The meetings were chaired by BF&M's Deputy Chairman, Garry Madeiros. Because the Chairman, Lt. Col. Michael Darling, is one of the many shareholder defendants, he explained to the shareholders that Mr. Madeiros would chair the meeting. In addition to Mr. Madeiros, the meeting was addressed by the President & Chief Executive Officer, Glenn Titterton and by leading legal counsel from London.
Mr. Titterton pointed out that this settlement was a sensible commercial decision. "The current trial, which started in May, was scheduled to run until the end of the year 2000." "The likelihood was that whatever decision was reached, it would have been appealed all the way to the Privy Council in London. This process would have taken several more years and resulted in further enormous legal expenses and loss of focus for the Company."
Under the agreement, BF&M Limited agreed to pay the sum of $35 million, in conjunction with substantial additional payments by the other defendants. The settlement agreement also provides an option for BFMIC to purchase up to 1 million common shares of BF&M Limited, during a 3 year period commencing 1 January 2004, at a price of BD$12.40 per share. Mr. Titterton said that "if the option is exercised in full, it will result in the welcome infusion of $12.4 million of capital into the Company."
Shareholders heard that BF&M retained several important safeguards. These include -
· A call option requiring BFMIC, after exercising their option, to sell the shares to BF&M at a prescribed price.
· A right of pre-emption requiring BFMIC, before selling shares to any other party, to offer them to BF&M.
· Restrictions on the number of shares BFMIC can dispose of at any one time.
· A restriction that BFMIC will not increase its holding in BF&M i.e. will not acquire any further shares in addition to the common shares granted under the option and the common shares obtained by converting preference shares that BFMIC already hold.
· A restriction ensuring that BF&M remains not less than 60% Bermudian owned.
· The right to extinguish the options at any time up to 31 December 2003.
Mr. Madeiros explained that BFMIC would be entitled to appoint one person to BF&M's Board for as long as they hold over 200,000 shares or options. He said that "BFMIC is required to abstain from voting its shares on any resolution to elect, re-elect or remove any other director of the Company."
Leading London Counsel, Elizabeth Gloster QC, commented on the progress of the case to date and summarized the uncertainties for all of the parties in continuing the current legal action. She recommended settlement on the terms outlined. She also confirmed that the Plaintiffs had executed separate settlement agreements with all other defendants and that all parties had signed mutual release and discharge agreements.
Shareholders overwhelmingly approved the terms of the settlement and resulting changes to the Bye-Laws of the Company. Members of the BF&M Shareholders Association also voted unanimously to approve the terms of their own settlement of the litigation and also approved a motion to wind up the Association 28 days following the dismissal of the case.
Approval by BF&M's shareholders was one of the conditions of the agreement. Now that shareholders have approved, legal counsel for all parties will apply to Puisne Judge Justice Meerabux, on December 16th, to dismiss the action with no order as to costs. BF&M common shares should begin to trade on the Bermuda Stock Exchange the following day.
Mr. Titterton said that " the Board, Management and staff of the BF&M Insurance Group
welcome the settlement and are delighted to have this contentious matter behind them." "We are looking forward to the future and the opportunities to grow the company in major lines of business, with enthusiasm and confidence."