Converium has abandoned its investor plan and will tell shareholders today that it will have to price its new shares at a discount of SF5 each.
A meeting will be held at its Zurich headquarters this afternoon to vote on the company's survival.
The rights issue has been underwritten by a consortium of banks, led by CSFB and JP Morgan.
According to reports, shareholders are concerned about the dilution of their stakes given the low issue price, set at 74.4% below Monday's closing price. Before the deal gets a green light, shareholders will have to approve a reduction in the value of Converium stock from SF10 to SF5.
The meetings comes as Converium confirmed it intended to continue as an independent company, back-tracking on the option of bringing in a strategic investor raised only last week.
Converium said its board had decided on an independent strategy, focused on non-US operations. It added that US activities, the source of its difficulties, could be sold.
The group warned of a severe fall in non-US premium income of up to 40% next year. Total premiums could fall by half to about $2bn, compared with the $4bn expected this year.
The new approach contrasted with Converium's message last Thursday, when Dirk Lohmann, chief executive, said the company was in negotiations with a number of potential partners, with some of the talks “at a very advanced stage”.
