UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
————————————
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): November 28,
2007
————————————
VALIDUS
HOLDINGS, LTD.
(Exact
name of registrant as specified in its charter)
————————————
|
Bermuda
|
001-33606
|
98-0501001
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
19
Par-La-Ville Road, Hamilton, HM 11 Bermuda
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (441) 278-9000
Not
Applicable
(Former
name or former address, if changed since last report)
————————————
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
|
Item
1.01
|
Entry
into a Material Definitive
Agreement.
|
On
November 28, 2007, Validus Holdings,
Ltd. (“Validus Holdings”), as Guarantor, and its wholly-owned subsidiary, Talbot
Holdings Ltd. (“Talbot Holdings”), as Borrower, entered into a new $100 million
Funds-at-Lloyd’s Standby Letter of Credit Facility (the “Facility”) to support
underwriting capacity provided to Talbot 2002 Underwriting Ltd through
Syndicate 1183 at Lloyd’s of London for the 2008, 2009 and prior
underwriting years of account. The Facility was provided by a group of banks
arranged by Lloyd’s TSB Bank PLC and ING Bank N.V., London
Branch. The Facility provides for the issuance of up to $100 million
(denominated in US Dollars or Pound Sterling) of secured and/or unsecured
letters of credit to be issued for the benefit of Lloyd’s of London. On November
28, 2007, a $100 million secured letter of credit was issued under the
Facility.
The
Facility contains affirmative
covenants that include, among other things, (i) the requirement that
Validus Holdings and its subsidiaries initially maintain a minimum level
of
consolidated net worth of at least $1,164,265,000, and commencing with the
end
of the fiscal quarter ending December 31, 2007 to be increased quarterly
by an
amount equal to 50% of our consolidated net income (if positive) for such
quarter plus 50% of any net proceeds received from any issuance of common
shares
during such quarter and (ii) the requirement that Validus Holdings and its
subsidiaries maintain at all times a consolidated total debt to consolidated
total capitalization ratio not greater than 0.35:1.00. The Facility defines
net
worth to include preferred and preference securities and “hybrid” securities
(which includes Validus Holdings’ Junior Subordinated Deferrable
Debentures). The Facility also requires that Talbot Holdings maintain
at least $215 million of its own Funds at Lloyd’s, and to obtain a letter of
comfort from Lloyd’s of London confirming that Lloyd’s of London will take into
account a requested order of drawdown to drawdown Talbot Holdings’ own Funds at
Lloyd’s ahead of letters of credit issued under the Facility.
The
Facility also contains restrictions on Validus Holdings’ ability to pay
dividends and other payments in respect of equity interests at any time
that it
is otherwise in default under the Facility (with certain exceptions for
dividends in respect of preferred securities and hybrid securities, which
are
only limited during the continuance of certain specified defaults), make
investments, incur debt at its subsidiaries, transact with affiliates,
incur
liens, sell assets and merge or consolidate with others and other restrictions
customary for transactions of this type, in each case subject to agreed
exceptions.
Under
the Facility, the Borrower is
required to pay letter of credit commissions at the rate of 0.25% per annum
on
outstanding secured letters of credit. Letter of credit commissions in respect
of unsecured letters of credit are determined based on the A.M. Best financial
strength rating of Validus Reinsurance, Ltd. ranging from 0.40% per annum
in the
case of an A++ financial strength rating to 1.00% per annum in the case of
a
financial strength rating of B+ or below. The Facility provides for a 0.10%
per
annum commitment commission in respect of unused commitments. Drawn letters
of
credit incur interest at a rate of LIBOR plus 3% per annum.
Secured
letter of credit availability under the Facility is subject to a borrowing
base
limitation comprised of (a) the market value of cash and eligible
securities owned by Validus Reinsurance, Ltd. and placed in a collateral
account
subject to a customary account control agreement in favor of the lenders
and
agents under the Facility multiplied by (b) an agreed upon advance rate
applicable for each category of cash and eligible securities. Obligations
in
respect of secured letters of credit under the Facility are secured by a
first-priority lien on the cash and eligible securities comprising the borrowing
base in favor of the lenders and agents under the Facility. The
Facility provides that the Borrower may, in its own discretion, periodically
redesignate an outstanding letter of credit as being secured or
unsecured.
Under
certain circumstances including
the occurrence of certain events of default or failure to meet certain Lloyd’s
of London’s solvency requirements or A.M. Best minimal ratings, or upon the
occurrence of certain materially adverse events, the Borrower will be required
to convert any then outstanding unsecured letters of credit into secured
letters
of credit (and maintain such letters of credit as secured letters of credit
for
so long as such events continue) and post borrowing base collateral in favor
of
the lenders in respect of such letters of credit.
The
Facility contains representations
and warranties customary for facilities of this type. The Facility
also contains customary events of default including without limitation, with
agreed grace periods and thresholds, failure to make payments due under the
Facility, material inaccuracy of representations and warranties, breach of
covenants, cross defaults to material indebtedness, bankruptcy defaults,
judgments defaults, and failure to maintain certain material insurance
licenses.
Item
2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The
information set forth in Item 1.01
is incorporated herein by reference.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed herewith:
|
Exhibit
No.
|
Description
|
|
10.1
|
$100
million Standby Letter of Credit Facility dated as of 28 November
2007,
among Talbot Holdings Ltd., as Borrower, Validus Holdings, Ltd.,
as
Guarantor, Lloyds TSB Bank PLC , as joint Mandated Lead Arranger,
Agent,
and Security Trustee, and ING Bank N.V., London Branch, as joint
Mandated
Lead Arranger and Structuring
Agent.
|
SIGNATURES
Pursuant
to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to
be signed on its behalf by the undersigned hereunto duly
authorized.
Date: December 4,
2007
|
VALIDUS
HOLDINGS, LTD.
|
|
(Registrant)
|
|
By: /s/
Joseph E. (Jeff) Consolino
Name: Joseph
E. (Jeff) Consolino
Title: Executive
Vice President
&
Chief Financial Officer
|