Preferred shareholders of PartnerRe are to receive a total cash payment of about $42.7 million in connection with the company’s acquisition by Exor.

The payment equals $1.25 per preferred share, and is expected to be made in the current financial quarter subject and subsequent to the closing of the deal.

As part of the $6.9 billion merger agreement made last year, Exor had previously announced enhanced terms for PartnerRe’s preferred shares, to be effected through an exchange offer, amounting to a 100 basis point increase in the current dividend rate and an extended redemption date.

This was contingent upon the receipt by PartnerRe of a private letter ruling from the United States Internal Revenue Service as to the tax shelter reporting obligations of such enhanced preferred shares.

However, on Tuesday the IRS indicated that it would not grant such a ruling.

As a result Exor will, in lieu of a 100 basis point increase in the current dividend rate, make the cash payments to PartnerRe preferred shareholders of record on the closing date.

In a statement the company said it will, following the closing of the deal, “use commercially reasonable efforts to launch an exchange offer, referred to as the Alternate Exchange Offer in the merger agreement, whereby existing preferred shares could be exchanged for new preferred shares with an extended redemption date”.