contracts obligating holders to purchase from us a
specified number of common shares or preferred shares at a
future date or dates; and |
|
|
|
purchase units, consisting of a purchase contract and, as
security for the holders obligation to purchase common
shares or preferred shares under the purchase contract, any of
(1) Platinum Holdings debt securities,
(2) Platinum Finances debt securities which are fully
and unconditionally guaranteed by Platinum Holdings,
(3) debt obligations of third parties, including
U.S. Treasury securities or (3) our preferred shares. |
Platinum Finance may from time to time offer under this
prospectus, separately or together,
|
|
|
|
|
senior debt securities fully and unconditionally guaranteed by
Platinum Holdings; and |
|
|
|
subordinated debt securities fully and unconditionally
guaranteed by Platinum Holdings. |
The aggregate initial offering price of these offered securities
will not exceed $750,000,000.
4
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed
charges for the nine month period ended September 30, 2005,
the years ended December 31, 2004 and 2003 and the period
from November 1, 2002 to December 31, 2002:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended | |
|
|
Period Ended | |
|
December 31, | |
|
|
September 30, | |
|
| |
|
|
2005 | |
|
2004 | |
|
2003 | |
|
2002(1) | |
|
|
| |
|
| |
|
| |
|
| |
Ratio of Earnings to Fixed Charges
|
|
|
|
(2) |
|
|
13.4 |
|
|
|
21.4 |
|
|
|
8.7 |
|
|
|
(1) |
In 2002, we only had two months of operations following our
initial public offering on November 1, 2002. |
|
(2) |
Earnings were insufficient to cover fixed charges by $42,942,000
for the nine month period ended September 30, 2005. |
For purposes of computing these ratios, earnings
consists of income/loss before income taxes and fixed charges.
Fixed charges consists of interest expense and
amortization of capitalized debt expenses.
We did not have any preferred shares outstanding during any of
the periods shown and accordingly our ratio of earnings to fixed
charges and preferred share dividend requirements would be the
same as the ratios shown above.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate herein by
reference may contain forward-looking statements within the
meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as
amended (the Exchange Act), with respect to our
beliefs, plans, goals, expectations, and estimates.
Forward-looking statements are necessarily based on estimates
and assumptions that are inherently subject to significant
business, economic and competitive uncertainties and
contingencies, many of which are subject to change. These
uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those
expressed in any forward-looking statements made by, or on
behalf of, us.
In particular, statements using words such as may,
should, estimate, expect,
anticipate, intend, believe,
predict, potential, or words of similar
import generally involve forward-looking statements. This
prospectus and the documents incorporated by reference herein
also contain forward-looking statements with respect to our
business and industry, such as those relating to our strategy
and management objectives and trends in market conditions,
market standing, product volumes, investment results and pricing
conditions.
In light of the risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this
prospectus and the documents incorporated by reference herein
should not be considered as a representation by us or any other
person that our objectives or plans will be achieved. Numerous
factors could cause our actual results to differ materially from
those in forward-looking statements, including the following:
|
|
|
(1) conducting operations in a competitive environment; |
|
|
(2) our ability to maintain our A.M. Best Company rating; |
|
|
(3) significant weather-related or other natural or
man-made disasters over which the Company has no control; |
5
|
|
|
(4) the effectiveness of our loss limitation methods and
pricing models; |
|
|
(5) the adequacy of the Companys liability for unpaid
losses and loss adjustment expenses; |
|
|
(6) the availability of retrocessional reinsurance on
acceptable terms; |
|
|
(7) our ability to maintain our business relationships with
reinsurance brokers; |
|
|
(8) general political and economic conditions, including
the effects of civil unrest, war or a prolonged U.S. or
global economic downturn or recession; |
|
|
(9) the cyclicality of the property and casualty
reinsurance business; |
|
|
(10) market volatility and interest rate and currency
exchange rate fluctuation; |
|
|
(11) tax, regulatory or legal restrictions or limitations
applicable to the Company or the property and casualty
reinsurance business generally; |
|
|
(12) changes in the Companys plans, strategies,
objectives, expectations or intentions, which may happen at any
time at the Companys discretion; and |
|
|
(13) the uncertainty as to the ultimate magnitude of our
losses pursuant to Hurricanes Katrina and Rita. |
As a consequence, current plans, anticipated actions and future
financial conditions and results may differ from those expressed
in any forward-looking statements made by or on behalf of the
Company. The foregoing factors should not be construed as
exhaustive. Additionally, forward-looking statements speak only
as of the date they are made, and we undertake no obligation to
release publicly the results of any future revisions or updates
we may make to forward-looking statements to reflect new
information or circumstances after the date hereof or to reflect
the occurrence of future events.
RECENT DEVELOPMENTS
$200 Million Credit Facility
We announced on October 21, 2005 that we have entered into a
three-year $200,000,000 credit agreement with a syndicate of
lenders. The credit agreement consists of a $100,000,000 senior
unsecured credit facility available for revolving borrowings and
letters of credit, and a $100,000,000 senior secured credit
facility available for letters of credit. The revolving line of
credit will be available for the working capital, liquidity and
general corporate requirements of the Company and its
subsidiaries. The credit facility was arranged by Wachovia
Capital Markets, LLC, acting as sole lead arranger and
bookrunner.
Exchange Offer for the 6.371% Notes
On October 26, 2005, we launched an exchange offer through which
we offered to exchange up to $137,500,000 aggregate principal
amount of the outstanding Remarketed Notes for up to
$137,500,000 aggregate principal amount of the Series B 6.371%
Notes, pursuant to a separate prospectus. This exchange offer is
currently scheduled to remain open through November 29, 2005.
Appointment of Michael D. Price as Chief Executive Officer
On October 27, 2005, we announced the appointment of Michael D.
Price as President and Chief Executive Officer of Platinum
Holdings. Mr. Price succeeds Gregory E.A. Morrison, who has been
named Vice Chairman of the Board of Directors. Mr. Price was
also named to the Companys Board of Directors. Mr. Price
was named Chief Operating Officer in August 2005, having
previously served as President and Chief Underwriting Officer of
Platinum US. We also announced that we have extended our
agreement with Steven Newman, pursuant to which he will continue
to serve as our Chairman until November 2007. Mr. Newman has
been Chairman of our Board of Directors since our inception in
2002.
6
Closing of 7.50% Notes Exchange Offer
On November 2, 2005, we closed an exchange offer through which
we had offered to exchange up to $250,000,000 aggregate
principal amount of our outstanding Series A 7.50% Notes for up
to $250,000,000 aggregate principal amount of Series B 7.50%
Notes, which have been registered under the Securities Act,
pursuant to a separate prospectus. The exchange offer period
expired on October 28, 2005, at which time $250,000,000
aggregate principal amount of outstanding Series A 7.50% Notes
had been tendered and accepted for exchange.
USE OF PROCEEDS
Unless indicated otherwise in a prospectus supplement, Platinum
Holdings and Platinum Finance expect to use the net proceeds
from the sale of the securities for general corporate purposes,
including their working capital and the working capital of their
reinsurance subsidiaries, capital expenditures, share repurchase
programs and acquisitions. We may provide additional information
on the use of the net proceeds from the sale of the offered
securities in an applicable prospectus supplement relating to
the offered securities.
DESCRIPTION OF OUR SHARE CAPITAL
The following description of the share capital of Platinum
Holdings summarizes certain provisions of Platinum
Holdings Bye-laws, and is qualified in its entirety by
reference to such Bye-laws. A copy of Platinum Holdings
Bye-laws is filed as an exhibit to Platinum Holdings
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004, filed with the SEC on August 6, 2004.
General
As of October 21, 2005, Platinum Holdings authorized
share capital consisted of: (1) 200,000,000 common shares,
par value $0.01 per share, of which 49,604,759 common
shares were outstanding and (ii) 25,000,000 preferred
shares, par value $0.01 per share, none of which were
outstanding. As of May 10, 2005, there were approximately
27 holders of record of our common shares, including
RenaissanceRe Holdings Ltd. (RenaissanceRe), which
held 3,960,000 common shares and an option to acquire a number
of common shares equal to the excess of the market price per
share over $27.00 less the par value per share multiplied by the
number of common shares issuable upon exercise of the option,
divided by that market price per share. Based on the closing
price per share on March 1, 2005, RenaissanceRe had the
right to acquire pursuant to the RenaissanceRe option 342,652
common shares as of such date, resulting in the beneficial
ownership by RenaissanceRe of 4,302,652 common shares (or 9.9%
of the then outstanding common shares) as of such date. Prior to
June 30, 2004, The St. Paul Travelers Companies, Inc.,
formerly The St. Paul Companies, Inc. (St. Paul),
owned 6,000,000 common shares. On that date, those common shares
were sold in an underwritten public offering, which was effected
pursuant to a prospectus supplement to the shelf registration
statement dated June 28, 2004. St. Paul continues to hold
options to acquire a number of common shares determined on the
same basis as the RenaissanceRe option described above. Based on
the closing price per share on March 1, 2005, St. Paul had
the right to acquire pursuant to the St. Paul options 802,437
common shares (or 1.9% of the then-outstanding common shares) as
of such date.
Common Shares
Holders of common shares have no pre-emptive, redemption,
conversion or sinking fund rights, provided, however, that
pursuant to a Transfer Restrictions, Registration Rights and
Standstill Agreement between the Company and RenaissanceRe dated
as of November 1, 2002, Platinum Holdings has granted
RenaissanceRe preemptive rights in the event of certain
issuances of common shares or any securities convertible into or
exchangeable for or carrying in any way the right to acquire
common shares. Subject to the limitation on voting rights
described below, holders of common shares are entitled to one
vote per
7
share on all matters submitted to a vote of holders of common
shares. Most matters to be approved by holders of common shares
require approval by a simple majority vote. The holders of at
least 75% of the common shares voting in person or by proxy at a
meeting must approve an amalgamation with another company. In
addition, a resolution to remove our independent registered
public accounting firm before the expiration of its term of
office must be approved by at least two-thirds of the votes cast
at a meeting of the shareholders of the Company. The quorum for
any meeting of our shareholders is two or more persons holding
or representing more than 50% of the outstanding common shares
on an unadjusted basis. Our board of directors has the power to
approve our discontinuation from Bermuda to another
jurisdiction. The rights attached to any class of shares, common
or preferred, may be varied with the consent in writing of the
holders of at least three-fourths of the issued shares of that
class or by a resolution passed by a majority of the votes cast
at a separate general meeting of the holders of the shares of
the class in accordance with the Bermuda Companies Act 1981 (the
Companies Act).
In the event of a liquidation, winding-up or dissolution of
Platinum Holdings, whether voluntary or involuntary or for the
purpose of a reorganization or otherwise or upon any
distribution of capital, the holders of common shares are
entitled to share equally and ratably in the assets of Platinum
Holdings, if any, remaining after the payment of all of its
debts and liabilities and the liquidation preference of any
outstanding preferred shares. All outstanding common shares are
fully paid and nonassessable. Authorized but unissued shares
may, subject to any rights attaching to any existing class or
classes of shares, be issued at any time and at the discretion
of the board of directors without the approval of the
shareholders of the Company with such rights, preferences and
limitations as the board of directors may determine.
Limitation on Voting Rights
Each common share has one vote on a poll of the shareholders,
except that, if and for as long as the number of issued
Controlled Shares (as defined below) of any person would
constitute 10% or more of the combined voting power of the
issued common shares of Platinum Holdings (after giving effect
to any prior reduction in voting power as described below), each
issued Controlled Share, regardless of the identity of the
registered holder thereof, will confer a fraction of a vote as
determined by the following formula:
(T - C)/(9.1 × C)
|
|
|
|
Where: (1) |
T is the aggregate number of votes conferred by all
the issued common shares immediately prior to that application
of the formula with respect to such issued Controlled Shares,
adjusted to take into account any prior reduction taken with
respect to any issued Controlled Shares pursuant to the
sequencing provision described below; and |
|
|
|
|
(2) |
C is the number of issued Controlled Shares
attributable to that person. Controlled Shares of
any person refers to all common shares, and all shares of any
other class of shares of the Company conferring voting rights,
owned by that person, whether (i) directly, (ii) with
respect to persons who are U.S. persons, by application of
the attribution and constructive ownership rules of
Sections 958(a) and 958(b) of the U.S. Internal
Revenue Code of 1986, as amended (the Code), or
(iii) beneficially, directly or indirectly, within the
meaning of Section 13(d)(3) of the Exchange Act, and the
rules and regulations thereunder. |
The formula will be applied successively as many times as may be
necessary to ensure that no person will be a 10% Shareholder (as
defined below) at any time (the sequencing
provision). For the purposes of determining the votes
exercisable by shareholders as of any date, the formula first
will be applied to the common shares of each shareholder in
declining order based on the respective numbers of total
Controlled Shares attributable to each shareholder. Thus, the
formula will be applied first to the votes of common shares held
by the shareholder to whom the largest number of total
Controlled Shares is attributable and thereafter sequentially
with respect to the shareholder with the next largest number of
total Controlled Shares. The formula will be applied iteratively
thereafter to ensure that no person will be a 10% Shareholder.
In each case, calculations are made on the basis of the
aggregate number of votes conferred
8
by the issued common shares as of such date, as reduced by the
application of the formula to any issued common shares of any
shareholder with a larger number of total Controlled Shares as
of such date. A 10% Shareholder means a person who
owns, in the aggregate, (i) directly, (ii) with
respect to persons who are U.S. persons, by application of
the attribution and constructive ownership rules of
Sections 958(a) and 958(b) of the Code or
(iii) beneficially, directly or indirectly, within the
meaning of Section 13(d)(3) of the Exchange Act, shares of
the Company carrying 10% or more of the total combined voting
rights attaching to the issued common shares and the issued
shares of any other class or classes of shares of the Company.
Because of the voting limitation described in the preceding
paragraph, in the event that RenaissanceRe acquired 10% or more
of the combined voting power of Platinum Holdings issued
common shares and the issued shares of any other class or
classes of the Company, the common shares so acquired would have
reduced voting rights. Thereafter, should RenaissanceRe dispose
of some or all of the common shares it owned, the reduced voting
rights with respect to the common shares disposed of by
RenaissanceRe would be eliminated and those common shares
thereafter would be entitled to full voting rights, subject to
future dilution to avoid creating a 10% Shareholder. Therefore,
the voting power of the common shares held by all of our
shareholders other than RenaissanceRe could be diluted upon any
such disposition by RenaissanceRe.
Our directors are empowered to require any shareholder to
provide information as to that shareholders beneficial
ownership of common shares, the names of persons having
beneficial ownership of the shareholders common shares,
relationships, associations or affiliations with other
shareholders or any other facts the directors may deem relevant
to a determination of the number of Controlled Shares
attributable to any person. Our directors may disregard the
votes attached to the common shares of any holder failing to
respond to such a request or submitting incomplete or untrue
information.
Our directors retain certain discretion to make such final
adjustments to the aggregate number of votes attaching to the
common shares of any shareholder that they consider fair and
reasonable in all the circumstances to ensure that no person
will be a 10% Shareholder at any time.
