-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LRkBBsOpS91I78jciMCV/GxKAQYS2iHUb/hWFQtXS08Qe+iF6FWg4In1/QTmlpuQ OUwZrIjuV3hiT3kK5g95mA== 0001169232-02-003496.txt : 20021212 0001169232-02-003496.hdr.sgml : 20021212 20021212095117 ACCESSION NUMBER: 0001169232-02-003496 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021206 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRENWICK GROUP LTD CENTRAL INDEX KEY: 0001122211 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 980232340 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16089 FILM NUMBER: 02855247 BUSINESS ADDRESS: STREET 1: LOM BLDG STREET 2: 27 REID STREET CITY: HAMILTON, BERMUDA STATE: D0 ZIP: HM 11 MAIL ADDRESS: STREET 1: 27 REID STREET LOM BLDG STREET 2: HAMILTON HM 11 BERMUNDA 8-K 1 d52959_8-k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) December 6, 2002 Trenwick Group Ltd. (Exact Name of Registrant as Specified in its Charter) Bermuda 1-16089 98-0232340 State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) LOM Building, 27 Reid Street Hamilton, HM 11, Bermuda Not Applicable (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (441) 292-4985 - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. - Other Events On December 8, 2002 Trenwick Group Ltd. ("Trenwick"), and its subsidiaries Trenwick America Corporation, Trenwick Holdings Limited and LaSalle Re Holdings Limited, reached an agreement in principle with certain lending institutions party to the Credit Agreement, dated as of November 24, 1999 and amended and restated as of September 27, 2000 (the "Credit Agreement"), and JP Morgan Chase Bank, as Administrative Agent. The agreement in principle provides for an extension for one year of $182.5 million of letters of credit supporting Trenwick's underwriting at Lloyd's. To those financial institutions extending their letters of credit, Trenwick will pay a 5% per annum cash letter of credit fee, issue pay-in-kind notes bearing interest at LIBOR plus 2.5% per annum, issue warrants equal to 10% of Trenwick's fully diluted equity capital and pay 15% of the profits earned by Trenwick for the 2002 and 2003 Lloyd's years of account. The agreement in principle also requires Trenwick to comply with certain financial and operational covenants in addition to those contained in the Credit Agreement. Trenwick also committed to pledge all of its equity interests, assets and property to secure its obligation to the renewing letter of credit providers. On December 6, 2002, Trenwick and its subsidiaries Trenwick America Corporation, Trenwick Holdings Limited and LaSalle Re Holdings Limited entered into a Second Amendment to the Forbearance Agreement, dated as of November 11, 2002 (the "Forbearance Agreement"), with certain lending institutions party to the Credit Agreement and JP Morgan Chase Bank, as Administrative Agent. In the Second Amendment to the Forbearance Agreement, the letter of credit providers agreed to refrain from enforcing their rights or remedies under the Credit Agreement until December 13, 2002, or earlier if there is another default under the Credit Agreement or the Forbearance Agreement, a third party exercises any right of action against Trenwick for a debt in excess of $5,000,000 or other material obligation or Trenwick takes an action which the letter of credit providers reasonably consider to be materially adverse to their interests. On December 9, 2002, Trenwick and its subsidiaries Trenwick America Corporation, Trenwick Holdings Limited and LaSalle Re Holdings Limited entered into the Third Amendment and Consent to the Forbearance Agreement with certain lending institutions party to the Credit Agreement and JP Morgan Chase Bank, as Administrative Agent. The Third Amendment and Consent to the Forbearance Agreement further extended the forbearance period until December 31, 2002 in order to complete final documentation of the terms of the extension of the letters of credit and permitted Trenwick to deposit funds at Lloyd's to satisfy its current obligations. On December 8, 2002, Trenwick issued a press release announcing the agreement in principle with its letter of credit providers, the hiring of Greenhill & Co. as a financial advisor and the cessation of underwriting at Trenwick International Limited. A copy of the press release is filed herewith as Exhibit 99.4 and is incorporated by reference herein. Item 7. Financial Statements and Exhibits 2 (c) Exhibits 99.1 Second Amendment to the Forbearance Agreement, dated as of December 6, 2002, among Trenwick Group Ltd. and its subsidiaries Trenwick America Corporation, Trenwick Holdings Limited and LaSalle Re Holdings Limited, and certain lending institutions party to the Credit Agreement, dated as of November 24, 1999 and amended and restated as of September 27, 2000, and JP Morgan Chase Bank, as Administrative Agent. 