MRH » Topics » Warrants

This excerpt taken from the MRH 10-K filed Mar 1, 2007.
Warrants
 
The Company issued warrants to the founding shareholders to purchase, in the aggregate, up to 7,319,160.1 common shares. The original warrants issued expired either five or ten years from the date of issue depending on the grant terms, and will be exercisable at a price per share of $16.67, equal to the price per share paid by investors in the initial private offering.
 
The warrant contracts may be settled using either the physical settlement or net-share settlement methods. The warrants have been classified as equity instruments, in accordance with EITF 00-19: “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.” The warrants were initially measured at an aggregate fair value of $61.3 million and reported as an expense and an addition to additional paid-in-capital for the period ended December 31, 2001.
 
The fair value of each warrant grant was estimated on the date of grant using the Black-Scholes option-pricing model. The volatility assumption used, of approximately 30.0%, was derived from the historical volatility of the share price of a range of publicly-traded Bermuda reinsurance companies of a similar business nature to the Company. No allowance was made for any potential liquidity associated with the private trading of the Company’s shares. The other assumptions used for grants in 2001 were as follows: risk free interest rate of 4.5%, expected life of five or ten years as appropriate, and a dividend yield of nil%.
 
During the year ended December 31, 2005, Bank of America Securities LLC exercised 146,802.6 warrants in exchange for 86,656 common shares, resulting in an increase in common shares by their par amount and a decrease in additional paid-in capital of an equivalent amount. The remaining warrants outstanding are all issued to White Mountains and some of their affiliated companies and will expire ten years after the date of issue.
 
This excerpt taken from the MRH 10-Q filed Nov 8, 2006.
Warrants
 
During the nine months ended September 30, 2005, Bank of America Securities LLC exercised 146,802.6 warrants in exchange for 86,656 common shares, resulting in an increase in common shares by their par amount and a decrease in additional paid-in capital of an equivalent amount. The remaining warrants outstanding are all issued to White Mountains and some of its affiliated companies and will expire on January 3, 2012.
 

EXCERPTS ON THIS PAGE:

10-K
Mar 1, 2007
10-Q
Nov 8, 2006
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