Restrictions on Transfer
Our Bye-laws contain several provisions restricting the
transferability of common shares. Our directors are required to
decline to register a transfer of common shares if they have
reason to believe that the result of such transfer would be
(i) that any person other than a St. Paul Person or a
RenaissanceRe Person (as defined below) would become or continue
to be a 10% Shareholder or (ii) that a St. Paul Person or a
RenaissanceRe Person would become or continue to be a United
States 25% Shareholder (as defined below), in each case without
giving effect to the limitation on voting rights described
above. Similar restrictions apply to Platinum Holdings
ability to issue or repurchase common shares. St. Paul
Person means any of St. Paul and its affiliates and
RenaissanceRe Person means any of RenaissanceRe and
its affiliates. A United States 25% Shareholder
means a U.S. person who owns, directly or by application of
the constructive ownership rules of Sections 958(a) and
958(b) of the Code, 25% or more of either (i) the total
combined voting rights attaching to the issued common shares and
the issued shares of any other class of Platinum Holdings or
(ii) the total combined value of the issued common shares
and any other issued shares of Platinum Holdings, determined
pursuant to Section 957 of the Code. Only for the purposes
of these provisions of our Bye-laws, it is assumed that all
RenaissanceRe Persons are U.S. Persons. These restrictions
on the transfer, issuance or repurchase of shares do not apply
to any issuance of common shares pursuant to a contract to
purchase common shares from Platinum Holdings included in the
ESUs issued by Platinum Holdings, though the limitations on
voting rights, discussed above, do apply to such common shares.
Our directors also may, in their absolute discretion, decline to
register the transfer of any common shares if they have reason
to believe (i) that the transfer may expose us, any of our
subsidiaries, any shareholder or any person ceding insurance to
any of our subsidiaries to adverse tax or regulatory treatment
in any jurisdiction or (ii) that registration of the
transfer under the Securities Act or under any
9
U.S. state securities laws or under the laws of any other
jurisdiction is required and such registration has not been duly
effected. In addition, our directors may decline to approve or
register a transfer of common shares unless all applicable
consents, authorizations, permissions or approvals of any
governmental body or agency in Bermuda, the United States or any
other applicable jurisdiction required to be obtained prior to
such transfer shall have been obtained.
Our directors are empowered to request information from any
holder or prospective acquiror of common shares as necessary to
give effect to the transfer, issuance and repurchase
restrictions described above, and may decline to effect any
transaction if complete and accurate information is not received
as requested.
Conyers Dill & Pearman, our Bermuda counsel, has
advised us that while the precise form of the restrictions on
transfer contained in our Bye-laws is untested, as a matter of
general principle, restrictions on transfers are enforceable
under Bermuda law and are not uncommon. A proposed transferee
will be permitted to dispose of any common shares purchased that
violate the restrictions and as to the transfer of which
registration is refused. The proposed transferor of those common
shares will be deemed to own those common shares for dividend,
voting and reporting purposes until a transfer of such common
shares has been registered on the register of shareholders of
Platinum Holdings.
If the directors refuse to register a transfer for any reason,
they must notify the proposed transferor and transferee within
thirty days of such refusal. Our Bye-laws also provide that our
board of directors may suspend the registration of transfers for
any reason and for such periods as it may determine, provided
that it may not suspend the registration of transfers for more
than 45 days in any period of 365 consecutive days.
Our directors may designate our Chief Executive Officer to
exercise their authority to decline to register transfers or to
limit voting rights as described above, or to take any other
action, for as long as the Chief Executive Officer is also a
director.
The voting restrictions and restrictions on transfer described
above may have the effect of delaying, deferring or preventing a
change in control of Platinum Holdings.
Preferred Shares
Pursuant to our Bye-laws and Bermuda law, our board of directors
by resolution may establish one or more series of preferred
shares having a number of shares, designations, relative voting
rights, dividend rates, liquidation and other rights,
preferences, limitations and powers as may be fixed by the board
of directors without any further shareholder approval which, if
any preferred shares are issued, may include restrictions on
voting and transfer intended to avoid having us become a
controlled foreign corporation for U.S. federal
income tax purposes. If our board of directors issues preferred
shares conferring any voting rights, it will amend our Bye-Laws
to apply the limitations on the voting rights discussed above
under Limitation on Voting Rights to
those preferred shares. Any rights, preferences, powers and
limitations as may be established could also have the effect of
discouraging an attempt to obtain control of the Company. The
issuance of preferred shares could adversely affect the voting
power of the holders of our common shares, deny such holders the
receipt of a premium on their common shares in the event of a
tender or other offer for the common shares and depress the
market price of the common shares. The particular rights and
preferences of any preferred shares will be described in any
prospectus supplement. We strongly encourage you to refer to our
memorandum of association and Bye-Laws and any applicable
certificate of designations for a complete understanding of the
terms and conditions applicable to the preferred shares.
Bye-laws
Our Bye-laws provide for our corporate governance, including the
establishment of share rights, modification of those rights,
issuance of share certificates, imposition of a lien over shares
in respect of unpaid amounts on those shares, calls on shares
which are not fully paid, forfeiture of shares, the transfer
10
of shares, alterations of capital, the calling and conduct of
general meetings of shareholders, proxies, the appointment and
removal of directors, conduct and power of directors, the
payment of dividends, the appointment of an auditor and our
winding-up.
Our Bye-laws provide that our board of directors shall be
elected annually and shall not be staggered. Shareholders may
only remove a director for cause prior to the expiration of that
directors term at a special meeting of shareholders at
which a majority of the holders of shares voting thereon vote in
favor of that action.
Our Bye-laws also provide that if our board of directors in its
absolute discretion determines that share ownership by any
shareholder may result in adverse tax, regulatory or legal
consequences to us, any of our subsidiaries or any other
shareholder, then we will have the option, but not the
obligation, to repurchase all or part of the shares held by such
shareholder to the extent the board of directors determines it
is necessary to avoid such adverse or potential adverse
consequences. The price to be paid for such shares will be the
fair market value of such shares.
Transfer Agent
Our registrar and transfer agent for the common shares is Mellon
Investor Services LLC.
Differences in Corporate Law
The Companies Act differs in certain material respects from laws
generally applicable to U.S. corporations and their
shareholders. Set forth below is a summary of certain
significant provisions of the Companies Act (including
modifications adopted pursuant to our Bye-laws) applicable to
us, which differ in certain respects from provisions of Delaware
corporate law, which is the law that governs many
U.S. public companies. The following statements are
summaries, and do not purport to deal with all aspects of
Bermuda law that may be relevant to us and our shareholders.
Duties of Directors. Under Bermuda law, at common law,
members of a board of directors owe a fiduciary duty to the
company to act in good faith in their dealings with or on behalf
of the company and exercise their powers and fulfill the duties
of their office honestly. This duty has the following essential
elements:
|
|
|
|
|
a duty to act in good faith in the best interests of the Company; |
|
|
|
a duty not to make a personal profit from opportunities that
arise from the office of director; |
|
|
|
a duty to avoid conflicts of interest; and |
|
|
|
a duty to exercise powers for the purpose for which such powers
were intended. |
The Companies Act imposes a duty on directors and officers of a
Bermuda company:
|
|
|
|
|
to act honestly and in good faith with a view to the best
interests of the company; and |
|
|
|
to exercise the care, diligence and skill that a reasonably
prudent person would exercise in comparable circumstances. |
In addition, the Companies Act imposes various duties on
directors and officers of a company with respect to matters of
management and administration of the company.
The Companies Act provides that in any proceedings for
negligence, default, breach of duty or breach of trust against
any director or officer, if it appears to a court that such
director or officer is or may be liable in respect of the
negligence, default, breach of duty or breach of trust, but that
he has acted honestly and reasonably, and that, having regard to
all the circumstances of the case, including those connected
with his appointment, he ought fairly to be excused for the
negligence, default, breach of duty or breach of trust, that
court may relieve him, either wholly or partly, from any
liability on such terms as the court may think fit. This
provision has been interpreted to apply only to actions brought
by or on behalf of the company against such directors and
officers. Our Bye-Laws, however, provide that
11
shareholders waive all claims or rights of action that they
might have, individually or by or in the right of Platinum
Holdings, against any director or officer of the Company on
account of any action taken by such director or officer, or the
failure of such director or officer to take any action in the
performance of his duties with or for the Company, except this
waiver does not extend to any matter in respect of fraud or
dishonesty on the part of such director or officer.
Under Delaware law, the business and affairs of a corporation
are managed by or under the direction of its board of directors.
In exercising their powers, directors are charged with a
fiduciary duty of care to protect the interests of the
corporation and a fiduciary duty of loyalty to act in the best
interests of its stockholders.
The duty of care requires that directors act in an informed and
deliberative manner and inform themselves, prior to making a
business decision, of all material information reasonably
available to them. The duty of care also requires that directors
exercise care in overseeing and investigating the conduct of
corporate employees. The duty of loyalty may be summarized as
the duty to act in good faith, not out of self-interest, and in
a manner which the director reasonably believes to be in the
best interests of the stockholders.
A party challenging the propriety of a decision of a board of
directors bears the burden of rebutting the applicability of the
presumptions afforded to directors by the business
judgment rule. If the presumption is not rebutted, the
business judgment rule attaches to protect the directors and
their decisions, and their business judgments will not be second
guessed. Where, however, the presumption is rebutted, the
directors bear the burden of demonstrating the entire fairness
of the relevant transaction. Notwithstanding the foregoing,
Delaware courts subject directors conduct to enhanced
scrutiny in respect of defensive actions taken in response to a
threat to corporate control and approval of a transaction
resulting in a sale of control of the corporation.
Interested Directors. Our Bye-laws provide that
transactions we enter into in which a director has an interest
are not voidable by us, nor can the interested director be
liable to us for any profit realized pursuant to such
transactions, provided the nature of the interest is disclosed
at the first opportunity at a meeting of directors, or in
writing to the directors. Under Delaware law, such a transaction
would not be voidable if (i) the material facts as to the
interested directors relationship or interests are
disclosed or are known to the board of directors and the board
in good faith authorized the transaction by the affirmative vote
of a majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum,
(ii) the material facts as to the directors
relationship or interest and as to the transaction are disclosed
or are known to the shareholders entitled to vote on the
transaction and the transaction is specifically approved in good
faith by vote of the shareholders or (iii) the transaction
is fair to the corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee of
the board of directors or the shareholders. Under Delaware law,
the interested director could be held liable for a transaction
in which that director derived an improper personal benefit.
Dividends and Distributions. Bermuda law permits the
declaration and payment of dividends and the making of
distributions from contributed surplus by a company only if
there are no reasonable grounds for believing that the company
is, or would after the payment be, unable to pay its liabilities
as they become due, or the realizable value of the
companys assets would be less, as a result of the payment,
than the aggregate of its liabilities and its issued share
capital and share premium accounts. The excess of the
consideration paid on issue of shares over the aggregate par
value of such shares must (except in limited circumstances) be
credited to a share premium account. Share premium may be
distributed in limited circumstances, for example to pay up
unissued shares which may be distributed to shareholders in
proportion to their holdings, but is otherwise subject to
limitation. In addition, our ability to pay dividends is subject
to Bermuda insurance laws and regulatory constraints. Our
Bye-Laws permit the board of directors to declare, in accordance
with the Companies Act, a dividend to be paid to its
shareholders, in proportion to the number of shares held by the
shareholders, and such dividend may be paid in cash or wholly or
partly in specie, in which case the board of directors may fix
the value for distribution in specie of any assets.
12
Under Delaware law, subject to any restrictions contained in the
companys certificate of incorporation, a company may pay
dividends out of surplus or, if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. Delaware law also provides
that dividends may not be paid out of net profits at any time
when capital is less than the capital represented by the issued
and outstanding stock of all classes having a preference upon
the distribution of assets.
Amalgamations, Mergers and Similar Agreements. We may
acquire the business of another Bermuda company or a company
incorporated outside Bermuda and carry on such business when it
is within the objects of our memorandum of association. In the
case of an amalgamation, we may amalgamate with another Bermuda
company or with an entity incorporated outside Bermuda. A
shareholder who did not vote in favor of the amalgamation may
apply to a Bermuda court for a proper valuation of his or her
shares if he or she is not satisfied that fair value has been
offered for those shares. The court ordinarily would not
disapprove the transaction on that ground absent evidence of
fraud or bad faith. Under Delaware law, with certain exceptions,
a merger, consolidation or sale of all or substantially all the
assets of a corporation must be approved by the board of
directors and the holders of a majority of the outstanding
shares entitled to vote thereon. Under Delaware law, a
stockholder of a corporation participating in certain major
corporate transactions may, under certain circumstances, be
entitled to appraisal rights pursuant to which the stockholder
may receive cash in the amount of the fair value of the shares
held by that stockholder (as determined by a court) in lieu of
the consideration that stockholder would otherwise receive in
the transaction. Delaware law does not provide stockholders of a
corporation with voting or appraisal rights when the corporation
acquires another business through the issuance of its stock or
other consideration (i) in exchange for the assets of the
business to be acquired, (ii) in exchange for the
outstanding stock of the corporation to be acquired;
(iii) in a merger of the corporation to be acquired with a
subsidiary of the acquiring corporation or (iv) in a merger
in which the corporations certificate of incorporation is
not amended and the corporation issues less than 20% of its
common stock outstanding prior to the merger.
Takeovers. Bermuda law provides that if the acquiring
party is a company, it may compulsorily acquire all the shares
of the target company, by acquiring pursuant to a tender offer
90% of the shares or class of shares not already owned by, or by
a nominee for, the acquiring party (the offeror), or any of its
subsidiaries. If an offeror has, within four months after the
making of an offer for all the shares or class of shares not
owned by, or by a nominee for, the offeror, or any of its
subsidiaries, obtained the approval of the holders of 90% or
more of all the shares to which the offer relates, the offeror
may, at any time within two months beginning with the date on
which the approval was obtained, require by notice any
nontendering shareholder to transfer its shares on the same
terms as the original offer. In those circumstances,
nontendering shareholders will be compelled to sell their shares
unless the Supreme Court of Bermuda (on application made within
a one-month period from the date of the offerors notice of
its intention to acquire such shares) orders otherwise. Where
one or more parties holds not less than 95% of the shares or a
class of shares of a company, such holder(s) may, pursuant to a
notice given to the remaining shareholders or class of
shareholders, acquire the shares of such remaining shareholders
or class of shareholders. When this notice is given, the
acquiring party is entitled and bound to acquire the shares of
the remaining shareholders on the terms set out in the notice,
unless a remaining shareholder, within one month of receiving
such notice, applies to the Supreme Court of Bermuda for an
appraisal of the value of their shares. This provision only
applies where the acquiring party offers the same terms to all
holders of shares whose shares are being acquired.
Delaware law provides that a parent corporation, by resolution
of its board of directors and without any shareholder vote, may
merge with any subsidiary of which it owns at least 90% of the
outstanding shares of each class of stock that is entitled to
vote on the transaction. Upon any such merger, dissenting
stockholders of the subsidiary would have appraisal rights.
Shareholders Suit. The rights of shareholders under
Bermuda law are not as extensive as the rights of shareholders
under legislation or judicial precedent in many
U.S. jurisdictions. Class actions and derivative actions
are generally not available to shareholders under the laws of
Bermuda. The Bermuda
13
courts, however, would ordinarily be expected to permit a
shareholder to commence an action in the name of a company to
remedy a wrong to the company where the act complained of is
alleged to be beyond the corporate power of the company or
illegal, or would result in a violation of the companys
memorandum of association or bye-laws. Furthermore,
consideration would be given by the court to acts that are
alleged to constitute a fraud against the minority shareholders
or where an act requires the approval of a greater percentage of
shareholders than actually approved it. The winning party in
such an action generally would be able to recover a portion of
attorneys fees incurred in connection with such action.
