British insurer Tawa Plc (LON:TAW) said on Monday it had inked a deal to sell its interest in KX Reinsurance Co Ltd (KX Re) and its wholly-owned unit OX Reinsurance Co Ltd (OX Re) to Catalina Holdings Ltd for a maximum of USD30m (EUR23.1m).
Under the terms of the agreement, Catalina will pay a minimum of USD28m in cash plus up to USD2m more based on KX Re’s financial performance till closing. The transaction is awaiting clearance by UK’s Financial Services Authority (FSA) which is expected to be obtained by the year end.
Tawa will use about USD15m of the total proceeds to repay an inter-company loan facility between it and KX Re on closing. The company intends to use the balance to fund new opportunities as well as for further debt repayment and general working capital purposes.
The divestment is part of Tawa’s strategy to shed some of its portfolios, the company said, adding that the previously announced formal sales process of its entire share capital is continuing as planned. Tawa estimates that the disposal of KX Re will reduce its equity by USD19m, if the maximum consideration is received.
Tawa bought KX Re and its wholly-owned unit in May 2007 and March 2011, respectively. Including the sale proceeds, the total value extracted from its investments in the two entities is projected to be USD126m. Last year, the company earned management fees of USD2m from KX Re.
KPMG consulted the vendor on the transaction.