99.2 Third Amendment and Consent to the Forbearance Agreement, dated as of December 9, 2002, among Trenwick Group Ltd. and its subsidiaries Trenwick America Corporation, Trenwick Holdings Limited and LaSalle Re Holdings Limited, and certain lending institutions party to the Credit Agreement, dated as of November 24, 1999 and amended and restated as of September 27, 2000, and JP Morgan Chase Bank, as Administrative Agent. 99.3 LOC Facility Term Sheet, dated December 3, 2002. 99.4 Press Release of Trenwick Group Ltd. issued December 8, 2002. 3 SIGNATURE Pursuant to the Requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRENWICK GROUP LTD. By: /s/ W. Marston Becker --------------------------------- W. Marston Becker Acting Chairman and Acting Chief Executive Officer Dated: December 12, 2002 4 EXHIBIT INDEX Exhibit Description of Exhibit - ------- ---------------------- 99.1 Second Amendment to the Forbearance Agreement, dated as of December 6, 2002, among Trenwick Group Ltd. and its subsidiaries Trenwick America Corporation, Trenwick Holdings Limited and LaSalle Re Holdings Limited, and certain lending institutions party to the Credit Agreement, dated as of November 24, 1999 and amended and restated as of September 27, 2000, and JP Morgan Chase Bank, as Administrative Agent. 99.2 Third Amendment and Consent to the Forbearance Agreement, dated as of December 9, 2002, among Trenwick Group Ltd. and its subsidiaries Trenwick America Corporation, Trenwick Holdings Limited and LaSalle Re Holdings Limited, and certain lending institutions party to the Credit Agreement, dated as of November 24, 1999 and amended and restated as of September 27, 2000, and JP Morgan Chase Bank, as Administrative Agent. 99.3 LOC Facility Term Sheet, dated December 3, 2002. 99.4 Press Release of Trenwick Group Ltd. issued December 8, 2002. EX-99.1 3 d52959_ex99-1.txt SECOND AMENDMENT TO THE FORBEARANCE AGREEMENT Exhibit 99.1 SECOND AMENDMENT TO THE FORBEARANCE AGREEMENT SECOND AMENDMENT TO THE FORBEARANCE AGREEMENT, dated as of December 6, 2002 (this "Second Amendment"), among TRENWICK AMERICA CORPORATION ("Trenwick America"), TRENWICK HOLDINGS LIMITED (the "Account Party"), TRENWICK GROUP LTD. ("Holdings"), LASALLE RE HOLDINGS LIMITED ("LaSalle Holdings"), the lending institutions party to the Credit Agreement referred to below ( each a "Bank," and collectively, the "Banks"), and JPMORGAN CHASE BANK, as Administrative Agent (in such capacity, the "Administrative Agent"). All capitalized terms used herein and not otherwise defined herein shall have the meaning provided such terms in the Forbearance Agreement and the Credit Agreement referred to below. W I T N E S S E T H : WHEREAS, Trenwick America, the Account Party, Holdings, LaSalle Holdings, the Banks and the Administrative Agent are parties to a Forbearance Agreement dated as of November 11, 2002 (as amended, modified and/or supplemented to, but not including the date hereof, the "Forbearance Agreement"); WHEREAS, Trenwick America, the Account Party, the Banks and the Administrative Agent are parties to the Credit Agreement, dated as of November 24, 1999 and Amended and Restated as of September 27, 2000 (as amended, modified and/or supplemented to, but not including, the date hereof, the "Credit Agreement"); WHEREAS, Holdings and the Administrative Agent are parties to the Holdings Guaranty, dated as of September 27, 2000 (as amended, modified and/or supplemented to, but not including, the date hereof, the "Holdings Guaranty"); WHEREAS, subject to the terms and conditions set forth below, the parties hereto wish to amend the Forbearance Agreement as provided herein; NOW, THEREFORE, it is agreed; A. Amendment 1. Section 2.1 of the Forbearance Agreement is hereby amended by deleting the date "December 6, 2002" appearing therein and inserting the date "December 13, 2002" in lieu thereof. B. Miscellaneous Provisions 1. In order to induce the Banks to enter into this Second Amendment, each Credit Party hereby represents and warrants that (i) the representations and warranties of contained in Article IV of the Forbearance Agreement are true and correct in all material respects on and as of the Forbearance Amendment Effective Date (as defined below) (except with respect to any representations and warranties limited by their terms to a specific date, which shall be true and correct in all material respects as of such date), (ii) there exists no Forbearance Event of Default under the Forbearance Agreement on the Forbearance Amendment Effective Date and (iii) there exists no Default or Event of Default under the Credit Agreement (other than the Events) on the Forbearance Amendment Effective Date, in each case after giving effect to this Second Amendment. 