When the affairs of a company are being conducted in a manner
which is oppressive or prejudicial to the interests of some part
of the shareholders, one or more shareholders may apply to the
Supreme Court of Bermuda, which may make such order as it sees
fit, including an order regulating the conduct of the
companys affairs in the future or ordering the purchase of
the shares of any shareholders by other shareholders or by the
company.
Our Bye-Laws contain a provision by virtue of which our
shareholders waive any claim or right of action that they have,
both individually and on our behalf, against any director or
officer in relation to any action or failure to take action by
such director or officer, except in respect of any fraud or
dishonesty of such director or officer.
Class actions and derivative actions generally are available to
stockholders under Delaware law for, among other things, breach
of fiduciary duty, corporate waste and actions not taken in
accordance with applicable law. In such actions, the court has
discretion to permit the winning party to recover
attorneys fees incurred in connection with such action.
Indemnification of Directors. Our Bye-laws indemnify our
directors and officers in their capacity as such in respect of
any loss arising or liability attaching to them by virtue of any
rule of law in respect of any negligence, default, breach of
duty or breach of trust of which a director or officer may be
guilty in relation to us other than in respect of his own fraud
or dishonesty, which is the maximum extent of indemnification
permitted under the Companies Act. Under Delaware law, a
corporation may indemnify a director or officer of the
corporation against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred in defense of an action, suit or proceeding
by reason of such position if (i) the director or officer
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and
(ii) with respect to any criminal action or proceeding, if
the director or officer had no reasonable cause to believe his
conduct was unlawful.
Inspection of Corporate Records. Members of the general
public have the right to inspect our public documents available
at the office of the Registrar of Companies in Bermuda, which
will include our memorandum of association (including our
objects and powers) and alterations to our memorandum of
association, including any increase or reduction of our
authorized capital. Our shareholders have the additional right
to inspect our Bye-laws, minutes of general meetings and our
audited financial statements, which must be presented to the
annual general meeting of shareholders. Our register of
shareholders is also open to inspection by shareholders without
charge, and to members of the public for a fee. We are required
to maintain a share register in Bermuda but may establish a
branch register outside Bermuda. We are required to keep at our
registered office a register of our directors and officers which
is open for inspection by members of the public without charge.
Bermuda law does not, however, provide a general right for
shareholders to inspect or obtain copies of any other corporate
records. Delaware law permits any stockholder to inspect or
obtain copies of a corporations stockholder list and its
other books and records for any purpose reasonably related to
such persons interest as a stockholder.
Enforcement of Judgments and Other Matters. We have been
advised by Conyers Dill & Pearman, our Bermuda counsel,
that there is doubt as to whether the courts of Bermuda would
enforce (1) judgments of United States courts obtained in
actions against us or our directors and officers, as well as the
experts named in this prospectus who reside outside the United
States predicated upon the civil liability provisions of the
United States federal securities laws and (2) original
actions brought in Bermuda against us or our directors and
officers, as well as the experts named in this prospectus who
reside outside the United States predicated solely upon United
States federal securities laws. There is no treaty in effect
14
between the United States and Bermuda providing for such
enforcement, and there are grounds upon which Bermuda courts may
not enforce judgments of United States courts. Certain remedies
available under the laws of U.S. jurisdictions, including
certain remedies available under the U.S. federal
securities laws, would not be allowed in Bermuda courts as
contrary to Bermudas public policy.
Shareholder Proposals. Under Bermuda law, the Companies
Act provides that shareholders may, as set forth below and at
their own expense (unless a company otherwise resolves), require
a company to give notice of any resolution that the shareholders
can properly propose at the next annual general meeting and/or
to circulate a statement prepared by the requesting shareholders
in respect of any matter referred to in a proposed resolution or
any business to be conducted at a general meeting. The number of
shareholders necessary for such a requisition is either that
number of shareholders representing at least 5% of the total
voting rights of all shareholders having a right to vote at the
meeting to which the requisition relates or not less than
100 shareholders. Delaware law does not include a provision
restricting the manner in which nominations for directors may be
made by stockholders or the manner in which business may be
brought before a meeting.
Calling of Special Shareholders Meetings. Under our
Bye-Laws, a special general meeting may be called by our
Chairman or by any two directors or and director and the
secretary or by the board of directors. Under Bermuda law, a
special meeting may also be called by the shareholders when
requisitioned by the holders of at least 10% of the paid up
voting share capital of Platinum Holdings as provided by the
Companies Act. Delaware law permits the board of directors or
any person who is authorized under a corporations
certificate of incorporation or Bye-Laws to call a special
meeting of stockholders.
Approval of Corporate Matters by Written Consent. Under
Bermuda law, the Companies Act provides that shareholders may
take action by written consent with 100% shareholders consent
required. Delaware law permits stockholders to take action by
the consent in writing by the holders of outstanding stock
having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting of
stockholders at which all shares entitled to vote thereon were
present and voted.
Amendment of Memorandum of Association. Bermuda law
provides that the memorandum of association of a company may be
amended by a resolution passed at a general meeting of
shareholders of which due notice has been given. The holders of
an aggregate of not less than 20% in par value of a
companys issued share capital or any class thereof have
the right to apply to the Bermuda courts for an annulment of any
amendment of the memorandum of association adopted by
shareholders at any general meeting, other than an amendment
which alters or reduces a companys share capital as
provided in the Companies Act. Where such an application is
made, the amendment becomes effective only to the extent that it
is confirmed by the Bermuda court.
Under Delaware law, amendment of the certificate of
incorporation of a company must be made by a resolution of the
board of directors setting forth the amendment, declaring its
advisability, and either calling a special meeting of the
stockholders entitled to vote or directing that the amendment
proposed be considered at the next annual meeting of the
stockholders. Delaware law requires that, unless a different
percentage is provided for in the certificate of incorporation,
a majority of the outstanding shares entitled to vote thereon is
required to approve the amendment of the certificate of
incorporation at the stockholders meeting. If the amendment
would alter the number of authorized shares or otherwise
adversely affect the rights or preference of any class of a
companys stock, Delaware law provides that the holders of
the outstanding shares of such affected class should be entitled
to vote as a class upon the proposed amendment, regardless of
whether such holders are entitled to vote by the certificate of
incorporation. However, the number of authorized shares of any
class may be increased or decreased, to the extent not falling
below the number of shares then outstanding, by the affirmative
vote of the holders of a majority of the stock entitled to vote,
if so provided in the companys certificate of
incorporation or any amendment that created such class or was
adopted prior to the issuance of such class or that was
authorized by the affirmative vote of the holders of a majority
of such class of stock.
15
Amendment of Bye-laws. Consistent with the Companies Act,
our Bye-Laws provide that the no Bye-Law may be rescinded,
altered or amended, and no new Bye-Law shall be made, until it
has been approved by a resolution of our board of directors and
by a resolution of our shareholders. Under Delaware law, holders
of a majority of the voting power of a corporation and, if so
provided in the certificate of incorporation, the directors of
the corporation, have the power to adopt, amend and repeal the
bylaws of a corporation.
DESCRIPTION OF THE DEPOSITARY SHARES
General
We may, at our option, elect to offer depositary shares, each
representing a fraction (to be set forth in the prospectus
supplement relating to our common shares or a particular series
of preferred shares) of a common share or a fraction of a share
of a particular class or series of preferred shares as described
below. In the event we elect to do so, depositary receipts
evidencing depositary shares will be issued to the public.
The common shares or the shares of the class or series of
preferred shares represented by depositary shares will be
deposited under a deposit agreement among us, a depositary
selected by us and the holders of the depositary receipts. The
depositary will be a bank or trust company having its principal
office in the United States and having a combined capital
and surplus of at least $50,000,000. Subject to the terms of the
deposit agreement, each owner of a depositary share will be
entitled, in proportion to the applicable fraction of a common
share or preference share represented by such depositary share,
to all the rights and preferences of the common shares or
preferred shares represented thereby (including dividend,
voting, redemption and liquidation rights). The depositary
shares will be evidenced by depositary receipts issued pursuant
to the deposit agreement. Depositary receipts will be
distributed to those persons purchasing the fractional common
shares or fractional shares of the applicable class or series of
preferred shares in accordance with the terms of the offering
described in the related prospectus supplement. Forms of the
deposit agreement and depositary receipt have been filed as
exhibits to the registration statement of which this prospectus
forms a part.
Pending the preparation of definitive depositary receipts, the
depositary may, upon our written order, issue temporary
depositary receipts substantially identical to (and entitling
the holders thereof to all the rights pertaining to) the
definitive depositary receipts but not in definitive form.
Definitive depositary receipts will be prepared thereafter
without unreasonable delay, and temporary depositary receipts
will be exchangeable for definitive depositary receipts without
charge to the holder thereof.
The following description of the depositary shares sets forth
the material terms and provisions of the depositary shares to
which any prospectus supplement may relate. The particular terms
of the depositary shares offered by any prospectus supplement,
and the extent to which the general provisions described below
may apply to the offered securities, will be described in the
prospectus supplement, which will also include a discussion of
certain U.S. federal income tax considerations.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other
distributions received in respect of the related common shares
or preferred shares to the record holders of depositary shares
relating to such common shares or preferred shares in proportion
to the number of such depositary shares owned by such holders.
In the event of a distribution other than in cash, the
depositary will distribute property received by it to the record
holders of depositary shares entitled thereto, unless the
depositary determines that it is not feasible to make such
distribution, in which case the depositary may, with our
approval, sell such property and distribute the net proceeds
from the sale to such holders.
16
Withdrawal of Shares
Upon surrender of the depositary receipts at the corporate trust
office of the depositary (unless the related depositary shares
have previously been called for redemption), the holder of the
depositary shares evidenced thereby is entitled to delivery of
the number of whole shares of the related common shares or class
or series of preferred shares and any money or other property
represented by such depositary shares. Holders of depositary
shares will be entitled to receive whole shares of the related
common shares or class or series of preferred shares on the
basis set forth in the prospectus supplement for such common
shares or class or series of preferred shares, but holders of
such whole common shares or preferred shares will not thereafter
be entitled to exchange them for depositary shares. If the
depositary receipts delivered by the holder evidence a number of
depositary shares in excess of the number of depositary shares
representing the number of whole common shares or preferred
shares to be withdrawn, the depositary will deliver to such
holder at the same time a new depositary receipt evidencing such
excess number of depositary shares. In no event will fractional
common shares or preferred shares be delivered upon surrender of
depositary receipts to the depositary.
Redemption of Depositary Shares
Whenever we redeem common shares or preferred shares held by the
depositary, the depositary will redeem as of the same redemption
date the number of depositary shares representing common shares
or shares of the related class or series of preferred shares so
redeemed. The redemption price per depositary share will be
equal to the applicable fraction of the redemption price per
share payable with respect to such common shares or class or
series of preferred shares. If less than all the depositary
shares are to be redeemed, the depositary shares to be redeemed
will be selected by lot or pro rata as may be determined by the
depositary.
Voting of the Common Shares or Preferred Shares
Upon receipt of notice of any meeting at which the holders of
common shares or preferred shares are entitled to vote, the
depositary will mail the information contained in such notice of
meeting to the record holders of the depositary shares relating
to such common shares or preferred shares. Each record holder of
such depositary shares on the record date (which will be the
same date as the record date for common shares or preferred
shares, as applicable) will be entitled to instruct the
depositary as to the exercise of the voting rights pertaining to
the amount of common shares or preferred shares represented by
such holders depositary shares. The depositary will
endeavor, insofar as practicable, to vote the number of the
common shares or preferred shares represented by such depositary
shares in accordance with such instructions, and we will agree
to take all action which the depositary deems necessary in order
to enable the depositary to do so. The depositary will vote all
common shares or preferred shares held by it proportionately
with instructions received if it does not receive specific
instructions from the holders of depositary shares representing
such common shares or preferred shares.
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares
and any provision of the deposit agreement may at any time be
amended by agreement between us and the depositary. However, any
amendment which materially and adversely alters the rights of
the holders of depositary receipts will not be effective unless
such amendment has been approved by the holders of depositary
receipts representing at least a majority (or, in the case of
amendments relating to or affecting rights to receive dividends
or distributions or voting or redemption rights, 66%, unless
otherwise provided in the related prospectus supplement) of the
depositary shares then outstanding. The deposit agreement may be
terminated by us or the depositary only if (1) all
outstanding depositary shares have been redeemed, (2) there
has been a final distribution in respect of the common shares or
the preferred shares in connection with our liquidation,
dissolution or winding up and such distribution has been
distributed to the holders of depositary receipts or
(3) upon the consent of holders of depositary receipts
representing not less than 66% of the depositary shares
outstanding, unless otherwise provided in the related prospectus
supplement.
17
Charges of Depositary
We will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary
arrangements. We will also pay charges of the depositary in
connection with the initial deposit of the related common shares
or preferred shares and any redemption of such common shares or
preferred shares. Holders of depositary receipts will pay all
other transfer and other taxes and governmental charges and such
other charges as are expressly provided in the deposit agreement
to be for their accounts.
The depositary may refuse to effect any transfer of a depositary
receipt or any withdrawal of common shares or preferred shares
evidenced thereby until all such taxes and charges with respect
to such depositary receipt or such common shares or preferred
shares are paid by the holders thereof.
Miscellaneous
The depositary will forward all reports and communications from
us which are delivered to the depositary and which we are
required to furnish to the holders of common shares or preferred
shares.
Neither we nor the depositary will be liable if either of us is
prevented or delayed by law or any circumstance beyond our
control in performing our obligations under the deposit
agreement. Our obligations and the obligations of the depositary
under the deposit agreement will be limited to performance in
good faith of their duties thereunder and neither we nor the
depositary will be obligated to prosecute or defend any legal
proceeding in respect of any depositary shares or class or
series of preferred shares unless satisfactory indemnity is
furnished. We and the depositary may rely on written advice of
counsel or accountants, or information provided by persons
presenting preferred shares for deposit, holders of depositary
shares or other persons believed to be competent and on
documents believed to be genuine.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice
of its election to do so, and we may at any time remove the
depositary. Any such resignation or removal of the depositary
will take effect upon the appointment of a successor depositary,
which successor depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at
least $50,000,000.
DESCRIPTION OF THE DEBT SECURITIES
General
The following summary is a description of the debt securities
that may be issued by either Platinum Holdings or Platinum
Finance; debt securities issued by Platinum Finance will be
fully and unconditionally guaranteed by Platinum Holdings. The
description sets forth the material terms and provisions of the
debt securities to which any prospectus supplement may relate
and may be amended or supplemented by terms described in the
applicable prospectus supplement. Platinum Holdings senior
debt securities (which we refer to as the Platinum Holdings
senior debt securities) are to be issued under a senior
indenture between Platinum Holdings and JPMorgan Chase Bank N.A.
(as successor entity to JPMorgan Chase Bank, and which we refer
to as JPMorgan Chase Bank), as trustee, as supplemented (which
we refer to as the Platinum Holdings senior indenture). Platinum
Holdings subordinated debt securities (which we refer to
as the Platinum Holdings subordinated debt securities) are to be
issued under a subordinated indenture between us and JPMorgan
Chase Bank, as trustee, as supplemented (which we refer to as
the Platinum Holdings subordinated indenture). The Platinum
Holdings senior indenture and the Platinum Holdings subordinated
indenture are substantially identical, except for certain
covenants of Platinum Holdings and provisions relating to
subordination. The Platinum Holdings senior indenture and the
Platinum Holdings subordinated indenture are sometimes referred
to herein collectively as the Platinum Holdings
indentures and each individually as a Platinum
Holdings indenture, and the trustees under each of the
18
Platinum Holdings indentures are sometimes referred to herein
collectively as the Platinum Holdings trustees and
each individually as a Platinum Holdings trustee.
