R&Q plots multi-stage issue towards $100m funding requirement

Global specialty insurer  Randall & Quilter will ask investors for $100 million in a multi-stage deal as it scrambles to meet its Lloyd's obligations, starting with a late June deadline, and then plans to shore up its balance sheet.

The new shares go on offer at 105 pence apiece. Shares had traded near 92p as recently as late Friday and have since rallied to above 100p.

Book building begins immediately among institutional investors for the firm placement of up to 10% of capital already authorised for issuance.

Beyond the immediate tranche, the company will call a shareholder meeting for July 11 to authorise the remainder for a follow-up tranche.

An open tranche of up to $8 million will allow non-institutional investors to have their shot in the rescue.

Select management board members have agreed to come on board and will pony up $1.4 million to take a slice of the deal.

From the raised funds,  R&Q intends to put approximately $60 million to fund collateral requirements at Lloyd's, then put the rest to pay down debt and meet financial covenants. R&Q is under the gun to put $30 million into its Lloyd's reserve by June 21, then the other half by August.

The new issuance will go head-to-head with a major stake sale by an existing shareholder.  Just over 34 million shares or 12.4% pledged to Vida by Brickell PC Insurance Holdings and 777 Partners are set for sale June 20.

R&Q justified the fundraising needs with note that above-expectation claims have hit liquidity in a legacy portfolio also hurt by a non-cash charge, but with a gap until first layer reinsurance kicks in. Cash capacity had to be committed to reserve building.

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