As is typical after major merger transactions, Trenwick restructured its debt.
Thus, it entered into a $400 million credit facility in November 1999. A $170 million
revolving credit facility for the use of Trenwick as a holding company comprised one
major chunk of the debt. The other portion, $230 million, went to finance a five-year
letter of credit for use by Chartwell Managing Agents in its Lloyd’s syndicate
underwriting operations. The assets of several Trenwick subsidiaries, including the
Trenwick America operating unit entities, were pledged as security for the $400 million
debt, thereby rendering Trenwick America a primary guarantor of that debt.
As with the acquisition of Sorema, Trenwick’s merger with Chartwell did not
involve a transaction with an affiliate. Chartwell was a listed company in its own right
and both its stockholders, and the stockholders of Trenwick, voted to approve the merger.
In Trenwick’s case, 82.8% of the electorate participated in the vote, with over 90%
voting to approve the deal.12 After the closing of the Chartwell acquisition, three
members of Chartwell’s board joined the Trenwick board increasing the board from one
7/8 comprised of independent directors to one 10/11 comprised of such directors.13
As of the end of 1999, Trenwick had reported assets in excess of $3.24 billion,
stockholders’ equity in excess of a $462 million, and a book value of $27.37 per share.14
Hefter Decl. Ex. C at 23 (Trenwick 10-K filed March 30, 2000). Chartwell directors Cole, DeMichele, and Grzelecki joined the Trenwick board.
Decl. Ex. H at 2-5 (Trenwick Proxy Statement filed Apr. 17, 2000); Hefter Decl. Ex. G at 64
(Trenwick Form S-4 filed Aug. 23, 2000). Hefter Decl. Ex. G at 10 (Trenwick Form S-4 filed Aug. 23, 2000). 14