2. This Second Amendment is limited as specified and shall not constitute an amendment, modification, acceptance or waiver of any other provision of the Forbearance Agreement. 3. THIS SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 4. This Second Amendment shall become effective on the date (the "Forbearance Amendment Effective Date") when the Borrower, the Account Party, Holdings, LaSalle Holdings and the Required Banks shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of telecopier) the same to the Administrative Agent. 5. From and after the Forbearance Amendment Effective Date, all references in the Forbearance Agreement shall be deemed to be referenced to the Forbearance Agreement as modified hereby. * * * -2- IN WITNESS WHEREOF, the parties hereto have caused this Forbearance Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above. TRENWICK GROUP LTD., in its capacity as a Guarantor and Pledgor By /s/ Alan L. Hunte -------------------------------------- Name: Alan L. Hunte Title: Executive Vice President and Chief Financial Officer TRENWICK AMERICA CORPORATION, in its capacity as the Borrower and Guarantor By /s/ Alan L. Hunte -------------------------------------- Name: Alan L. Hunte Title: Executive Vice President and Chief Financial Officer TRENWICK HOLDINGS LIMITED, in its capacity as the Account Party By /s/ Alan L. Hunte -------------------------------------- Name: Alan L. Hunte Title: Director LASALLE RE HOLDINGS LIMITED, in its capacity as a Guarantor and Pledgor By /s/ John V. Del Col -------------------------------------- Name: John V. Del Col Title: Director [Bank Signatures Intentionally Omitted] EX-99.2 4 d52959_ex99-2.txt THIRD AMENDMENT AND CONSENT Exhibit 99.2 THIRD AMENDMENT AND CONSENT TO THE FORBEARANCE AGREEMENT THIRD AMENDMENT AND CONSENT TO THE FORBEARANCE AGREEMENT, dated as of December 9, 2002 (this "Third Amendment"), among TRENWICK AMERICA CORPORATION ("Trenwick America"), TRENWICK HOLDINGS LIMITED (the "Account Party"), TRENWICK GROUP LTD. ("Holdings"), LASALLE RE HOLDINGS LIMITED ("LaSalle Holdings"), the lending institutions party to the Credit Agreement referred to below ( each a "Bank," and collectively, the "Banks"), and JPMORGAN CHASE BANK, as Administrative Agent (in such capacity, the "Administrative Agent"). All capitalized terms used herein and not otherwise defined herein shall have the meaning provided such terms in the Forbearance Agreement and the Credit Agreement referred to below. W I T N E S S E T H : WHEREAS, Trenwick America, the Account Party, Holdings, LaSalle Holdings, the Banks and the Administrative Agent are parties to a Forbearance Agreement dated as of November 11, 2002 (as amended, modified and/or supplemented to, but not including the date hereof, the "Forbearance Agreement"); WHEREAS, Trenwick America, the Account Party, the Banks and the Administrative Agent are parties to the Credit Agreement, dated as of November 24, 1999 and Amended and Restated as of September 27, 2000 (as amended, modified and/or supplemented to, but not including, the date hereof, the "Credit Agreement"); WHEREAS, Holdings and the Administrative Agent are parties to the Holdings Guaranty, dated as of September 27, 2000 (as amended, modified and/or supplemented to, but not including, the date hereof, the "Holdings Guaranty"); WHEREAS, subject to the terms and conditions set forth below, the parties hereto wish to amend the Forbearance Agreement as provided herein; NOW, THEREFORE, it is agreed; A. Amendment and Waiver 1. Section 2.1 of the Forbearance Agreement is hereby amended by deleting the date "December 13, 2002" appearing therein and inserting the date "December 31, 2002" in lieu thereof. 2. Notwithstanding anything to the contrary contained in Section 2.2(e) of the Forbearance Agreement, Holdings and/or its Subsidiaries may use the LaSalle Collateral and the Cat E Put Proceeds in an aggregate amount not to exceed approximately (pound)64,699,500 to deposit funds at Lloyd's solely to satisfy the Lloyd's Solvency Deficit; provided that the Lloyd's Solvency Deficit is satisfied by first, using no less than the pounds sterling equivalent of $35,000,000 of the Cat E Put Proceeds and second, by using the LaSalle Collateral. 