Platinum Finances senior debt securities, which will be
fully and unconditionally guaranteed by Platinum Holdings (which
we refer to as the Platinum Finance senior debt securities), are
to be issued under a senior indenture among Platinum Finance as
issuer, Platinum Holdings as guarantor and JPMorgan Chase Bank,
as trustee, as supplemented (which we refer to as the Platinum
Finance senior indenture). Platinum Finances subordinated
debt securities, which will be fully and unconditionally
guaranteed by Platinum Holdings (which we refer to as the
Platinum Finance subordinated debt securities), are to be issued
under a subordinated indenture among Platinum Finance as issuer,
Platinum Holdings as guarantor and JPMorgan Chase Bank, as
trustee, as supplemented (which we refer to as the Platinum
Finance subordinated indenture). The Platinum Finance senior
indenture and the Platinum Finance subordinated indenture are
substantially identical, except for certain covenants of
Platinum Finance and provisions relating to subordination. The
Platinum Finance senior indenture and the Platinum Finance
subordinated indenture are sometimes referred to herein
collectively as the Platinum Finance indentures and
each individually as a Platinum Finance indenture,
and the trustees under each of the Platinum Finance indentures
are sometimes referred to herein collectively as the
Platinum Finance trustees and each individually as a
Platinum Finance trustee. The Platinum Holdings
indentures and the Platinum Finance indentures are also
substantially identical, except for certain covenants of
Platinum Holdings or Platinum Finance, as applicable, relating
to the guarantee by Platinum Holdings of debt securities issued
by Platinum Finance.
The Platinum Holdings indentures and the Platinum Finance
indentures are sometimes referred to herein collectively as the
indentures and each individually as the
indenture. The Platinum Holdings trustees and the
Platinum Finance trustees are sometimes referred to herein
collectively as the trustees and each individually
as a trustee. Platinum Holdings and Platinum Finance
are sometimes referred to herein collectively as the
issuers and each individually as the
issuer. If applicable, Platinum Holdings is
sometimes referred to herein as the guarantor. We
refer collectively to the Platinum Holdings senior debt
securities, the Platinum Holdings subordinated debt securities,
the Platinum Finance senior debt securities and the Platinum
Finance subordinated debt securities as the debt
securities.
The particular terms of the series of debt securities offered by
any prospectus supplement, and the extent to which general
provisions described below may apply to the offered series of
debt securities, will be described in the prospectus supplement.
The following summaries of the material terms and provisions of
the indentures and the related debt securities and any related
guarantee are not complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the
indentures, including the definitions of certain terms in the
indentures and those terms to be made a part of the indentures
by the Trust Indenture Act of 1939, as amended (which we refer
to as the Trust Indenture Act). Wherever we refer to
particular articles, sections or defined terms of an indenture,
without specific reference to an indenture, those articles,
sections or defined terms are contained in all indentures.
The indentures do not limit the aggregate principal amount of
the debt securities which the issuer may issue under them and
provide that the issuer may issue debt securities under them
from time to time in one or more series. The indentures do not
limit the amount of other indebtedness or the debt securities
which the applicable issuer or its subsidiaries may issue.
Unless otherwise provided in a prospectus supplement, Platinum
Holdings senior debt securities and any related guarantee of
Platinum Finance senior debt securities will be unsecured
obligations of Platinum Holdings, and will rank equally with all
of Platinum Holdings other unsecured and unsubordinated
indebtedness. Platinum Holdings subordinated debt securities and
any related guarantee of such Platinum Finance subordinated debt
securities will be unsecured obligations of Platinum Holdings,
subordinated in right of payment to the prior payment in full of
all Senior Indebtedness (which term includes the senior debt
securities) of Platinum Holdings as described below under
Subordination of the Subordinated Debt Securities
and in the applicable prospectus supplement.
19
Unless otherwise provided in a prospectus supplement, Platinum
Finances senior debt securities will be unsecured
obligations of Platinum Finance, and will rank equally with all
of Platinum Finances other unsecured and unsubordinated
indebtedness. Platinum Finances subordinated debt
securities will be unsecured obligations of Platinum Finance,
subordinated in right of payment to the prior payment in full of
all Senior Indebtedness (which term includes the senior debt
securities) of Platinum Finance as described below under
Subordination of the Subordinated Debt Securities
and in the applicable prospectus supplement.
Because Platinum Holdings and Platinum Finance are holding
companies, their rights and the rights of their creditors
(including the holders of their debt securities) and
shareholders of Platinum Holdings or the stockholder of Platinum
Finance to participate in distributions by certain of their
subsidiaries upon that subsidiarys liquidation or
reorganization or otherwise would be subject to the prior claims
of that subsidiarys creditors, except to the extent that
they may themselves be creditors with recognized claims against
that subsidiary or their creditor may have the benefit of a
guaranty from a subsidiary of either Platinum Holdings or
Platinum Finance. None of their creditors has the benefit of a
guaranty from any of their subsidiaries. The rights of Platinum
Holdings or Platinum Finances creditors (including
the holders of their debt securities) to participate in the
distribution of stock or shares, as applicable, owned by them in
certain of their subsidiaries, including their insurance
subsidiaries, may also be subject to approval by certain
insurance regulatory authorities having jurisdiction over such
subsidiaries.
The ability of Platinum Holdings and Platinum Finance to receive
dividends and other distributions from their insurance company
subsidiaries is limited by applicable law and regulation. See
Our Business Regulation in our Annual
Report on Form 10-K/ A for the year ended December 31,
2004 incorporated by reference in this prospectus. If Platinum
Holdings or Platinum Finance, as applicable, is unable to
receive dividends or distributions from its insurance company
subsidiaries, or if such dividends or distributions are limited,
the ability of Platinum Holdings or Platinum Finance, as
applicable, to make payments owing with respect to the debt
securities will be adversely affected.
The prospectus supplement relating to the particular series of
debt securities offered thereby will describe the following
terms of the offered series of debt securities and any related
guarantee by Platinum Holdings:
|
|
|
|
|
the title of such debt securities and the series in which such
debt securities will be included, which may include medium-term
notes, the aggregate principal amount of such debt securities
and any limit upon such principal amount; |
|
|
|
the date or dates, or the method or methods, if any, by which
such date or dates will be determined, on which the principal of
such series of debt securities will be payable; |
|
|
|
the rate or rates at which such series of debt securities will
bear interest, if any, which rate may be zero in the case of
certain debt securities issued at an issue price representing a
discount from the principal amount payable at maturity, or the
method by which such rate or rates will be determined
(including, if applicable, any remarketing option or similar
method), and the date or dates from which such interest, if any,
will accrue or the method by which such date or dates will be
determined; |
|
|
|
the date or dates on which interest, if any, on such series of
debt securities will be payable and any regular record dates
applicable to the date or dates on which interest will be so
payable; |
|
|
|
the place or places where the principal of, any premium or
interest on or any additional amounts with respect to such
series of debt securities will be payable, any of such series of
debt securities that are issued in registered form may be
surrendered for registration of transfer or exchange, and any
such debt securities may be surrendered for conversion or
exchange; |
|
|
|
whether any of such series of debt securities are to be
redeemable at the particular issuers option and, if so,
the date or dates on which, the period or periods within which,
the price or prices at |
20
|
|
|
|
|
which and the other terms and conditions upon which such series
of debt securities may be redeemed, in whole or in part, at the
particular issuers option; |
|
|
|
whether the issuer will be obligated to redeem or purchase any
of such series of debt securities pursuant to any sinking fund
or analogous provision or at the option of any holder thereof
and, if so, the date or dates on which, the period or periods
within which, the price or prices at which and the other terms
and conditions upon which such debt securities will be redeemed
or purchased, in whole or in part, pursuant to such obligation,
and any provisions for the remarketing of such series of debt
securities so redeemed or purchased; |
|
|
|
if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any series of debt
securities to be issued in registered form will be issuable and,
if other than a denomination of $5,000, the denominations in
which any debt securities to be issued in bearer form will be
issuable; |
|
|
|
whether the series of debt securities will be listed on any
national securities exchange; |
|
|
|
whether the series of debt securities will be convertible into
common shares and/or exchangeable for other securities issued by
the issuer of the particular debt securities, and, if so, the
terms and conditions upon which such series of debt securities
will be so convertible or exchangeable; |
|
|
|
if other than the principal amount, the portion of the principal
amount (or the method by which such portion will be determined)
of such series of debt securities that will be payable upon
declaration of acceleration of the maturity thereof; |
|
|
|
if other than United States dollars, the currency of payment,
including composite currencies, of the principal of, any premium
or interest on or any additional amounts with respect to any of
such series of debt securities; |
|
|
|
whether the principal of, any premium or interest on or any
additional amounts with respect to such series of debt
securities will be payable, at the issuers election or the
election of a holder, in a currency other than that in which
such series of debt securities are stated to be payable and the
date or dates on which, the period or periods within which, and
the other terms and conditions upon which, such election may be
made; |
|
|
|
any index, formula or other method used to determine the amount
of payments of principal of, any premium or interest on or any
additional amounts with respect to such series of debt
securities; |
|
|
|
whether such series of debt securities are to be issued in the
form of one or more global securities and, if so, the identity
of the depositary for such global security or securities; |
|
|
|
whether such series of debt securities are the senior debt
securities or subordinated debt securities and, if the
subordinated debt securities, the specific subordination
provisions applicable thereto; |
|
|
|
in the case of subordinated debt securities, the relative
degree, if any, to which such series of subordinated debt
securities of the series, and any related guarantee, will be
senior to or be subordinated to other series of the subordinated
debt securities or other indebtedness of the issuer and any
guarantor in right of payment, whether such other series of the
subordinated debt securities or other indebtedness are
outstanding or not; |
|
|
|
in the case of subordinated debt securities, any limitation on
the issuance of additional Senior Indebtedness; |
|
|
|
any deletions from, modifications of or additions to the Events
of Default or covenants of the issuer and any guarantor with
respect to such series of debt securities; |
|
|
|
whether the provisions described below under Discharge,
Defeasance and Covenant Defeasance will be applicable to
such series of debt securities; |
|
|
|
a discussion of certain U.S. federal income tax
considerations; |
21
|
|
|
|
|
whether any of such series of debt securities are to be issued
upon the exercise of warrants, and the time, manner and place
for such debt securities to be authenticated and
delivered; and |
|
|
|
any other terms of such series of debt securities and any
related guarantee and any other deletions from or modifications
or additions to the applicable indenture in respect of such debt
securities. |
The issuer will have the ability under the indentures to
reopen a previously issued series of debt securities
and issue additional debt securities of that series or establish
additional terms of that series. The issuer is also permitted to
issue debt securities with the same terms as previously issued
debt securities.
Unless otherwise provided in the related prospectus supplement,
principal, premium, interest and additional amounts, if any,
with respect to any series of debt securities will be payable at
the office or agency maintained by the issuer for such purposes
(initially the corporate trust office of the trustee). In the
case of debt securities issued in registered form, interest may
be paid by check mailed to the persons entitled thereto at their
addresses appearing on the security register or by transfer to
an account maintained by the payee with a bank located in the
United States. Interest on debt securities issued in registered
form will be payable on any interest payment date to the persons
in whose names the debt securities are registered at the close
of business on the regular record date with respect to such
interest payment date. Interest on such debt securities which
have a redemption date after a regular record date, and on or
before the following interest payment date, will also be payable
to the persons in whose names the debt securities are so
registered. All paying agents initially designated by the issuer
for the debt securities will be named in the related prospectus
supplement. The issuer may at any time designate additional
paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent
acts, except that the issuer will be required to maintain a
paying agent in each place where the principal of, any premium
or interest on or any additional amounts with respect to the
debt securities are payable.
Unless otherwise provided in the related prospectus supplement,
the debt securities may be presented for transfer (duly endorsed
or accompanied by a written instrument of transfer, if so
required by the issuer or the security registrar) or exchanged
for other debt securities of the same series (containing
identical terms and provisions, in any authorized denominations,
and of a like aggregate principal amount) at the office or
agency maintained by the issuer for such purposes (initially the
corporate trust office of the trustee). Such transfer or
exchange will be made without service charge, but the issuer may
require payment of a sum sufficient to cover any tax or other
governmental charge and any other expenses then payable. The
issuer will not be required to (1) issue, register the
transfer of, or exchange, the debt securities during a period
beginning at the opening of business 15 days before the day
of mailing of a notice of redemption of any such debt securities
and ending at the close of business on the day of such mailing
or (2) register the transfer of or exchange any debt
security so selected for redemption in whole or in part, except
the unredeemed portion of any debt security being redeemed in
part. Any transfer agent (in addition to the security registrar)
initially designated by the issuer for its debt securities will
be named in the related prospectus supplement. The issuer may at
any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that the
issuer will be required to maintain a transfer agent in each
place where the principal of, any premium or interest on or any
additional amounts with respect to the debt securities are
payable.
Unless otherwise provided in the related prospectus supplement,
the debt securities will be issued only in fully registered form
without coupons in minimum denominations of $1,000 and any
integral multiple thereof. The debt securities may be
represented in whole or in part by one or more global debt
securities registered in the name of a depositary or its nominee
and, if so represented, interests in such global debt security
will be shown on, and transfers thereof will be effected only
through, records maintained by the designated depositary and its
participants as described below. Where the debt securities of
any series are issued in bearer form, the special restrictions
and considerations, including special offering restrictions and
special U.S. federal income tax considerations, applicable
to such debt securities and to payment on and transfer and
exchange of such debt securities will be described in the
related prospectus supplement.
22
The debt securities may be issued as original issue discount
securities (bearing no fixed interest or bearing fixed interest
at a rate which at the time of issuance is below specified
market rates) to be sold at a substantial discount below their
principal amount and may for various other reasons be considered
to have original issue discount for U.S. federal income tax
purposes. In general, original issue discount is included in the
income of holders on a yield-to-maturity basis. Accordingly,
depending on the terms of the debt securities, holders may be
required to include amounts in income prior to the receipt
thereof. Special U.S. federal income tax and other
considerations applicable to original issue discount securities
will be described in the related prospectus supplement.
The debt securities may also be issued at a premium (issued for
an amount in excess of the face amount of such securities). In
general, such bond premium would be amortizable over the term of
the debt instrument and deductible by the holders for
U.S. federal income tax purposes. Special U.S. federal
income tax and other considerations applicable to securities
issued at a premium will be described in the related prospectus
supplement.
If the purchase price of any debt securities is payable in one
or more foreign currencies or currency units or if any debt
securities are denominated in one or more foreign currencies or
currency units or if the principal of, or any premium or
interest on, or any additional amounts with respect to, any debt
securities is payable in one or more foreign currencies or
currency units, the restrictions, elections, certain
U.S. federal income tax considerations, specific terms and
other information with respect to such debt securities and such
foreign currency or currency units will be set forth in the
related prospectus supplement.
The issuer will comply with Section 14(e) under the
Exchange Act, and any other tender offer rules under the
Exchange Act which may then be applicable, in connection with
any obligation of the issuer to purchase debt securities at the
option of the holders. Any such obligation applicable to a
series of debt securities will be described in the related
prospectus supplement.
