Scottish Re Group Limited (NYSE:SCT) shares jumped over 10% today as the company updated investors on its "strategic alternatives". The company first ran into trouble in July after it blindsided investors with wide losses for the second quarter due to "lower than expected new-business volumes, higher than anticipated retrocession costs and income-tax expense due to the inability to recognize future deferred-tax benefits". This, combined with the resignation of the CEO and various profit warnings, caused the stock to drop over 75%. Since then, the stock has regained some ground after the company confirmed that it would be able to remain solvant. Moreover, the company announced that it would begin the auction process to put itself up for sale in addition to acquiring further financing in order to remain liquid.

Today, the company announced that it had succeeded in both of its goals. Scottish Re announced that it had received proposals from a number of potential bidders last Friday, along with three written proposals for possible financing (between $150 - $250 million). Considering the fact that the stock was trading at $16 shortly before the second quarter earnings were reported and $25 earlier in the year, many investors are speculating that the buyout offers may be significantly higher than the stock's current levels. This is optimism is further driven by SCT's impressive cash flow. Moreover, the fact that there are several bidders opens up the doors to a potential bidding war. So, what's the downside? The company said that it expects its former executives to sell their stock, which includes stock options (that must be exercised within 60 days of their departure) and shares held in their 401k plans. Whether or not they sell remains to be seen. Either way, this stock is a great one to keep an eye on as these events unfold...

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