3. Notwithstanding anything contained in Section 2.2(e) and 2.3 of the Forbearance Agreement, Holdings and/or its Subsidiaries may deposit funds at Lloyd's in an amount not to exceed approximately (pound)9,314,100, in order for Holdings and/or its Subsidiaries to satisfy Lloyd's underwriting capacity requirements for the 2003 year of account. B. Miscellaneous Provisions 1. In order to induce the Banks to enter into this Third Amendment, each Credit Party hereby represents and warrants that (i) the representations and warranties of contained in Article IV of the Forbearance Agreement are true and correct in all material respects on and as of the Forbearance Amendment Effective Date (as defined below) (except with respect to any representations and warranties limited by their terms to a specific date, which shall be true and correct in all material respects as of such date), (ii) there exists no Forbearance Event of Default under the Forbearance Agreement on the Forbearance Amendment Effective Date and (iii) there exists no Default or Event of Default under the Credit Agreement (other than the Events) on the Forbearance Amendment Effective Date, in each case after giving effect to this Amendment. 2. This Third Amendment is limited as specified and shall not constitute an amendment, modification, acceptance or waiver of any other provision of the Forbearance Agreement. 3. THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 4. This Third Amendment shall become effective on the date (the "Forbearance Amendment Effective Date") when (i) the Borrower, the Account Party, Holdings, LaSalle Holdings and the Required Banks shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of telecopier) the same to the Administrative Agent and (ii) when Lloyd's has issued a letter of comfort in form and substance satisfactory to the Required Banks. 5. From and after the Forbearance Amendment Effective Date, all references in the Forbearance Agreement shall be deemed to be referenced to the Forbearance Agreement as modified hereby. * * * -2- IN WITNESS WHEREOF, the parties hereto have caused this Forbearance Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above. TRENWICK GROUP LTD., in its capacity as a Guarantor and Pledgor By /s/ Alan L. Hunte -------------------------------------- Name: Alan L. Hunte Title: Executive Vice President and Chief Financial Officer TRENWICK AMERICA CORPORATION, in its capacity as the Borrower and Guarantor By /s/ Alan L. Hunte -------------------------------------- Name: Alan L. Hunte Title: Executive Vice President and Chief Financial Officer TRENWICK HOLDINGS LIMITED, in its capacity as the Account Party By /s/ Alan L. Hunte -------------------------------------- Name: Alan L. Hunte Title: Director LASALLE RE HOLDINGS LIMITED, in its capacity as a Guarantor and Pledgor By /s/ John V. Del Col -------------------------------------- Name: John V. Del Col Title: Director [Bank Signatures Intentionally Omitted] EX-99.3 5 d52959_ex99-3.txt PRESS RELEASE OF TRENWICK GROUP LTD. Exhibit 99.3 Trenwick Group Ltd. Term Sheet LOC Facility December 3, 2002 - -------------------------------------------------------------------------------- A. Existing LOC - -------------------------------------------------------------------------------- Account Party: Trenwick Holdings Limited (the "Account Party"). - -------------------------------------------------------------------------------- Banks: All of the Banks (the "Existing Banks") with commitments under existing LOC (the "Existing LOC") pursuant to the existing credit agreement (the "Existing Credit Agreement"). - -------------------------------------------------------------------------------- Amount: $182.5 million, with each of the Existing Banks' commitment permanently reduced pro rata to reflect the reduction of the Existing LOC from approximately $226 million to $182.5 million; provided that at least 91.25% (the "Renewal Percentage") of the Existing Banks (as determined by reference to each Existing Bank's commitment before giving effect to the above-referenced reduction) elect to participate in the Renewal LOC (as defined below). - -------------------------------------------------------------------------------- Beneficiary: Lloyd's (in support of the underwriting of syndicates 839 and 44). - -------------------------------------------------------------------------------- Expiration: December 31, 2005. - -------------------------------------------------------------------------------- B. Renewal LOC - -------------------------------------------------------------------------------- Account Party: The Account Party. - -------------------------------------------------------------------------------- Banks: The renewal LOC (the "Renewal LOC" and, together with the Existing