Troubled Bermuda company Trenwick yesterday announced the suspension of its preferred share dividends.

The company, which in recent weeks disclosed that it was restating its financial results for 2001 and the first two quarters of 2002, and posted close to $140 million in net losses for the third quarter, said the move was part of a forbearance agreement with creditors.

"In accordance with the terms of Trenwick's current credit facility and forbearance agreement with its letter of credit providers, Trenwick has elected to suspend, with immediate effect and for an indefinite period, dividends or distributions payable on the outstanding Trenwick Group Ltd. Series B Cumulative Convertible Perpetual Preferred Shares, LaSalle Re Holdings Limited's Series A Preferred Shares and Trenwick Capital Trust I 8.82 percent Exchange Subordinated Capital Income Securities.

"The suspension on the payment of dividends on LaSalle Re Holdings Limited's includes a suspension of the dividend payable on December 2, 2002 to holders of record on October 31, 2002," a company press statement said.

The forbearance agreement runs through December 6 and means creditors "refrain from enforcing their rights or remedies in the next fortnight unless there was another default under the credit facility or if a third party exercised any right of action against Trenwick for a debt in excess of $5 million." Trenwick's Lloyds operation has also been given a grace period with the London insurance marketplace agreeing to accept a delay of its funding for the 2003 year of account "for a short time", in light of the ongoing negotiations.

The credit issue is key for the company as without the letter of credit facility in place, the company would face "substantial doubt" as to its ability to continue underwriting at Lloyds or to continue as an ongoing concern, according to rating agency Standard & Poors (S&P).

The S&P downgraded the company's credit rating earlier this month from B to CCC+ and put the rating on credit watch negative which indicated the company's financial strength could be lowered further.

Meanwhile the company's stock, which had plunged to trading below a dollar after its third quarter results were announced, rebounded slightly yesterday moving up to $1.74 on the New York Stock Exchange.