Investment firm Sixth Street has completed their acquisition of insurance company Enstar.
Along with the announcement of the merger completion comes the official announcement that the 2 Enstar non cumulative preferreds will be delisted. This delisted was noted in the original merger announcement.
The 2 issues are ESGRP, which is a 7% fixed to floating issue and ESGRO, which is a 7% fixed issue.
Both issues are now trading around $19.50/share—the delisting is to take place around 7/14/2025. I am not aware yet if shares will be listed elsewhere (i.e. OTC) after the NASDAQ delisting.
I held the 7% fixed rate issue (ESGRO), but sold it 5 minutes after the acquisition announcment. I have always found that shares will drop in a situation like this—I sold for a 12 cents/share loss at $23.83 on 7/29/2024.
As I mentioned when I sold it is likely that the dividend will be just fine–but obviously the share price may take more of a hit than it already has (down $4 from my sale price)—we don’t know and will have to wait and see.
Bought right these delisted shares obviously can present a juicy yield—and I would consider a buy if they were to trade on the OTC market. I have considered buying shares in insurance company AmTrust which are giving yields of 12-13%–thus far I have not.
I have written about Enstar several times on this board, including comments here:
https://innovativeincomeinvestor.com/i-am-out-of-enstar-preferred-shares/
(when Tim bailed out of Enstar) – and some comments in Reader Initiated Alerts yesterday.
Enstar (imho) is not a trustworthy management team. I realize I sound a bit “broken record”, but IMHO, doing business with these guys is a risky proposition.
They got shares in AFSI when it went private, then helped the Zyskind/Karfunkel cabal (at AFSI) raid Maiden Holdings (which the cabal also controlled) by selling essentially all of Maiden’s productive assets to Enstar in an apparently sweetheart deal, which screwed over both the common and preferred shareholders.
Personally, I think Enstar will screw their (non-cumulative) preferred shareholders using dirty techniques like they were involved with at Maiden.
I could be wrong, but I wouldn’t bet a nickel on them becoming honest and upstanding once they go dark.
you should do your own diligence.
Private I bought the common and rode it up for a quick $5.00 a share. No interest in holding a long dated non cumulative especially with this company. I like to do flips on M & A stocks. But not sure about this year. Market did good this week so are we going to see FOMO trades next week from people coming back from a short holiday?
This could be an interesting buy right at the last minute before it gets delisted.
I’m holding ESGRO and wondering if I should bail or hang on. Once delisted, what do they look like in the account? Do they have a name? Are they likely to continue to earn the dividend? Sounds like I should take the hit and let them go.
I emailed IR and got this response today:
Hi Leonard – Thank you for reaching out. They will trade in the OTC market, please work with your broker to understand the process for trading such securities.
Thanks,
Enstar IR
From: lwhowell314@att.net
Sent: Thursday, July 3, 2025 12:11 AM
To: Investor Relations
Subject: Preferred shares ESGRP and ESGRO
Caution: This email originated from outside of the organisation. Do not click on links or open attachments unless you recognise the sender and know the content is safe.
________________________________________
Hello – I own ESGRO shares and am wondering what will happen to them after the merger. I read they would be delisted, but will they transform into private company stock or maybe trade on the OTC market?
Thank You,
Leonard Howell
Thanks, Leonard.
That’s interesting, in light of the below statement:
“Enstar has not arranged, and does not intend to arrange, for listing and/or registration of the depositary shares on another national securities exchange or for quotation of the depositary shares in a quotation medium.”
mbg,
Does seem like mixed signals to me too, although, at least to me, the language from the IR person is more straightforward to understand compared to the wordy press release. To follow up, I hit reply to the IR email with the following content, to which I have not yet received a reply. Might be a good idea for another III’er to pulse IR with the same question about OTC trading and see if we get the same answer. Here’s what I replied:
“Many thanks for your prompt reply and it helped me decide to hang on to my ESGRO shares instead of selling them today at a loss.
This part of your recent press release (below, in quotes) is causing many people I know to conclude it will not be traded in the OTC market. What are they (and I was too) misunderstanding about this quote to conclude ESGRO would not trade OTC?
Thanks again, Leonard
From the press release:
“Enstar has not arranged, and does not intend to arrange, for listing and/or registration of the depositary shares on another national securities exchange or for quotation of the depositary shares in a quotation medium.”
Also, according to ChatGPT which I find a little useful:
Name Role ESGRO Shares ESGRP Shares Notes
Dominic F. Silvester CEO 456,558 497,929 Confirmed insider owner
Leonard,
Others here are better qualified to answer but perhaps I can add 2 cents. Some of us worry when securities become OTC “Expert Market” but not if securities trade in OTCQX, OTCQB, OTCID or Pink Limited (other than perhaps brokerage trade fee for OTC listed securities).
It is a matter of information disclosure.
See the answer to the first FAQ in:
https://www.otcmarkets.com/learn/faqs
You may also want to click on “here” for the following FAQ:
Is there a list of all the flags and symbols used on OTC Markets?
See:
https://www.otcmarkets.com/learn/reporting-standards
and
https://www.otcmarkets.com/corporate-services/pink-market
GnG – thank you for your very helpful post. I didn’t realize there are so many levels of OTC markets and so basically, the person from IR saying “it will trade in the OTC market” could be correct but also mean “OTC Expert market” which in turn would be highly undesirable anyway. The press release stating they don’t plan to facilitate in any way would suggest it won’t trade in the OTC OTCQX, OTCQB, OTCID or Pink Limited so Expert becomes default, right?
Leonard, any luck hearing back from enstar IR, re: whether they will go expert or just a diff version of OTC?
If i remember correctly the AM Trust shares dropped from ~$22 to ~$13 and have fluctuated between ~$13 and ~15. I lost a lot of money when they delisted (without any warning). I am not saying ENSTAR will do the same but just heads up.
And the non-cumulative feature means you could be stuck like in Hotel California. That Hovanian issue went a decade before resuming, and that was publicly traded, so you could exit at any time
But the combination of delisting and a non-cumulative?
It would need to be closer to $10 before I would be stuck with that in perpetuity.
The optional redemption clauses are about as likely to happen as being hit by a meteorite.
https://www.sec.gov/Archives/edgar/data/1363829/000136382918000144/a2018novpreffinalprosupp.htm
Tim, see the last sentence of the excerpt (below) that I copied from the press release. They do not intend to list and/or register them on another national securities exchange or for quotation of the depositary shares in a quotation medium.
In connection with the closing of the transaction, Enstar notified The Nasdaq Stock Market, LLC (“NASDAQ”) that Enstar intends to voluntarily withdraw its depositary shares, each representing a 1/1,000th interest in a 7.00% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Share, Series D, par value $1.00 per share, and its depositary shares, each representing a 7.00% Perpetual Non-Cumulative Preferred Share, Series E, par value $1.00 per share (collectively, the “depositary shares”) from listing on NASDAQ and registration pursuant to Section 12(b) of the Securities Exchange Act of 1934. Enstar expects to file a Form 25 Notification of Delisting with the Securities and Exchange Commission (the “SEC”) on or about July 14, 2025, relating to delisting and deregistering of the depositary shares. Enstar has not arranged, and does not intend to arrange, for listing and/or registration of the depositary shares on another national securities exchange or for quotation of the depositary shares in a quotation medium.
Thanks mbg!
Definitely time to bail, IMO.