LOC Facility, the "LOC Facility") will include all of the Existing Banks who elect to participate in the Renewal LOC ("the Renewing Banks," with any of the Existing Banks who do not participate in the Renewal LOC being referred to herein the "Nonrenewing Banks") with each of the Renewing Banks increasing its respective commitment pro rata to reflect the termination of the commitments of the Nonrenewing Banks; provided that the Existing Banks constituting the Renewal Percentage elect to participate in the Renewal LOC. - -------------------------------------------------------------------------------- Amount: $182.5 million, subject to reduction on a dollar for dollar basis upon drawings being made on the Existing LOC. - -------------------------------------------------------------------------------- Beneficiary: Lloyd's (in support of Syndicates 839 and 44). - -------------------------------------------------------------------------------- Effective Date January 1, 2006 - -------------------------------------------------------------------------------- Trenwick Group Ltd. Term Sheet LOC Facility December 3, 2002 - -------------------------------------------------------------------------------- Expiration: December 31, 2006. - -------------------------------------------------------------------------------- C. Terms applicable to the LOC Facility - -------------------------------------------------------------------------------- Guarantors: Trenwick Group Ltd. ("Trenwick") and each existing and future direct and indirect subsidiary of Trenwick (other than the Account Party), to the extent permitted by law or applicable regulatory authorities. - -------------------------------------------------------------------------------- Security: The Nonrenewing Banks will continue to have their respective obligations under the Existing LOC secured by a pledge of 100% of the stock and equity interests of La Salle Re Holdings Limited and La Salle Re Limited (the "Existing Collateral"). The Renewing Banks shall have their respective obligations under the Existing LOC and the Renewal LOC secured by the following, to the extent permitted by applicable law and instruments governing the currently outstanding indebtedness of Holdings and its subsidiaries: (i) the Existing Collateral (which shall be pari passu with the liens in favor of the Nonrenewing Banks), (ii) a pledge of 100% of the stock and equity interests now or hereafter owned by Holdings and its direct and indirect subsidiaries (other than the Existing Collateral), and (iii) substantially all of the present and future assets and property of Holdings, each direct and indirect U.S. nonregulated subsidiary of Holdings and each direct and indirect Non-U.S. subsidiary of Holdings (which security shall include, without limitation, the current and future profits from Trenwick America and the OAK dedicated entities). - -------------------------------------------------------------------------------- Pricing: o Nonrenewing Banks: o Same as the Existing Credit Agreement. o Renewing Banks: o 500 bps per annum on each Renewing Bank's commitment under the Existing LOC during the period that the Existing LOC is in effect (i.e., from the date which is the date of the closing of this transaction through December 31, 2005) (the "Existing LOC Period") and on each Renewing Bank's commitment under the Renewal LOC during the period that the - -------------------------------------------------------------------------------- -2- Trenwick Group Ltd. Term Sheet LOC Facility December 3, 2002 - -------------------------------------------------------------------------------- Renewal LOC is in effect (i.e., from January 1, 2006 through December 31, 2006) (the "Renewal LOC Period"), payable quarterly. o An additional Letter of Credit Fee in the form of PIK notes (the "PIK Notes"), to be issued to each Renewing Bank equal to the PIK Note amount (as defined below). Interest on the PIK Notes shall accrue on a quarterly basis at an interest rate of LIBOR plus 250 bps per annum via the issuance of like-kind notes. The "PIK Note Amount" shall equal the difference, calculated on a quarterly basis, between (i) 500 bps per annum on each Renewing Bank's commitment under (I) the Existing LOC during the Existing LOC Period and (II) the Renewal LOC during the Renewal LOC Period, and (ii) the cost to Trenwick (expressed in basis points) to have the Berkshire Back-Up LOC (as defined below) issued. o An additional Letter of Credit Fee in an amount equal to 50 bps on each Renewing Bank's commitment under the Existing LOC during the Existing LOC Period and the Renewal LOC during the Renewal LOC Period