2025.01.15
On December 30, 2024, CM Bermuda Limited ("CM Bermuda") entered into an agreement with NYSE-listed SiriusPoint Ltd. (NYSE: SPNT), under which SiriusPoint would repurchase all ordinary shares and warrants held by CM Bermuda in SPNT for a total consideration of approximately USD 726 million. SiriusPoint would pay the amounts in two installments. The first installment of approximately USD 243 million and the related transaction costs of approximately USD 6.7 million born by SPNT were paid on the signing date. The transaction was expected to close by February 28, 2025, when SPNT would pay the second installment of USD 483 million to CM Bermuda. This followed the preferred stock settlement and partial equity repurchase agreement reached between CM Bermuda and SPNT in August 2024. The total amount of the two transactions was USD 987 million. Upon completion of the transaction, CM Bermuda would fully disinvest from SPNT.
CM Bermuda is a wholly-owned subsidiary of CMIG International Holding Pte. Ltd. ("CMIG International"), an overseas investment platform jointly established by China Minsheng Investment Group ("CMIG"), Hana Bank, TBEA and Sun Hung Kai Financial. CM Bermuda is an overseas insurance and financial business and is the largest single shareholder of SPNT. SPNT is a global insurance and reinsurance underwriter headquartered in Bermuda, with offices in New York, London, Stockholm and other locations. It is licensed to write property and casualty insurance and reinsurance worldwide. According to SPNT's 2023 annual report, CM Bermuda held approximately 36.5% of SPNT's ordinary shares, approximately 210,000 ordinary warrants and approximately 110,000 preferred shares.
CMIG suffered a liquidity crisis in 2019, which affected its subsidiaries while SPNT's stock price had eased since its merger in 2021, hitting a low of USD 4 per share. As a result of these liquidity issues, in December 2023 CMIG’s shares in CMIG International were taken over by a Singaporean receiver appointed by a syndicate of state-owned banks. This transaction became a crucial part of CMIG International's overseas asset restructuring and it faced complex cross-border and multi-party interest coordination challenges. The specific challenges include:
(1) This transaction involved a special arrangement whereby a domestic syndicate appointed an overseas receiver. Since the transaction involved overseas assets, the domestic syndicate appointed an overseas receiver. The debt restructuring required balancing the interests of the stakeholders and maintaining the stability of the management team.
(2) It involved complex prior financing and mortgage and pledge arrangements for overseas investment projects. In addition to the usual share sale, the transaction documents had to address special cross-border loan repayments and overseas pledge release arrangements.
The parties to the transaction conducted thorough analysis, negotiations and risk assessments regarding the pledge of the target shares and the release thereof, the price payment and loan repayment arrangements, and the escrow of payment and release instructions, to ensure that the rights of CM Bermuda and the syndicate were fully protected during the transition period under the transaction documents. The legal counsel also had to consider the client's business needs and the receiver's professional opinions and ensure that the seller's rights and needs were reflected in the corresponding provisions. The legal counsel issued legal opinions, anticipated risks, and prevented malicious challenges from third parties.
(3) The transaction had to comply with domestic and foreign regulatory and listing requirements as it involved regulatory and disclosure requirements for listed companies under U.S. and Bermuda laws. The project team cooperated in the disclosure and announcement of the transaction by the parties in strict accordance with the listing regulations within a short timeframe and met the regulatory requirements for the disposal of pledged assets and the receiver's process in both the domestic and foreign jurisdictions.
(4) It involved multiple jurisdictions and different teams in the U.S., Bermuda, Singapore and China and the negotiations and document drafting were conducted in English. The opinions of different intermediaries in each jurisdiction, including top law firms such as Perkins Coie, Harneys and Drew & Napier, had to be reflected in the transaction documents and negotiations. The project team had strong English negotiation and writing skills, as well as excellent cross-cultural communication, understanding, coordination, and integration abilities.
(5) There were many different time zones and a tight timeline. The project team coordinated with different teams in China, Singapore, Bermuda, and the U.S. during the negotiations and working across the different time zones posed significant challenges to the team's endurance and stamina. As the transaction documents were finalized and signed during the Christmas holiday period, the project team faced great difficulties in advancing negotiations with foreign parties (including the buyer and its team) when there were significant disagreements between the parties.
JunHe was the exclusive Chinese legal counsel to CM Bermuda and the legal counsel to the party leading the project. They closely collaborated with the receiver and the management team to facilitate the smooth progress of the project. JunHe participated in the transaction structuring, negotiated and revised the transaction documents, coordinated with the overseas lawyers and the various intermediaries, and assisted the syndicate and its advisors in advancing the transaction. JunHe also assisted with the contract signing and integrated legal opinions from overseas lawyers. With its efficient and rigorous legal services and detail-oriented and professional expertise, JunHe’s team was highly recognized and trusted by the client and the other intermediaries.
Partner SUN, Jiangang (Roy) led the JunHe team and partner HU, Xiaohong provided great support for resolving potential disputes related to the restructuring.