Unless otherwise described in a prospectus supplement relating
to any series of debt securities, the indentures do not contain
any provisions that would limit the issuers or any
guarantors ability to incur indebtedness or that would
afford holders of the debt securities protection in the event of
a sudden and significant decline in the issuers or any
guarantors credit quality or a takeover, recapitalization
or highly leveraged or similar transaction involving the issuer
or any guarantor. Accordingly, the issuer and any guarantor
could in the future enter into transactions that could increase
the amount of indebtedness outstanding at that time or otherwise
affect our capital structure or credit rating. You should refer
to the prospectus supplement relating to a particular series of
the debt securities for information regarding to any deletions
from, modifications of or additions to the Events of Defaults
described below or the issuers or any guarantors
covenants contained in the indentures, including any addition of
a covenant or other provisions providing event risk or similar
protection.
Conversion and Exchange
The terms, if any, on which debt securities of any series are
convertible into or exchangeable for common shares or preferred
shares of Platinum Holdings or other securities issued by either
Platinum Holdings or Platinum Finance, property or cash, or a
combination of any of the foregoing, will be set forth in the
related prospectus supplement. Such terms may include provisions
for conversion or exchange, either mandatory, at the option of
the holder, or at the issuers option, in which the
securities, property or cash to be received by the holders of
the debt securities would be calculated according to the factors
and at such time as described in the related prospectus
supplement. Any such conversion or exchange for securities
issued by Platinum Holdings will comply with applicable Bermuda
law, its memorandum of association and Bye-laws. Any such
conversion or exchange for securities issued by Platinum Finance
will comply with applicable Delaware law, its Certificate of
Incorporation and By-laws.
23
Optional Redemption
Unless otherwise described in a prospectus supplement relating
to any debt securities, the issuer may at its option, redeem any
series of its own debt securities, in whole or in part, at any
time at the redemption price. Unless otherwise described in a
prospectus supplement, debt securities will not be subject
to sinking fund or other mandatory redemption or to redemption
or repurchase at the option of the holders upon a change of
control, a change in management, an asset sale or any other
specified event.
Selection and Notice
Unless otherwise described in a prospectus supplement, the
issuer will send the holders of its debt securities to be
redeemed a notice of redemption by first-class mail at least 30
and not more than 60 days prior to the date fixed for
redemption. If the issuer elects to redeem fewer than all the
debt securities, unless otherwise agreed in a holders
redemption agreement, the trustee will select in a fair and
appropriate manner, including pro rata or by lot, the debt
securities to be redeemed in whole or in part.
Unless the issuer defaults in payment of the redemption price,
the debt securities called for redemption shall cease to accrue
any interest on or after the redemption date.
Consolidation, Amalgamation, Merger and Sale of Assets
Unless otherwise described in a prospectus supplement, each
indenture provides that the issuer and any guarantor may not
(1) consolidate or amalgamate with or merge into any person
or convey, transfer or lease the issuers or any
guarantors properties and assets as an entirety or
substantially as an entirety to any person, or (2) permit
any person to consolidate or amalgamate with or merge into the
issuer or any guarantor unless (a) such person is a
corporation or limited liability company organized and existing
under the laws of the United States, any state thereof or the
District of Columbia, Bermuda or any other country (including
under the laws of any state, province or political subdivision
thereof) which is, on the date of the indenture, a member of the
Organization of Economic Cooperation and Development and will
expressly assume, by supplemental indenture satisfactory in form
to the trustee, the due and punctual payment or guarantee of the
principal of, any premium and interest on and any additional
amounts with respect to the debt securities issued thereunder,
and the performance of the issuers and any
guarantors obligations under the indenture and the debt
securities issued thereunder; (b) immediately after giving
effect to such transaction and treating any indebtedness which
becomes an obligation of the issuer or of any guarantor or of a
designated subsidiary as a result of such transaction as having
been incurred by the issuer or such subsidiary at the time of
such transaction, no event of default, and no event which after
notice or lapse of time or both would become an event of
default, will have happened and be continuing; and
(c) certain other documents are delivered.
Certain Other Covenants
Except as otherwise permitted under Consolidation,
Amalgamation, Merger and Sale of Assets described above,
the issuer and any guarantor will do or cause to be done all
things necessary to maintain in full force and effect their
legal existence, rights (charter and statutory) and franchises.
The issuer and any guarantor are not, however, required to
preserve any right or franchise if they determine that it is no
longer desirable in the conduct of their business and the loss
is not disadvantageous in any material respect to the holders of
any debt securities. (Section 4.6 of the indenture)
Guarantee
Under the guarantee attached to any debt securities issued by
Platinum Finance, Platinum Holdings irrevocably, fully and
unconditionally guarantees, on a senior and unsecured basis, the
payment in full of the following:
|
|
|
(1) interest payments that are required to be paid on the
Platinum Finance debt securities; |
|
|
(2) the principal amount of the Platinum Finance debt
securities; |
24
|
|
|
(3) interest payments on overdue interest payments and
principal amounts due on the Platinum Finance debt securities,
to the extent permitted by law; and |
|
|
(4) any other payments due to holders of Platinum Finance
debt securities under the Platinum Finance debt securities and
the Platinum Finance indenture. |
The guarantee is unsecured and ranks equally in right of payment
to all other senior unsecured debt of Platinum Holdings,
including its guarantees of Platinum Finances outstanding
7.50% Notes in the aggregate principal amount of
$250,000,000 and of Platinum Finances outstanding
6.371% Notes in the aggregate principal amount of
$137,500,000. In addition, Platinum Holdings is a holding
company and its assets consist primarily of the capital stock of
its subsidiaries. Accordingly, Platinum Holdings depends on
dividends and other distributions from its subsidiaries in order
to make payments on the guarantee. Platinum Holdings
guarantee is effectively junior to the debt and other
liabilities of its subsidiaries. The Platinum Finance debt
securities and any guarantee do not limit Platinum
Holdings ability or the ability of its subsidiaries to
incur indebtedness. This would include indebtedness that ranks
equally with the Platinum Finance debt securities and the
guarantee. The guarantee is governed by, and construed in
accordance with, the laws of the State of New York, without
regard to conflicts of laws principles thereof.
Events of Default
Unless the issuer and any guarantor provide other or substitute
Events of Default in a prospectus supplement, or unless the
following Events of Default are either inapplicable to a
particular series of debt securities or are specifically deleted
or modified in the applicable resolution of the board of
directors of the issuer or in the supplemental indenture under
which such series of debt securities is issued, the following
events will constitute an event of default under the applicable
indenture with respect to a series of debt securities (whatever
the reason for such event of default and whether it will be
voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
|
|
|
(1) default in the payment of any interest on the series of
debt securities, or any additional amounts payable with respect
thereto, when such interest becomes or such additional amounts
become due and payable, and continuance of such default for a
period of 30 days; |
|
|
(2) default in the payment of the principal of or any
premium, if any, on the series of debt securities, or any
additional amounts payable with respect thereto, when such
principal or premium becomes or such additional amounts become
due and payable either at maturity, upon any redemption, by
declaration of acceleration or otherwise; |
|
|
(3) default in the performance, or breach, of any covenant
or warranty of the issuer or any guarantor contained in the
indenture (other than a covenant or warranty in respect of the
debt securities of such series a default in whose performance or
observance is elsewhere specifically dealt with pursuant to
another Event of Default), and the continuance of such default
or breach for a period of 60 days after written notice has
been given as provided in the indenture; |
|
|
(4) default in the payment at maturity of Indebtedness of
the issuer or any guarantor in excess of $50,000,000 or if any
event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there
may be secured or evidenced, any of the issuers or any
guarantors Indebtedness (other than indebtedness which is
non-recourse to the issuer or any guarantor) happens and results
in acceleration of more than $50,000,000 in principal amount of
such Indebtedness (after giving effect to any applicable grace
period), and such default is not cured or waived or such
acceleration is not rescinded or annulled within a period of
30 days after written notice has been given as provided in
the indenture; |
|
|
(5) the issuer or any guarantor shall fail within
60 days to pay, bond or otherwise discharge any uninsured
judgment or court order for the payment of money in excess of
$50,000,000, which is not stayed on appeal or is not otherwise
being appropriately contested in good faith; |
25
|
|
|
(6) certain events relating to the issuers or any
guarantors bankruptcy, insolvency or reorganization; |
|
|
(7) the issuers or any guarantors default in
the performance or breach of the conditions relating to
amalgamation, consolidation, merger or sale of assets stated
above, and the continuation of such violation for 60 days
after notice is given to the issuer or any guarantor.
(Section 6.1 of the indenture); or |
|
|
(8) any guarantee ceases to be in full force and effect or
Platinum Holdings, or any person acting on its behalf, denies or
disaffirms the obligations of Platinum Holdings under the
Platinum Finance indenture or the guarantee. |
If an event of default with respect to the debt securities
(other than an event of default described in clause (6) of
the preceding paragraph) occurs and is continuing, either the
trustee or the holders of at least 25% in principal amount of
the outstanding debt securities by written notice as provided in
the indenture may declare the principal amount of all
outstanding debt securities and the interest accrued thereon to
be due and payable immediately. An event of default described in
clause (6) of the preceding paragraph will cause the
principal amount and accrued interest to become immediately due
and payable without any declaration or other act by the trustee
or any holder. At any time after a declaration of acceleration
has been made, but before a judgment or decree for payment of
money has been obtained by the trustee, and subject to
applicable law and certain other provisions of the indenture,
the holders of a majority in aggregate principal amount of the
debt securities may, under certain circumstances, rescind and
annul such acceleration.
Each indenture provides that, within 60 days after the
occurrence of any event which is, or after notice or lapse of
time or both would become, an event of default with respect to
the debt securities, the trustee will transmit, in the manner
set forth in the indenture and subject to the exceptions
described below, notice of such default to the holders of the
debt securities unless such default has been cured or waived.
However, except in the case of a default in the payment of
principal of, or premium, if any, or interest on, or additional
amounts with respect to, any debt securities, the trustee may
withhold such notice if and so long as the board, executive
committee or a trust committee of directors and/or responsible
officers of the trustee in good faith determine that the
withholding of such notice is in the best interest of the
holders of the debt securities.
If an event of default occurs, has not been waived and is
continuing with respect to the debt securities, the trustee may
in its discretion proceed to protect and enforce its rights and
the rights of the holders of the debt securities by all
appropriate judicial proceedings. Each indenture provides that,
subject to the duty of the trustee during any default to act
with the required standard of care, the trustee will be under no
obligation to exercise any of its rights or powers under such
indenture at the request or direction of any of the holders of
the debt securities, unless such holders shall have offered to
the trustee reasonable indemnity. Subject to such provisions for
the indemnification of the trustee, and subject to applicable
law and certain other provisions of the indenture, the holders
of a majority in aggregate principal amount of the outstanding
debt securities will have the right to direct the time, method
and place of conducting any proceeding for any remedy available
to the trustee, or exercising any trust or power conferred on
the trustee, with respect to the debt securities.
Under the Companies Act, any payment or other disposition of
property made by Platinum Holdings within six months prior to
the commencement of its winding up will be invalid if made with
the intent to fraudulently prefer one or more of its creditors
at a time that Platinum Holdings was unable to pay its debts as
they became due.
Modification and Waiver
The issuer, any guarantor and the trustee may modify or amend
each indenture with the consent of the holders of not less than
a majority in aggregate principal amount outstanding of a series
of debt
26
securities affected by the amendment or modification; provided,
however, that no such modification or amendment may, without the
consent of the holder of each outstanding debt security affected
thereby:
|
|
|
|
|
change the stated maturity of the principal of, or any premium
or installment of interest on, or any additional amounts with
respect to, the series of debt securities; |
|
|
|
reduce the principal amount of, or the rate (or modify the
calculation of such principal amount or rate) of interest on, or
any additional amounts with respect to, or any premium payable
upon the redemption of, the series of debt securities; |
|
|
|
change the issuers and any guarantors obligation to
pay additional amounts with respect to the series of debt
securities; |
|
|
|
change the redemption provisions of the series of debt
securities or, following the occurrence of any event that would
entitle a holder to require the issuer to redeem or repurchase
the series of debt securities at the option of the holder,
adversely affect the right of redemption or repurchase at the
option of such holder, of the series of debt securities; |
|
|
|
change the place of payment or the coin or currency in which the
principal of, any premium or interest on or any additional
amounts with respect to, the series of debt securities is
payable; |
|
|
|
impair the right to institute suit for the enforcement of any
payment on or after the stated maturity of the series of debt
securities (or, in the case of redemption, on or after the
redemption date or, in the case of repayment at the option of
any holder, on or after the repayment date); |
|
|
|
reduce the percentage in principal amount of the series of debt
securities, the consent of whose holders is required in order to
take specific actions; |
|
|
|
reduce the requirements for quorum or voting by holders of the
series of debt securities in the applicable section of the
indenture; |
|
|
|
modify any of the provisions in the indenture regarding the
waiver of past defaults and the waiver of certain covenants by
the holders of the series of debt securities except to increase
any percentage vote required or to provide that other provisions
of the indenture cannot be modified or waived without the
consent of the holder of each debt security affected
thereby; or |
|
|
|
modify any of the above provisions. (Section 10.2 of the
indenture) |
In addition, no supplemental indenture may directly or
indirectly modify or eliminate the subordination provisions of
the subordinated indentures in any manner which might terminate
or impair the subordination of the subordinated debt securities
to Senior Indebtedness without the prior written consent of the
holders of the Senior Indebtedness.
The issuer, any guarantor and the trustee may modify or amend
each indenture and the series of debt securities without the
consent of any holder in order to, among other things:
|
|
|
|
|
provide for a successor pursuant to a consolidation,
amalgamation, merger or sale of assets that complies with the
merger covenant; |
|
|
|
add to the covenants for the benefit of the holders of the
series of debt securities or to surrender any right or power
conferred upon us by the indenture; |
|
|
|
provide for a successor trustee with respect to the series of
debt securities; |
|
|
|
cure any ambiguity or correct or supplement any provision in the
indenture which may be defective or inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under the indenture which will not
adversely affect the interests of the holders of the series of
debt securities; |
|
|
|
change the conditions, limitations and restrictions on the
authorized amount, terms or purposes of issue, authentication
and delivery of the series of debt securities under the
indenture; |
27
|
|
|
|
|
add any additional events of default with respect to the series
of debt securities; |
|
|
|
provide for conversion or exchange rights of the holders of the
series of debt securities; or |
|
|
|
make any other change that does not materially adversely affect
the interests of the holders of the series of debt securities.
(Section 10.1 of the indenture) |
The holders of at least a majority in aggregate principal amount
of the series of debt securities may, on behalf of the holders
of the debt securities, waive compliance by the issuer or any
guarantor with certain restrictive provisions of the indenture.
(Section 6.1 of the indenture) The holders of not less than
a majority in aggregate principal amount of the series of debt
securities may, on behalf of the holders of the debt securities,
waive any past default and its consequences under the indenture
with respect to the series of debt securities, except a default
(1) in the payment of principal of, any premium or interest
on or any additional amounts with respect to the series of debt
securities or (2) in respect of a covenant or provision of
the indenture that cannot be modified or amended without the
consent of the holder of each debt security. (Section 6.10
of the indenture)
Under each indenture, the issuer is required to furnish the
trustee annually a statement as to performance by the issuer and
any guarantor of certain of their obligations under the
indenture and as to any default in such performance. The issuer
is also required to deliver to the trustee, within five days
after occurrence thereof, written notice of any event of default
or any event which after notice or lapse of time or both would
constitute an event of default under clause (3) in
Events of Default described above.