to the extent Trenwick has not collateralized the LOC in a manner satisfactory to the Administrative Agent on dates to be determined. o Warrants to purchase common stock equal to 10% of Trenwick's fully diluted equity capital as of the closing of the transaction on terms and conditions satisfactory to the Banks. The warrants shall be issued to each Renewing Bank pro rata based on each Bank's commitment (as determined by reference to each Renewing Bank's commitment under the Renewal LOC). o An additional Letter of Credit Fee equal to 15% of the profits earned by Trenwick for the 2002 and 2003 years of Account. - -------------------------------------------------------------------------------- Cash Collateralization The obligations of the Renewing Banks under the of the Existing LOC and Renewal LOC will be collateralized in a manner - -------------------------------------------------------------------------------- -3- Trenwick Group Ltd. Term Sheet LOC Facility December 3, 2002 - -------------------------------------------------------------------------------- LOC: satisfactory to the Administrative Agent with the proceeds from the following (less any cash letter of credit fees paid to the Existing Banks and the Renewing Banks): o any debt issuance. o any equity issuance. o any asset sale. o any profits earned from the Oak dedicated entities. - -------------------------------------------------------------------------------- Affirmative Covenants: Similar to the Existing Credit Agreement with changes consistent within the context of this transaction, including, without limitation, the following: o Trenwick International Limited to be placed into run-off prior to December 31, 2002. o Trenwick to use its best efforts to terminate the Existing LOC and Renewal LOC by December 31, 2003. o Trenwick to fully collateralize in a manner satisfactory to the Administrative Agent the obligations of the Renewing Banks under the Existing LOC and Renewal LOC by December 31, 2003 to the extent the respective LOCs are not terminated. o Trenwick to use its best efforts to secure stop-loss treaties satisfactory to the Required Banks for the 2000, 2001 and 2002 years of account. o Trenwick to use its best efforts to convert the LaSalle regulated entities to Class 3 insurer status. o Senior Notes to be refinanced no later than March 1, 2003 in a manner satisfactory to the Required Banks. o Trenwick to pay Lloyd's any residual amounts due for the 2002 and prior years of account. o Trenwick to use its best efforts to secure loss portfolio transfers at LaSalle satisfactory to the Required Banks. o Monthly reporting. o Reviews by Elliston or similar company at the request of the Required Banks, including, without limitation, a review and analysis of the salaries and - -------------------------------------------------------------------------------- -4- Trenwick Group Ltd. Term Sheet LOC Facility December 3, 2002 - -------------------------------------------------------------------------------- directors' fees in connection with the Trenwick Managing Agency syndicate. o Monitoring by Elliston or similar company at the request of the Required Banks with respect to any run off costs incurred in connection with the Existing LOC and Renewal LOC, with the Required Banks retaining veto rights in connection with the incurrence of such run off costs. o The appointment of new directors satisfactory to the Required Banks to manage syndicates 839 and 44 to the extent such syndicates runoff for the 2003 and prior years of account. - -------------------------------------------------------------------------------- Negative Covenants: Similar to the Existing Credit Agreement with changes consistent in the context of the transaction, including, but not limited to the following: o Prohibitions on any distributions of any kind from the Oak dedicated entities except to Lloyd's or to collateralize the Existing LOC and Renewal LOC. o Prohibitions on writing any future U.S. D&O and E&O business. o Prohibition on writing any new or renewal business that has an insurance period greater than 12 months plus odd time to a maximum of 18 months. o Prohibition on writing any business, including by class, duration or otherwise, without review by Elliston or similar company and with the Required Banks retaining veto rights in connection of the writing of such business. o Further prohibitions on debt, including, but not limited to, a prohibition on the guaranty of the Senior Notes. o Further prohibitions on the incurrence of liens. o Further prohibitions on asset sales and reorganizations, provided that (a) Holdings will be permitted to redomesticate