2 February 2015 Insurance

Towergate to sell to creditors

The board of UK-based Towergate Insurance has agreed a financial restructuring deal, which will see senior secured creditors take over ownership of the group.

Under the terms of the agreement, which involves a financial restructuring and recapitalisation of the group, senior secured creditors will convert all of their existing claims into £375 million of new senior secured notes, £150 million of subordinated PIK notes and 100 percent of the ordinary shares in a new holding company. Following the transaction, net senior debt will be reduced by more than 60 percent.

The deal is expected to involve a scheme of arrangement, and subject to customary regulatory approvals, is expected to complete before the end of March 2015.

Towergate added that there are ongoing discussions between senior secured and senior unsecured creditors to determine the terms on which the senior unsecured creditors may participate in the restructuring.

In the same statement, Towergate unveiled its preliminary financial results for 2014. Its income fell 4 percent to £426 million for the year ended December 31, 2014, compared with £443 million in 2013.

Alastair Lyons, interim executive chairman of Towergate, said: “This ends a long period of uncertainty for Towergate and lays the foundations for a strong future. With a very substantial reduction in our existing debt burden and £75 million of new investment we have what we need to be able to realise our strategic ambitions.

“This action by our lenders, who now take over the ownership of the group, makes clear their confidence in Towergate as a market leader and in our people’s ability to create significant value from that position.

“That is a confidence that has been shared by all those of our insurer partners, suppliers and clients who have supported us through the difficult period from which we are now emerging – a confidence that we will now be able to repay.”

A spokesman acting on behalf of the Ad Hoc Committee said: "We are pleased to announce our agreement to acquire the Towergate Group which provides for a substantially deleveraged capital structure and a new money facility to put the Towergate Group on a stable, long-term footing.

“Our agreement enables the Towergate Group to seize opportunities in the market while establishing the stability required to maintain the support of Towergate’s insurer partners, customers, suppliers and employees. We view Towergate’s employees as critical to Towergate’s future success and we look forward to working with them to strengthen Towergate's position as a market-leading UK insurance provider.”

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