(Section 4.7 of the indenture)
Discharge, Defeasance and Covenant Defeasance
The issuer and any guarantor may discharge certain obligations
to holders of the debt securities that have not already been
delivered to the trustee for cancellation and that either have
become due and payable or will become due and payable within one
year (or called for redemption within one year) by depositing
with the trustee, in trust, funds in U.S. dollars or
Government Obligations (as defined below) in an amount
sufficient to pay the entire indebtedness on the debt securities
with respect to principal and any premium, interest and
additional amounts to the date of such deposit (if the debt
securities have become due and payable) or with respect to
principal, any premium and interest to the maturity or
redemption date thereof, as the case may be. (Section 12.1
of the indenture)
Each indenture provides that, unless the provisions of
Section 12.2 of such indenture are made inapplicable to the
debt securities pursuant to Section 3.1 of the indenture,
the issuer may elect either (1) to defease and be
discharged from any and all obligations with respect to the debt
securities (except for, among other things, the obligation to
pay principal, interest and additional amounts, if any, upon the
occurrence of certain events of taxation, assessment or
governmental charge with respect to payments on the debt
securities and other obligations to register the transfer or
exchange of the debt securities, to replace temporary or
mutilated, destroyed, lost or stolen debt securities, to
maintain an office or agency with respect to the debt securities
and to hold moneys for payment in trust)
(defeasance) or (2) to be released from their
obligations with respect to the debt securities under certain
covenants and any omission to comply with such obligations will
not constitute a default or an event of default with respect to
the debt securities (covenant defeasance).
Defeasance or covenant defeasance, as the case may be, will be
conditioned upon the irrevocable deposit with the trustee, in
trust, of an amount in U.S. dollars, or Government
Obligations, or both, applicable to such debt securities which
through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount
sufficient to pay the principal of, any premium and interest on
the debt securities on the scheduled due dates or any prior
redemption date. (Section 12.2 of the indenture)
Such a trust may only be established if, among other things:
|
|
|
(1) the applicable defeasance or covenant defeasance does
not result in a breach or violation of, or constitute a default
under, any material agreement or instrument, other than the
indenture, to which the issuer is a party or by which the issuer
is bound, |
28
|
|
|
(2) no event of default or event which with notice or lapse
of time or both would become an event of default with respect to
the debt securities to be defeased will have occurred and be
continuing on the date of establishment of such a trust after
giving effect to such establishment and, with respect to
defeasance only, no bankruptcy proceeding will have occurred and
be continuing at any time during the period ending on the
91st day after such date, |
|
|
(3) with respect to registered securities and any bearer
securities for which the place of payment is within the United
States, the issuer and any guarantor have delivered to the
trustee an opinion of counsel (as specified in the indenture) to
the effect that the holders of the debt securities will not
recognize income, gain or loss for U.S. federal income tax
purposes as a result of such defeasance or covenant defeasance
and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such defeasance or covenant defeasance had not
occurred, and such opinion of counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of
the Internal Revenue Service received by the issuer or any
guarantor, a Revenue Ruling published by the Internal Revenue
Service or a change in applicable U.S. federal income tax
law occurring after the date of the indenture, and |
|
|
(4) with respect to defeasance, the issuer and any
guarantor have delivered to the trustee an officers
certificate as to solvency and the absence of intent of
preferring holders over their other creditors.
(Section 12.2 of the indenture) |
Government Obligations means debt securities which
are (1) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or
(2) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the timely payment of which is fully and unconditionally
guaranteed as a full faith and credit obligation by the
United States of America which, in the case of
clauses (1) and (2), are not callable or redeemable at the
option of the issuer or issuers thereof, and will also include a
depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of or any other
amount with respect to any such Government Obligation held by
such custodian for the account of the holder of such depository
receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any
amount received by the custodian with respect to the Government
Obligation or the specific payment of interest on or principal
of or any other amount with respect to the Government Obligation
evidenced by such depository receipt. (Section 1.1 of the
indenture)
In the event the issuer effects covenant defeasance with respect
to the debt securities and the debt securities are declared due
and payable because of the occurrence of any event of default
other than an event of default with respect to any covenant as
to which there has been covenant defeasance, the Government
Obligations on deposit with the trustee will be sufficient to
pay amounts due on the debt securities at the time of the stated
maturity or redemption date but may not be sufficient to pay
amounts due on the debt securities at the time of the
acceleration resulting from such event of default. However, the
issuer and any guarantor would remain liable to make payment of
such amounts due at the time of acceleration.
Payment of Additional Amounts
Unless otherwise described in a prospectus supplement, the
issuer or any guarantor will make all payments of principal of
and premium, if any, interest and any other amounts on, or in
respect of, the debt securities without withholding or deduction
at source for, or on account of, any present or future taxes,
fees, duties, assessments or governmental charges of whatever
nature imposed or levied by or on behalf of Bermuda or any other
jurisdiction in which the issuer or any guarantor is organized
(a taxing jurisdiction) or any political subdivision
or taxing authority thereof or therein, unless such taxes, fees,
duties, assessments or governmental charges are required to be
withheld or deducted by (x) the laws (or any regulations or
rulings promulgated thereunder) of a taxing jurisdiction or any
political subdivision or taxing authority thereof or therein or
(y) an official position regarding the application,
administration,
29
interpretation or enforcement of any such laws, regulations or
rulings (including, without limitation, a holding by a court of
competent jurisdiction or by a taxing authority in a taxing
jurisdiction or any political subdivision thereof). If a
withholding or deduction at source is required, the issuer or
any guarantor will, subject to certain limitations and
exceptions described below, pay to the holder of any debt
security such additional amounts as may be necessary so that
every net payment of principal, premium, if any, interest or any
other amount made to such holder, after the withholding or
deduction, will not be less than the amount provided for in such
debt security or in the indenture to be then due and payable.
The issuer and any guarantor will not be required to pay any
additional amounts for or on account of:
|
|
|
(1) any tax, fee, duty, assessment or governmental charge
of whatever nature which would not have been imposed but for the
fact that such holder (a) was a resident, domiciliary or
national of, or engaged in business or maintained a permanent
establishment or was physically present in, the relevant taxing
jurisdiction or any political subdivision thereof or otherwise
had some connection with the relevant taxing jurisdiction other
than by reason of the mere ownership of, or receipt of payment
under, such debt security, (b) presented, where
presentation is required, such debt security for payment in the
relevant taxing jurisdiction or any political subdivision
thereof, unless such debt security could not have been presented
for payment elsewhere, or (c) presented, where presentation
is required, such debt security for payment more than
30 days after the date on which the payment in respect of
such debt security became due and payable or provided for,
whichever is later, except to the extent that the holder would
have been entitled to such additional amounts if it had
presented such debt security for payment on any day within that
30-day period; |
|
|
(2) any estate, inheritance, gift, sale, transfer, personal
property or similar tax, assessment or other governmental charge; |
|
|
(3) any tax, assessment or other governmental charge that
is imposed or withheld by reason of the failure by the holder of
such debt security to comply with any reasonable request by the
issuer addressed to the holder within 90 days of such
request (a) to provide information concerning the
nationality, residence or identity of the holder or such
beneficial owner or (b) to make any declaration or other
similar claim or satisfy any information or reporting
requirement, which is, in the case of (a) or (b), required
or imposed by statute, treaty, regulation or administrative
practice of the relevant taxing jurisdiction or any political
subdivision thereof as a precondition to exemption from all or
part of such tax, assessment or other governmental charge; |
|
|
(4) any withholding or deduction required to be made
pursuant to any EU Directive on the taxation of savings
implementing the conclusions of the ECOFIN Council meetings of
26-27 November 2000, 3 June 2003 or any law implementing or
complying with, or introduced in order to conform to, such EU
Directive; or |
|
|
(5) any combination of items (1), (2), (3) and (4). |
In addition, the issuer will not be required to pay additional
amounts if a payment on the debt securities is reduced as a
result of any tax, assessment or other governmental charge that
is imposed and withheld at source solely by reason of the
beneficial owner (a) being or having been a foreign private
foundation or other foreign tax-exempt organization,
(b) owning or having owned, actually or constructively, 10%
or more of the total combined voting power of all classes of
shares of Platinum Holdings entitled to vote, (c) being or
having been a controlled foreign corporation with
respect to which we are a related person within the
meaning of the Code, (d) being or having been a bank
receiving the interest pursuant to a loan agreement in the
ordinary course of your trade or business or (e) any
combination of items (1), (2), (3) and (4) above and
(a), (b), (c) and (d) as contained herein.
In addition, neither the issuer nor any guarantor will pay
additional amounts with respect to any payment of principal of,
or premium, if any, interest or any other amounts on, any such
debt security to any holder who is a fiduciary, partnership,
limited liability company, other fiscally transparent entity or
other than the sole beneficial owner of such debt security to
the extent that such partner, member with respect to such a
limited liability company or other fiscally transparent entity,
or beneficiary or settler with
30
respect to such fiduciary would not have been entitled to such
additional amounts had it been the holder of such debt
securities. Moreover, neither the issuer nor any guarantor shall
provide any indemnification to the extent that any fiduciary,
partnership, limited liability company, other fiscally
transparent entity or other than the sole beneficially owner of
such debt securities fails to withhold any amounts so required
by any relevant taxing jurisdiction. (Section 4.4 of the
indenture)
Redemption for Tax Purposes
Unless otherwise described in a prospectus supplement, the
issuer may redeem its debt securities at its option, in whole
but not in part, at a redemption price equal to 100% of the
principal amount, together with accrued and unpaid interest and
additional amounts, if any, to the date fixed for redemption, at
any time it receives an opinion of counsel that as a result of
(1) any change in or amendment to the laws or treaties (or
any regulations or rulings promulgated under these laws or
treaties) of Bermuda or any taxing jurisdiction (or of any
political subdivision or taxation authority affecting taxation)
or any change in the application or official interpretation of
such laws, treaties, regulations or rulings (including a
holding, judgment or order by a court of competent jurisdiction)
which change in position becomes effective after the issuance of
the debt securities, or (2) any action taken by a taxing
authority of Bermuda or any taxing jurisdiction (or any
political subdivision or taxing authority affecting taxation)
which action is generally applied or is taken with respect to
the issuer, or (3) a decision rendered by a court of
competent jurisdiction in Bermuda or any taxing jurisdiction (or
any political subdivision) whether or not such decision was
rendered with respect to the issuer or any guarantor, there is a
substantial probability that the issuer will be required as of
the next interest payment date to pay additional amounts with
respect to the debt securities as provided in Payment of
Additional Amounts above and such requirements cannot be
avoided by the use of reasonable measures (consistent with
practices and interpretations generally followed or in effect at
the time such measures could be taken) then available. If the
issuer elects to redeem the debt securities under this
provision, it will give written notice of such election to the
trustee and the holders of the debt securities. If the issuer
elects to redeem the debt securities under this provision, it
will also mail a notice of redemption at least 30 days but
no more than 60 days before the redemption date to each
holder of the debt securities to be redeemed. Interest on the
debt securities will cease to accrue unless the issuer defaults
in the payment of the redemption price. (Section 4.5 of the
indenture)
Global Securities
The debt securities of a series may be issued in whole or in
part in the form of one or more global debt securities that will
be deposited with, or on behalf of, a depositary identified in
the prospectus supplement relating to such series.
The specific terms of the depositary arrangement with respect to
a series of the debt securities will be described in the
prospectus supplement relating to such series. Platinum Holdings
and Platinum Finance anticipate that the following provisions
will apply to all depositary arrangements.
Upon the issuance of a global security, the depositary for such
global security or its nominee will credit, on its book-entry
registration and transfer system, the respective principal
amounts of the debt securities represented by such global
security. Such accounts will be designated by the underwriters
or agents with respect to such debt securities or by the issuer
if such debt securities are offered and sold directly by the
issuer. Ownership of beneficial interests in a global security
will be limited to persons that may hold interests through
participants in the depositary. Ownership of beneficial
interests in such global security will be shown on, and the
transfer of that ownership will be effected only through,
records maintained by the depositary or its nominee (with
respect to interests of participants) and on the records of
participants (with respect to interests of persons other than
participants). The laws of some states require that certain
purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a global
security.
So long as the depositary for a global security, or its nominee,
is the registered owner of such global security, such depositary
or such nominee, as the case may be, will be considered the sole
owner or holder
31
of the debt securities represented by such global security for
all purposes under the applicable indenture. Except as described
below, owners of beneficial interests in a global security will
not be entitled to have the debt securities of the series
represented by such global security registered in their names
and will not receive or be entitled to receive physical delivery
of the debt securities of that series in definitive form.
Principal of, any premium and interest on, and any additional
amounts with respect to, the debt securities registered in the
name of a depositary or its nominee will be made to the
depositary or its nominee, as the case may be, as the registered
owner of the global security representing such debt securities.
None of the trustee, any paying agent, the security registrar,
the issuer or any guarantor will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests of the global
security for such debt securities or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
Platinum Holdings and Platinum Finance expect that the
depositary for a series of its respective debt securities or its
nominee, upon receipt of any payment with respect to such debt
securities, will credit immediately participants accounts
with payments in amounts proportionate to their respective
beneficial interest in the principal amount of the global
security for such debt securities as shown on the records of
such depositary or its nominee. Platinum Holdings and Platinum
Finance also expect that payments by participants to owners of
beneficial interests in such global security held through such
participants will be governed by standing instructions and
customary practices, as is now the case with securities held for
the accounts of customers registered in street name,
and will be the responsibility of such participants.
The indentures provide that if:
|
|
|
(1) the depositary for a series of the debt securities
notifies the issuer or any guarantor, as the case may be, that
it is unwilling or unable to continue as depositary or if such
depositary ceases to be eligible under the applicable indenture
and a successor depositary is not appointed by us within
90 days of written notice; |
|
|
(2) the issuer determines that the debt securities of a
particular series will no longer be represented by global
securities and executes and delivers to the trustee a company
order to such effect; or |
|
|
(3) an Event of Default with respect to a series of the
debt securities has occurred and is continuing, |
then in each such case, the global securities will be exchanged
for the debt securities of such series in definitive form of
like tenor and of an equal aggregate principal amount, in
authorized denominations.
Such definitive debt securities will be registered in such name
or names as the depositary shall instruct the trustee.
(Section 2.4 of the Platinum Holdings indentures and
Section 2.5 of the Platinum Finance indentures). It is
expected that such instructions may be based upon directions
received by the depositary from participants with respect to
ownership of beneficial interests in global securities.
Governing Law
Each indenture and the debt securities will be governed by, and
construed in accordance with, the laws of the State of New York
applicable to agreements made or instruments entered into and,
in each case, performed in that state.
Information Concerning the Trustee
Unless otherwise specified in the applicable prospectus
supplement, JPMorgan Chase Bank is to be the trustee and paying
agent under each indenture and is one of a number of banks with
which Platinum Holdings, Platinum Finance and their respective
subsidiaries maintain banking relationships in the ordinary
course of business.
32
CERTAIN PROVISIONS APPLICABLE TO SUBORDINATED DEBT
SECURITIES
Subordination of the Subordinated Debt Securities
The subordinated debt securities will, to the extent set forth
in the subordinated indenture, be subordinate in right of
payment to the prior payment in full of all Senior Indebtedness.