to Delaware and, if applicable, merge Trenwick America Corporation and LaSalle Re Holdings Limited into the redomesticated Holdings, (b) Chartwell Insurance Company will be permitted to merge with and into - -------------------------------------------------------------------------------- -5- Trenwick Group Ltd. Term Sheet LOC Facility December 3, 2002 - -------------------------------------------------------------------------------- Trenwick America Reinsurance Corporation (c) LaSalle Re Limited will be permitted to acquire Oak Dedicated Limited and Oak Dedicated Three Limited, (d) Holdings will be permitted to sell Trenwick International Limited and/or Trenwick Holdings Limited and (e) Holdings will be permitted to dividend and sell Dakota Specialty Insurance Company. o Prohibition on expenditures (other than claims payments) in excess of $100,000 without the approval of the Required Banks. o Prohibition on other than ordinary and necessary expenditures made by the LaSalle entities. o Prohibitions on salary increases, bonuses, options and other similar forms of compensation except pursuant to plans already in existence and within the normal course of business. o Prohibitions on intercompany transfers and on dividends, including, without limitation, on Holdings common shares, Holdings Series B Cumulative Convertible Perpetual Preferred Shares and LaSalle Series A Preferred Shares, with limited exceptions for certain intercompany transfers and intercompany dividends to be agreed upon, and the prohibition of payments on the Trust Preferred Securities. o Prohibition on any new agreements permitting any other creditors to be preferred over the Banks. - -------------------------------------------------------------------------------- Financial Covenants: o Maximum Leverage Ratio (as currently defined) of .325 to 1. o Minimum Combined Statutory Surplus (as currently defined) of not less than $325 million. o Minimum Tangible Consolidated Net Worth (as currently defined) of at least $350 million. - -------------------------------------------------------------------------------- Conditions Precedent: Similar to the Existing Credit Agreement with changes consistent with the context of the transaction, including but not limited to the following: o Payment by Trenwick to Lloyd's of approximately $104 million to cure the solvency deficit. - -------------------------------------------------------------------------------- -6- Trenwick Group Ltd. Term Sheet LOC Facility December 3, 2002 - -------------------------------------------------------------------------------- o Lloyd's agreement that it will apply the $104 million payment to meet the solvency deficit before it draws on the LOC. o Delivery of a solvency certificate. o Regulatory approval in manner satisfactory to each of the Renewing Banks regarding the reserve requirements for each of the Renewing Banks and the treatment of the Existing LOC and Renewal LOC on each of the Renewing Bank's financial statements. o Agreement with Lloyd's on the form and substance of the Existing LOC and the Renewal LOC. o Each Renewing Bank's approval of the terms and conditions of the back-up LOC to be issued by Berkshire to support the 2003 year of account (the "Berkshire Back-Up LOC"), it being understood and agreed that the Berkshire Back-Up LOC shall be drawn upon by Lloyd's only after exhaustion of the Existing LOC or the Renewal LOC, as the case may be. o The LOC Facility closing by no later than December 31, 2002. - -------------------------------------------------------------------------------- Event of Default: Similar to the Existing Credit Agreement with changes consistent with the context of the transaction, including but not limited to the following: o The Termination of the Chubb and Berkshire Agreements. - -------------------------------------------------------------------------------- Amendments & Waivers: Similar to the Existing Credit Agreement with the additional requirement that any material transfers (intercompany or otherwise) from the LaSalle entities (other than transfers to collateralize or reimburse the Existing LOC or Renewal LOC or pay letter of credit or other fees to the Banks) require 66-2/3% Bank approval to the extent that this additional requirement does not require 100% Bank approval. - -------------------------------------------------------------------------------- -7- EX-99.4 6 d52959_ex99-4.txt LOC FACILITY TERM SHEET Exhibit 99.4 Trenwick Group Ltd. LOM Building Tel 441.292.4985 27 Reid Street Fax 441.292.4878 Hamilton HM 11 Bermuda [LOGO] TRENWICK NYSE Symbol: TWK Contact: Alan L. Hunte, Executive Vice President and Chief