Proposed Merger of North and SMMI - December 2013
CIRCULAR REF: 2013/041
CIRCULATED TO ALL MEMBERS, BROKERS AND DIRECTORS
We refer to Circular number 2013/026 of 7 August 2013 where we advised that the North of England P&I Association (North) had entered into formal merger discussions and was conducting a due diligence exercise in respect of Sunderland Marine Mutual Insurance Company (SMMI).
We are now pleased to confirm that, following completion of both financial and legal due diligence, North and SMMI will be entering into a framework agreement which, subject to the satisfaction of various conditions, forms the basis of the proposed merger.
In accordance with North’s mutual ethos, the Directors wish to ensure that they have a clear mandate from the Club’s mutual membership before proceeding with the proposed merger and the Framework Agreement is therefore conditional upon the Club’s Members approving the transaction at a General Meeting. The Directors have agreed to submit formal merger proposals to the Club’s membership for approval at a General Meeting on 16 January 2014.
It is important that as a matter of transparency and good governance, Members have sufficient information to enable them to properly consider the potential benefits and risks of the proposed merger in advance of the General Meeting. This Circular and the attached Explanatory Notes have therefore been prepared to provide Members with information on the merger and to explain why the Directors consider that the merger is in the best interests of North’s Members.
Also provided with this Circular is formal notice of the General Meeting of the Members on 16 January 2014 setting out the resolutions which Members are being asked to consider and, if thought fit, approve at that meeting.
The merger proposal has received the unanimous support of the Directors, the Members Board and the senior management team. It represents a unique low risk opportunity to satisfactorily deliver North’s strategic objective of diversification of non-core fixed premium business to produce a profitable income stream for the benefit of the Club’s mutual membership. As a result of the merger transaction, North will assume ownership (at no cash consideration) of SMMI’s assets and liabilities. The surplus of assets over liabilities is calculated to be in the region of £30M – £35M (US$48M – US$56M).
The Directors strongly recommend that Members support the proposal by voting in favour of the resolutions to be proposed at the General Meeting on 16 January 2014.
AA WILSON and PA JENNINGS
JOINT MANAGING DIRECTORS – North Insurance Management Limited
As Managers on behalf of the North of England P&I Association Limited