Shareholders of troubled life reinsurance specialist Scottish Re will gather in Hamilton tomorrow to decide the future of the business that suffered a net loss of $368.3 million in 2006.

A $600-million lifeline is available if shareholders vote to accept an investment take-over deal from US-based MassMutual Capital and Cerberus Capital.

The alternative is likely to be bankruptcy unless Scottish Re can quickly secure another financial injection. As things stand, the company estimates it will have a liquidity of just $2 million within a year and a projected deficit of $650 million by 2014.

Chief executive officer Paul Goldean has sent a last-minute reminder to shareholders about the extraordinary general meeting at the Fairmont Hamilton Princess Hotel tomorrow at 11 a.m.

The meeting was delayed by one week to allow adequate consideration of a late decision by Scottish Re to agree a $68.5 million indemnity for MassMutual/Cerebus ? should they be approved majority owners ? to provide protection against adverse mortality within Scottish Re?s life insurance policy sector.

A five percent higher than expected mortality in the company?s North America life assurance business was partially to blame for its unexpectedly bad fourth-quarter losses of $231.6 million.

Last week the Fitch agency downgraded Scottish Re?s financial strength rating from BBB to BB+.

There is a blunt choice for shareholders, according to the company?s Bermuda-based executives, and that is to approve the joint take-over by MassMutual and Cerebus or seek bankruptcy and insolvency protection.

In his letter to shareholders, Mr. Goldean said: ?In the event that Scottish Re is not able to complete the transaction our liquidity position, financial condition and our business would be materially adversely affected.

?Although we would attempt to enter into an alternative transaction that would provide us with the liquidity and capital needed to manage our business, we can not assure you that we would succeed.?

He warns that failure to secure the MassMutual/Cerebus deal is likely to lead to further credit downgrading of the company, HSBC Bank USA calling in a sizeable financial facility, and the loss of key employees and customers.

Mr. Goldean adds: ?We believe it may be necessary for us to seek protection from our creditors under bankruptcy and insolvency laws. We believe bankruptcy is likely to provide significantly less value and certainty to shareholders than this issuance.?