Financial Officer - 441-298-8082 - -------------------------------------------------------------------------------- For Immediate Release - -------------------------------------------------------------------------------- Trenwick Announces Agreement in Principle With Lloyd's Letter of Credit Providers, Hiring of Greenhill & Co. as Financial Advisor and Cessation of Underwriting at Trenwick International Limited Hamilton, Bermuda, December 8, 2002... Trenwick Group Ltd. ("Trenwick") announced today that it had reached an agreement in principle with its Lloyd's letter of credit providers and that it would be underwriting at Lloyd's in 2003. The letter of credit providers have agreed in principle to the renewal of $182 million of letters of credit supporting Trenwick's Lloyd's underwriting operations. The provision of letters of credit to Lloyd's is subject to the completion of final documentation. With additional capital provided by Trenwick and its previously announced agreement with National Indemnity Company, an affiliate of the Berkshire Hathaway Group, Trenwick's anticipated Lloyd's underwriting capacity for 2003 is up to $500 million. Michael Watson, Chairman and Chief Executive Officer of Trenwick Managing Agents Limited, said, "I am delighted that we are able to confirm our plans for 2003. Trenwick's Lloyd's capacity in 2003 will allow it the flexibility to develop its business next year and participate further in market conditions which we believe will continue to be very favorable." Trenwick also announced today that it has hired Greenhill & Co, LLC as its financial advisor. Greenhill & Co., a recognized leader in providing advisory services in financial restructuring transactions, has been hired by Trenwick to assist it in evaluating and implementing a restructuring of its outstanding indebtedness and preferred equity. Trenwick also announced today that Trenwick International Limited, its specialty London market insurance company, has ceased to underwrite new business. Trenwick will continue to administer and pay claims in connection with the insurance policies previously underwritten by Trenwick International Limited. Trenwick will record a charge in the fourth quarter of 2002 for the expenses it expects to incur in connection with the termination of Trenwick International Limited's underwriting business. W. Marston Becker, Acting Chairman and Acting Chief Executive Officer of Trenwick, stated, "These actions represent significant steps in the right direction for Trenwick. The $182 million of letter of credit and continued support from National Indemnity Company, Berkshire Hathaway's affiliate, for Trenwick's Lloyd's underwriting operation allows us to continue to support those portions of our business which we believe will produce the best results for our policyholders, creditors and shareholders." Background Information Trenwick is a Bermuda-based specialty insurance and reinsurance underwriting organization with two principal businesses operating through its subsidiaries located in the United States, the United Kingdom and Bermuda. Trenwick's reinsurance business provides treaty reinsurance to insurers of property and casualty risks from offices in the United States and Bermuda. Trenwick's international operations underwrite specialty insurance as well as treaty and facultative reinsurance on a worldwide basis through its London operations. Safe Harbor for Forward-Looking Statements Certain statements made in this press release that are not based on current or historical fact are forward-looking in nature including, without limitation, statements containing words "believes," "anticipates," "plans," "projects," "intends," "expects," "estimates," "predicts," and words of similar import. Such forward-looking statements involve known and unknown risks, assumptions, uncertainties, and other factors that may cause actual results, performance, or achievements of Trenwick or its industry to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Trenwick has identified certain risk factors which could cause actual plans or results to differ substantially from those included in any forward-looking statements. These risk factors are discussed in Trenwick's Securities and Exchange Commission filings, including but not limited to its most recent Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission, and such discussions regarding risk factors are hereby incorporated by reference into this press release. Copies of such Securities and Exchange Commission filings are available from Trenwick or directly from the Securities and Exchange Commission. -----END PRIVACY-ENHANCED MESSAGE-----