The majority shareholder of the troubled credit card insurer CPP has stepped down from the board and scrapped his attempt to buy the firm.
Hamish Ogston, the founder of CPP Group, had offered to buy the company in March for £1.7m to take it private soon after it had been slapped with a £60m bill for mis-selling, but talks broke down yesterday. Neither the company nor Mr Ogston would reveal why, but the company has been lurching from crisis to crisis after the City watchdog rapped the firm for widespread mis-selling of its card and identity protection products.
The company was fined £10.5m and ordered to compensate affected customers – with the bill expected to top £50m.
The scandal led the firm to lose two crucial contracts with RBS and Santander banks and it then had its bank financing withdrawn.
With a reported £40m-worth of debt on the books it sold its US business in April for £26.1m. That brought the firm a little more time with its creditors, but with the current arrangement due to expire at the end of September, Mr Ogston’s departure could herald more bad news for the York-based company, which employs around 900.
The troubles led the group to record a pre-tax loss of £19.9m last year, compared to a £11.9m profit in 2011. That led to a restructuring involving the loss of 120 jobs, including the chief executive, finance director and UK managing director.
Yesterday CPP said it had been seeking alternative financing solutions while involved in discussions with Mr Ogston. It said: “The group remains engaged in constructive discussions with its existing lenders and certain business partners with a view to putting in place a long-term funding plan for CPP.
“The group has in place existing banking facilities which expire on 30 September and the board will make further announcements when appropriate.”
Mr Ogston’s takeover bid had been dependent on completing due diligence on the group, securing new credit arrangements with its lenders for a three-year term, and ring-fencing certain parts of the group. His departure suggests some or all of these plans had failed.Reuse content