Upon any payment by the issuer or any guarantor or distribution
of assets of the issuer or any guarantor of any kind or
character, whether in cash, property or securities, to creditors
upon any dissolution, winding-up, liquidation or reorganization
of the issuer or any guarantor, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due upon all Senior Indebtedness of the issuer or
any guarantor shall first be paid in full, or payment thereof
provided for in money in accordance with their terms, before any
payment is made by the issuer or any guarantor on account of the
principal (and premium, if any) or interest on the subordinated
debt securities; and upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the issuer or any
guarantor, or distribution of assets of the issuer or any
guarantor of any kind or character, whether in cash, property or
securities, to which the holders of subordinated debt securities
or the trustee would be entitled to receive from the issuer,
except as so provided in the subordinated indentures, shall be
paid by the issuer or any guarantor, or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other person making
such payment or distribution, or by the holders of subordinated
debt securities or by the trustee under the subordinated
indentures if received by them or it, directly to the holders of
Senior Indebtedness of the issuer or any guarantor (pro rata to
such holders on the basis of the amounts of Senior Indebtedness
held by such holders, as calculated by the issuer or any
guarantor), or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which
any instruments evidencing such Senior Indebtedness may have
been issued, as their respective interests may appear, to the
extent necessary to pay such Senior Indebtedness in full, in
money or moneys worth, after giving effect to any
concurrent payment or distribution to or for the holders of such
Senior Indebtedness, before any payment or distribution is made
to the holders of subordinated debt securities or to the trustee.
By reason of such subordination, in the event of the
issuers or any guarantors liquidation or insolvency,
holders of Senior Indebtedness and holders of other obligations
of the issuer or any guarantor that are not subordinated to
Senior Indebtedness may recover more, ratably, than the holders
of subordinated debt securities.
Subject to the payment in full of all Senior Indebtedness, the
rights of the holders of subordinated debt securities will be
subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or
securities of the issuer or any guarantor applicable to such
Senior Indebtedness until the principal of, any premium and
interest on, and any additional amounts with respect to,
subordinated debt securities have been paid in full.
No payment of principal (including redemption and sinking fund
payments) of or any premium or interest on or any additional
amounts with respect to the subordinated debt securities, or
payments to acquire such securities (other than pursuant to
their conversion), may be made (1) if any Senior
Indebtedness of the issuer or any guarantor is not paid when due
and any applicable grace period with respect to such default has
ended and such default has not been cured or waived or ceased to
exist, or (2) if the maturity of any Senior Indebtedness of
the issuer or any guarantor has been accelerated because of a
default. The subordinated indenture does not limit or prohibit
the issuer or any guarantor from incurring additional Senior
Indebtedness, which may include Indebtedness that is senior to
subordinated debt securities, but subordinate to the
issuers or any guarantors other obligations. The
senior debt securities will constitute Senior Indebtedness under
the subordinated indenture.
33
The term Senior Indebtedness means all Indebtedness
of the issuer and any guarantor outstanding at any time, except:
|
|
|
(1) the subordinated debt securities; |
|
|
(2) Indebtedness as to which, by the terms of the
instrument creating or evidencing the same, it is provided that
such Indebtedness is subordinated to or ranks equally with the
subordinated debt securities; |
|
|
(3) Indebtedness of the issuer or any guarantor to an
affiliate of the issuer or any guarantor; |
|
|
(4) interest accruing after the filing of a petition
initiating any bankruptcy, insolvency or other similar
proceeding unless such interest is an allowed claim enforceable
against the issuer or any guarantor in a proceeding under
federal or state bankruptcy laws; |
|
|
(5) trade accounts payable; and |
|
|
(6) any Indebtedness, including all other debt securities
and guarantees in respect of those debt securities, initially
issued to any trust, partnership or other entity affiliated with
the issuer or any guarantor which is a financing vehicle of the
issuer or any guarantor or any Affiliate of the issuer or any
guarantor in connection with an issuance by such entity of
preferred securities. |
Such Senior Indebtedness will continue to be Senior Indebtedness
and be entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any
term of such Senior Indebtedness.
The subordinated indenture provides that the foregoing
subordination provisions, insofar as they relate to any
particular issue of subordinated debt securities, may be changed
prior to such issuance. Any such change would be described in
the related prospectus supplement.
DESCRIPTION OF THE WARRANTS TO PURCHASE COMMON SHARES
OR PREFERRED SHARES
The following statements with respect to the common share
warrants and preference share warrants are summaries of, and
subject to, the detailed provisions of a share warrant agreement
to be entered into by us and a share warrant agent to be
selected at the time of issue. The particular terms of any
warrants offered by any prospectus supplement, and the extent to
which the general provisions described below may apply to the
offered securities, will be described in the prospectus
supplement.
General
The share warrants, evidenced by share warrant certificates, may
be issued under the share warrant agreement independently or
together with any other securities offered by any prospectus
supplement and may be attached to or separate from such other
offered securities. If share warrants are offered, the related
prospectus supplement will describe the designation and terms of
the share warrants, including without limitation the following:
|
|
|
|
|
the offering price, if any; |
|
|
|
the aggregate number of warrants; |
|
|
|
the designation and terms of the common shares or preferred
shares purchasable upon exercise of the share warrants; |
|
|
|
if applicable, the date on and after which the share warrants
and the related offered securities will be separately
transferable; |
|
|
|
the number of common shares or preferred shares purchasable upon
exercise of one share warrant and the initial price at which
such shares may be purchased upon exercise; |
34
|
|
|
|
|
the date on which the right to exercise the share warrants shall
commence and the date on which such right shall expire; |
|
|
|
a discussion of certain U.S. federal income tax
considerations; |
|
|
|
the call provisions, if any; |
|
|
|
the currency, currencies or currency units in which the offering
price, if any, and exercise price are payable; |
|
|
|
the antidilution provisions of the share warrants; and |
|
|
|
any other terms of the share warrants. |
The common shares or preferred shares issuable upon exercise of
the share warrants will, when issued in accordance with the
share warrant agreement, be fully paid and nonassessable.
Exercise of Stock Warrants
Share warrants may be exercised by surrendering to the share
warrant agent the share warrant certificate with the form of
election to purchase on the reverse thereof duly completed and
signed by the warrantholder, or its duly authorized agent (such
signature to be guaranteed by a bank or trust company, by a
broker or dealer which is a member of the National Association
of Securities Dealers, Inc. or by a member of a national
securities exchange), indicating the warrantholders
election to exercise all or a portion of the share warrants
evidenced by the certificate. Surrendered share warrant
certificates will be accompanied by payment of the aggregate
exercise price of the share warrants to be exercised, as set
forth in the related prospectus supplement, in lawful money of
the United States, unless otherwise provided in the related
prospectus supplement. Upon receipt thereof by the share warrant
agent, the share warrant agent will requisition from the
transfer agent for the common shares or the preferred shares, as
the case may be, for issuance and delivery to or upon the
written order of the exercising warrantholder, a certificate
representing the number of common shares or preferred shares
purchased. If less than all of the share warrants evidenced by
any share warrant certificate are exercised, the share warrant
agent will deliver to the exercising warrantholder a new share
warrant certificate representing the unexercised share warrants.
Antidilution and Other Provisions
The exercise price payable and the number of common shares or
preferred shares purchasable upon the exercise of each share
warrant and the number of share warrants outstanding will be
subject to adjustment in certain events which will be described
in a prospectus supplement. These may include the issuance of a
stock dividend to holders of common shares or preferred shares,
respectively, or a combination, subdivision or reclassification
of common shares or preferred shares, respectively. In lieu of
adjusting the number of common shares or preferred shares
purchasable upon exercise of each share warrant, we may elect to
adjust the number of share warrants. No adjustment in the number
of shares purchasable upon exercise of the share warrants will
be required until cumulative adjustments require an adjustment
of at least 1% thereof. We may, at our option, reduce the
exercise price at any time. No fractional shares will be issued
upon exercise of share warrants, but we will pay the cash value
of any fractional shares otherwise issuable. Notwithstanding the
foregoing, in case of our consolidation, merger, or sale or
conveyance of our property as an entirety or substantially as an
entirety, the holder of each outstanding share warrant shall
have the right to the kind and amount of shares of stock and
other securities and property (including cash) receivable by a
holder of the number of common shares or preferred shares into
which such share warrants were exercisable immediately prior
thereto.
No Rights as Shareholders
Holders of share warrants will not be entitled, by virtue of
being such holders, to vote, to consent, to receive dividends,
to receive notice as shareholders with respect to any meeting of
shareholders for the election of our directors or any other
matter, or to exercise any rights whatsoever as our shareholders.
35
DESCRIPTION OF THE WARRANTS TO PURCHASE PLATINUM HOLDINGS
DEBT SECURITIES
The following statements with respect to the debt warrants are
summaries of, and subject to, the detailed provisions of a debt
warrant agreement to be entered into by us and a debt warrant
agent to be selected at the time of issue. The debt warrant
agreement may include or incorporate by reference standard
warrant provisions substantially in the form of the Standard
Debt Warrant Provisions filed as an exhibit to the registration
statement of which this prospectus forms a part. The particular
terms of any warrants offered by any prospectus supplement, and
the extent to which the general provisions described below may
apply to the offered securities, will be described in the
prospectus supplement.
General
The debt warrants, evidenced by debt warrant certificates, may
be issued under the debt warrant agreement independently or
together with any other securities offered by any prospectus
supplement and may be attached to or separate from such other
offered securities. If debt warrants are offered, the related
prospectus supplement will describe the designation and terms of
the debt warrants, including without limitation the following:
|
|
|
|
|
the offering price, if any; |
|
|
|
the aggregate number of debt warrants; |
|
|
|
the designation, aggregate principal amount and terms of the
Platinum Holdings debt securities purchasable upon exercise of
the debt warrants; |
|
|
|
if applicable, the date on and after which the debt warrants and
the related offered securities will be separately transferable; |
|
|
|
the principal amount of Platinum Holdings debt securities
purchasable upon exercise of one debt warrant and the price at
which such principal amount of Platinum Holdings debt securities
may be purchased upon exercise; |
|
|
|
the date on which the right to exercise the debt warrants shall
commence and the date on which such right shall expire; |
|
|
|
a discussion of certain U.S. federal income tax
considerations; |
|
|
|
whether the warrants represented by the debt warrant
certificates will be issued in registered or bearer form; |
|
|
|
the currency, currencies or currency units in which the offering
price, if any, and exercise price are payable; |
|
|
|
the antidilution provisions of the debt warrants; and |
|
|
|
any other terms of the debt warrants. |
Warrantholders will not have any of the rights of holders of
Platinum Holdings debt securities, including the right to
receive the payment of principal of, any premium or interest on,
or any additional amounts with respect to, the Platinum Holdings
debt securities or to enforce any of the covenants of the
Platinum Holdings debt securities or the applicable indenture
except as otherwise provided in the applicable indenture.
Exercise of Debt Warrants
Debt warrants may be exercised by surrendering the debt warrant
certificate at the office of the debt warrant agent, with the
form of election to purchase on the reverse side of the debt
warrant certificate properly completed and executed (with
signature(s) guaranteed by a bank or trust company, by a broker
or dealer which is a member of the National Association of
Securities Dealers, Inc. or by a member of a
36
national securities exchange), and by payment in full of the
exercise price, as set forth in the related prospectus
supplement. Upon the exercise of debt warrants, we will issue
the Platinum Holdings debt securities in authorized
denominations in accordance with the instructions of the
exercising warrantholder. If less than all of the debt warrants
evidenced by the debt warrant certificate are exercised, a new
debt warrant certificate will be issued for the remaining number
of debt warrants.
DESCRIPTION OF THE PURCHASE CONTRACTS AND THE PURCHASE
UNITS
Platinum Holdings may issue purchase contracts, obligating
holders to purchase from us, and obligating us to sell to the
holders, a specified number of its common shares, preferred
shares, debt securities or securities of third parties, a basket
of such securities, an index or indices of such securities or
any combination of the above, as specified in the applicable
prospectus supplement, at a future date or dates. The price per
security may be fixed at the time the purchase contracts are
issued or may be determined by reference to a specific formula
set forth in the purchase contracts and to be described in the
applicable prospectus supplement. The purchase contracts may be
issued separately or as a part of purchase units consisting of a
purchase contract and, as security for the holders
obligations to purchase the securities under the purchase
contracts, either:
|
|
|
(1) senior debt securities of Platinum Holdings or Platinum
Finance and any related guarantee or subordinated debt
securities of Platinum Holdings or Platinum Finance and any
related guarantee; |
|
|
(2) our preferred shares; or |
|
|
(3) debt obligations of third parties, including
U.S. Treasury securities. |
The applicable prospectus supplement will specify the securities
that will secure the holders obligations to purchase
securities under the applicable purchase contract. Unless
otherwise described in a prospectus supplement, the securities
related to the purchase contracts securing the holders
obligations to purchase securities will be pledged to a
collateral agent, for Platinum Holdings benefit, under a
pledge agreement. The pledged securities will secure the
obligations of holders of purchase contracts to purchase
securities under the related purchase contracts. The rights of
holders of purchase contracts to the related pledged securities
will be subject to Platinum Holdings security interest in
those pledged securities. That security interest will be created
by the pledge agreement. No holder of purchase contracts will be
permitted to withdraw the pledged securities related to such
purchase contracts from the pledge arrangement except upon the
termination or early settlement of the related purchase
contracts. Subject to that security interest and the terms of
the purchase contract agreement and the pledge agreement, each
holder of a purchase contract will retain full beneficial
ownership of the related pledged securities.
The purchase contracts may require Platinum Holdings to make
periodic payments to the holders of the purchase units or vice
versa, and such payments may be unsecured or prefunded on some
basis. The purchase contracts may require holders to secure
their obligations in a specified manner and in certain
circumstances Platinum Holdings may deliver newly issued prepaid
purchase contracts upon release to a holder of any collateral
securing such holders obligations under the original
purchase contract.
The applicable prospectus supplement will describe the terms of
any purchase contracts or purchase units and, if applicable,
prepaid purchase contracts.
Except as described in a prospectus supplement, the collateral
agent will, upon receipt of distributions on the pledged
securities, distribute those payments to Platinum Holdings or a
purchase contract agent, as provided in the pledge agreement.
The purchase contract agent will in turn distribute payments it
receives as provided in the purchase contract.
37
PLAN OF DISTRIBUTION
Platinum Holdings and/or Platinum Finance may sell offered
securities in any one or more of the following ways from time to
time:
|
|
|
(1) through agents; |
|
|
(2) to or through underwriters; |
|
|
(3) through dealers; or |
|
|
(4) directly to purchasers. |
The prospectus supplement with respect to the offered securities
will set forth the terms of the offering of the offered
securities, including the name or names of any underwriters,
dealers or agents; the purchase price of the offered securities
and the proceeds to Platinum Holdings and/or Platinum Finance
from such sale; any underwriting discounts and commissions or
agency fees and other items constituting underwriters or
agents compensation; any public offering price and any
discounts or concessions allowed or reallowed or paid to dealers
and any securities exchange on which such offered securities may
be listed. Any public offering price, discounts or concessions
allowed or reallowed or paid to dealers may be changed from time
to time.
The distribution of the offered securities may be effected from
time to time in one or more transactions at a fixed price or
prices, which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices
or at negotiated prices.
