Struggling Phoenix raises £25Om to restructure debts
Wednesday 30 January 2013
The troubled insurance group Phoenix restructured its debt in a move that could finally pave the way for it to lift dividend payments to shareholders.
The company said it planned to raise £250m in a share placing – helping it to reduce a debt burden which has constrained its growth since the costly £5bn acquisition of rival Resolution back in 2007.
Phoenix was originally set up by the entrepreneur Hugh Osmond, but has struggled in recent years to negotiate the economic downturn.
The placing will help the company to pay off a £450m loan from Impala bank and reduce its debt to £1.9bn. More importantly it will lift restrictions on the dividend it pays to shareholders, which were capped at £72m last year.
As part of the deal, the hedge fund Och-Ziff has agreed to buy about £80m of the group's shares, equivalent to a 9.2 per cent stake.
Clive Bannister, its chief executive, said: "I am delighted to announce the re-terming of Phoenix's debt through the injection of fresh equity, and a significant increase in the dividend per share, which we believe will provide policyholders with enhanced security and deliver excellent value to shareholders.
"Och-Ziff's commitment and the support of our lending banks underlines the attractive prospects of Phoenix as a business."
Shares in the company closed up 39p at 630p.
Sources close to Phoenix said it would focus on organic growth over the next few months. The company, which owns fund manager Ignis, has been mooted as a takeover target for rivals including Aberdeen Asset Management.
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