Offers to purchase offered securities may be solicited by agents
designated by Platinum Holdings and/or Platinum Finance, as
applicable, from time to time. Any such agent involved in the
offer or sale of the offered securities in respect of which this
prospectus is delivered will be named, and any commissions
payable by Platinum Holdings and/or Platinum Finance, as
applicable, to such agent will be set forth, in the applicable
prospectus supplement. Unless otherwise indicated in such
prospectus supplement, any such agent will be acting on a
reasonable best efforts basis for the period of its appointment.
Any such agent may be deemed to be an underwriter, as that term
is defined in the Securities Act, of the offered securities so
offered and sold.
If offered securities are sold by means of an underwritten
offering, Platinum Holdings and/or Platinum Finance, as
applicable, will execute an underwriting agreement with an
underwriter or underwriters, and the names of the specific
managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transaction, including
commissions, discounts and any other compensation of the
underwriters and dealers, if any, will be set forth in the
prospectus supplement which will be used by the underwriters to
make resales of the offered securities. If underwriters are
utilized in the sale of the offered securities, the offered
securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more
transactions, including negotiated transactions, at fixed public
offering prices or at varying prices determined by the
underwriters at the time of sale.
Offered securities of Platinum Holdings and/or Platinum Finance,
as applicable, may be offered to the public either through
underwriting syndicates represented by managing underwriters or
directly by the managing underwriters. If any underwriter or
underwriters are utilized in the sale of the offered securities,
unless otherwise indicated in the prospectus supplement, the
underwriting agreement will provide that the obligations of the
underwriters are subject to certain conditions precedent and
that the underwriters with respect to a sale of offered
securities will be obligated to purchase all such offered
securities of a series if any are purchased. Platinum Holdings
and/or Platinum Finance, as applicable, may grant to the
underwriters options to purchase additional offered securities,
to cover over-allotments, if any, at the public offering price
(with additional underwriting discounts or commissions), as may
be set forth in the prospectus supplement relating thereto. If
Platinum Holdings and/or Platinum Finance, as applicable, grant
any over-allotment option, the terms of such over-allotment
option will be set forth in the prospectus supplement relating
to such offered securities.
38
If a dealer is utilized in the sales of offered securities in
respect of which this prospectus is delivered, Platinum Holdings
and/or Platinum Finance, as applicable, will sell such offered
securities to the dealer as principal. The dealer may then
resell such offered securities to the public at varying prices
to be determined by such dealer at the time of resale. Any such
dealer may be deemed to be an underwriter, as such term is
defined in the Securities Act, of the offered securities so
offered and sold. The name of the dealer and the terms of the
transaction will be set forth in the related prospectus
supplement.
Offers to purchase offered securities may be solicited directly
by Platinum Holdings and/or Platinum Finance, as applicable, and
the sale thereof may be made by us directly to institutional
investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale
thereof. The terms of any such sales will be described in the
related prospectus supplement.
Platinum Holdings and/or Platinum Finance, as applicable, may
enter into derivative or other hedging transactions with
financial institutions. These financial institutions may in turn
engage in sales of common shares to hedge their position,
deliver this prospectus in connection with some or all of those
sales and use the shares covered by this prospectus to close out
any short position created in connection with those sales.
Platinum Holdings may also sell its common shares short using
this prospectus and deliver common shares covered by this
prospectus to close out such short positions, or loan or pledge
common shares to financial institutions that in turn may sell
the common shares using this prospectus. Platinum Holdings may
pledge or grant a security interest in some or all of the common
shares covered by this prospectus to support a derivative or
hedging position or other obligation and, if Platinum Holdings
defaults in the performance of its obligations, the pledgees or
secured parties may offer and sell the common shares from time
to time pursuant to this prospectus.
Offered securities may also be offered and sold, if so indicated
in the applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or
more firms (remarketing firms), acting as principals
for their own accounts or as agents for Platinum Holdings and/or
Platinum Finance, as applicable. Any remarketing firm will be
identified and the terms of its agreements, if any, with
Platinum Holdings and/or Platinum Finance and its compensation
will be described in the applicable prospectus supplement.
Remarketing firms may be deemed to be underwriters, as such term
is defined in the Securities Act, in connection with the offered
securities remarketed thereby.
Agents, underwriters, dealers and remarketing firms may be
entitled under relevant agreements entered into with Platinum
Holdings and/or Platinum Finance to indemnification by Platinum
Holdings and/or Platinum Finance, as applicable, against certain
civil liabilities, including liabilities under the Securities
Act, that may arise from any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission
to state a material fact in this prospectus, any supplement or
amendment hereto, or in the registration statement of which this
prospectus forms a part, or to contribution with respect to
payments which the agents, underwriters, dealers or remarketing
firms may be required to make.
If so indicated in the prospectus supplement, Platinum Holdings
and/or Platinum Finance, as applicable, will authorize
underwriters or other persons acting as their agents to solicit
offers by certain institutions to purchase offered securities
from us pursuant to contracts providing for payments and
delivery on a future date. Institutions with which such
contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all
cases such institutions must be approved by Platinum Holdings
and/or Platinum Finance, as applicable. The obligations of any
purchaser under any such contract will be subject to the
condition that the purchase of the offered securities shall not
at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The
underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such
contracts.
Disclosure in the prospectus supplement of the use of delayed
delivery contracts will include the commission that underwriters
and agents soliciting purchases of the securities under delayed
contracts will be entitled to receive in addition to the date
when Platinum Holdings and/or Platinum Finance will demand
payment and delivery of the securities under the delayed
delivery contracts. These delayed
39
delivery contracts will be subject only to the conditions that
Platinum Holdings and/or Platinum Finance describe in the
prospectus supplement.
Each series of offered securities will be a new issue and, other
than the common shares which are listed on the New York Stock
Exchange, will have no established trading market. Platinum
Holdings and/or Platinum Finance, as applicable, may elect to
list any series of offered securities on an exchange, and in the
case of the common shares, on any additional exchange, but,
unless otherwise specified in the applicable prospectus
supplement, Platinum Holdings and/or Platinum Finance shall not
be obligated to do so. No assurance can be given as to the
liquidity of the trading market for any of the offered
securities.
Underwriters, dealers, agents and remarketing firms, as well as
their respective affiliates, may be customers of, engage in
transactions with, or perform services for, Platinum Holdings,
Platinum Finance and their respective subsidiaries in the
ordinary course of business.
WHERE YOU CAN FIND MORE INFORMATION
General
Platinum Holdings and Platinum Finance, as co-registrants, have
filed with the SEC a registration statement on Form S-3
under the Securities Act with respect to the common shares,
preferred shares, depositary shares, debt securities and any
related guarantees, warrants, purchase contracts and purchase
units offered by this prospectus. This prospectus, filed as part
of the registration statement, does not contain all of the
information set forth in the registration statement and its
exhibits and schedules, portions of which have been omitted as
permitted by the rules and regulations of the SEC. For further
information about Platinum Holdings and/or Platinum Finance and
the securities, we refer you to the registration statement and
to its exhibits and schedules. Statements in this prospectus
about the contents of any contract, agreement or other document
are not necessarily complete and, in each instance, we refer you
to the copy of such contract, agreement or document filed as an
exhibit to the registration statement, with each such statement
being qualified in all respects by reference to the document to
which it refers. Anyone may inspect the registration statement
and its exhibits and schedules without charge at the public
reference facilities the SEC maintains at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain copies of all or any
part of these materials from the SEC upon the payment of certain
fees prescribed by the SEC. You may obtain further information
about the operation of the SECs Public Reference Room by
calling the SEC at 1-800-SEC-0330. You may also inspect these
reports and other information without charge at a web site
maintained by the SEC. The address of this site is
http://www.sec.gov.
We are subject to the informational requirements of the Exchange
Act. Accordingly, we file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may
inspect and copy these reports, proxy statements and other
information at the public reference facilities maintained by the
SEC at the address noted above. You also may obtain copies of
this material from the Public Reference Room of the SEC as
described above, or inspect them without charge at the
SECs web site or at our web site, the address of which is
http://www.platinumre.com. We also furnish our shareholders with
annual reports containing consolidated financial statements
audited by an independent accounting firm. Our web site is not
incorporated into or otherwise a part of this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. The SEC allows us to
incorporate by reference the information we file
with it, which means that we can disclose important information
to you by referring to those documents. The information
incorporated by reference is an important part of this
prospectus. Any statement contained in a document which is
incorporated by reference in this prospectus is automatically
updated and superseded if information contained in this
prospectus, or information that we later file with the SEC,
modifies or replaces this information. All documents we file
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act,
40
after the initial filing of this registration statement and
until we sell all the securities shall be deemed to be
incorporated by reference into this prospectus. We incorporate
by reference the following previously filed documents:
|
|
|
(1) Our Current Reports on Form 8-K (i) filed on
January 11, 2005, February 23, 2005, April 14,
2005, April 28, 2005, May 18, 2005 and August 9,
2005 under Items 1.01 and 9.01; (ii) filed on
February 23, 2005 and June 23, 2005 under
Item 5.02; (iii) filed on May 13, 2005 under
Items 1.01 and 1.02; (iv) filed on May 24, 2005
and on September 22, 2005 under Items 1.01, 8.01 and
9.01; (v) filed on May 27, 2005, August 17, 2005
and October 24, 2005 under Items 1.01, 2.03, 8.01 and
9.01; (vi) filed on June 15, 2005, August 2,
2005, September 15, 2005 and October 6, 2005 under
Items 8.01 and 9.01; (vii) filed on July 29, 2005
only with respect to information filed under Item 8.01 and
only Exhibit 99.3 under Item 9.01; (viii) filed
on October 28, 2005 only with respect to the information
filed under Items 1.01, 5.02 and only Exhibits 10.1, 10.2,
10.3 and 99.3 under Item 9.01 and (ix) filed on
November 3, 2005 under Items 1.01, 2.03 and 9.01; |
|
|
(2) Our Annual Report on Form 10-K and as amended on
Form 10-K/ A for the year ended December 31, 2004
including information specifically incorporated by reference
into Platinum Holdings Form 10-K from Platinum
Holdings definitive Proxy Statement for its 2005 annual
general meeting of shareholders; |
|
|
(3) Our Quarterly Reports on Form 10-Q for quarters
ended March 31, 2005 and September 30, 2005; our
Quarterly Report on Form 10-Q and as amended on
Form 10-Q/ A for the quarter ended June 30,
2005; and |
|
|
(4) The information set forth under the caption
Description of Our Common Shares in our registration
statement on Form S-1, Registration No. 333-86906,
filed with the SEC on April 25, 2002, as thereafter amended
and supplemented, including the prospectus constituting part of
such registration statement filed pursuant to Rule 424(b)
under the Securities Act on October 29, 2002. |
We will provide to each person, including any beneficial owner,
to whom this prospectus is delivered, a copy of any or all of
the information that has been incorporated by reference in this
prospectus but not delivered with this prospectus. To receive a
free copy of any of the documents incorporated by reference in
this prospectus (other than exhibits to the registration
statement of which this prospectus is a part), call or write us
at the following address: Platinum Underwriters Holdings, Ltd.,
The Belvedere Building, 69 Pitts Bay Road, Pembroke, Bermuda HM
08, Bermuda, (441) 295-7195.
LEGAL MATTERS
Certain matters as to U.S. law in connection with this
offering will be passed upon for us by Dewey Ballantine LLP.
Certain matters as to Bermuda law in connection with this
offering will be passed upon for us by Conyers Dill &
Pearman, Hamilton, Bermuda. Additional legal matters may be
passed on for us, any underwriters, dealers or agents by counsel
which we will name in the applicable prospectus supplement.
EXPERTS
The consolidated balance sheets of Platinum Holdings as of
December 31, 2004 and 2003 and the related consolidated
statements of income and comprehensive income,
shareholders equity and cash flows for the years ended
December 31, 2004 and 2003 and the period from
April 19, 2002 (date of inception) to December 31,
2002, and all related financial statement schedules,
incorporated by reference in this prospectus and
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2004,
incorporated by reference herein by reference to our Annual
Reports on Form 10-K and Form 10-K/ A have been
audited by KPMG LLP, independent registered public accounting
firm, as set forth in their reports appearing therein. These
consolidated financial statements and financial statement
schedules and managements assessment of the effectiveness
of internal control over
41
financial reporting referred to above are included in reliance
upon such reports of KPMG LLP, included herein or incorporated
by reference as noted, given upon the authority of such firm as
experts in accounting and auditing.
The combined statements of underwriting results and identifiable
underwriting cash flows of The St. Paul Companies, Inc.
Reinsurance Underwriting Segment (Predecessor) for the period
from January 1, 2002 through November 1, 2002
incorporated by reference in this prospectus have been audited
by KPMG LLP, independent registered public accounting firm, as
set forth in their report. The combined statements referred to
above are included in reliance upon such reports of KPMG LLP,
given upon the authority of such firm as experts in accounting
and auditing. The audit report covering Predecessors
combined statements contains an explanatory paragraph that
states that the combined statements are not intended to be a
complete presentation of Predecessors or St. Pauls
financial position, results of operations, or cash flows.
ENFORCEMENT OF CIVIL LIABILITIES UNDER UNITED STATES
FEDERAL
SECURITIES LAWS AND OTHER MATTERS
Platinum Holdings and Platinum Bermuda are Bermuda companies,
and certain of their officers and directors are or will be
residents of various jurisdictions outside the United States. A
substantial portion of the assets of Platinum Holdings (in
particular the assets of Platinum Bermuda) and of such officers
and directors, at any one time, are or may be located in
jurisdictions outside the United States. Therefore, it could be
difficult for investors to effect service of process within the
United States on Platinum Holdings or any of its officers and
directors who reside outside the U.S. or to recover against
Platinum Holdings or any such individuals on judgments of courts
in the U.S., including judgments predicated upon civil liability
under the U.S. federal securities laws. Platinum Holdings
has been advised by Conyers Dill & Pearman, its Bermuda
counsel, that there is doubt as to whether the courts of Bermuda
would enforce (1) judgments of U.S. courts obtained in
actions against such persons or Platinum Holdings predicated
upon the civil liability provisions of the U.S. federal
securities laws and (2) original actions brought in Bermuda
against such persons or Platinum Holdings predicated solely upon
United States federal securities laws. There is no treaty in
effect between the U.S. and Bermuda providing for such
enforcement, and there are grounds upon which Bermuda courts may
not enforce judgments of U.S. courts. Certain remedies
available under the laws of U.S. jurisdictions, including
certain remedies available under the U.S. federal
securities laws, would not be allowed in Bermuda courts as
contrary to Bermudas public policy. Notwithstanding the
foregoing, Platinum Holdings has irrevocably agreed that it may
be served with process with respect to actions against it
arising out of violations of the U.S. federal securities
laws in any federal or state court in the U.S. relating to
the transactions covered by this prospectus by serving CT
Corporation System, 111 Eighth Avenue, New York, New York 10011,
telephone (212) 894-8940, our U.S. agent appointed for
that purpose.
We will deliver a copy of this prospectus to the Registrar of
Companies in Bermuda for filing pursuant to the Companies Act.
However, the Bermuda Monetary Authority and Registrar of
Companies in Bermuda accept no responsibility for the financial
soundness of any proposal or for the correctness of any of the
statements made or opinions expressed in this prospectus.
42
%
Series A Mandatory Convertible Preferred Shares
PROSPECTUS SUPPLEMENT
Goldman, Sachs & Co.