Troubled insurance broker Towergate is considering a £1 takeover bid from its bondholders, who could write off £715 million of the company’s debt.
The group was founded by entrepreneur Peter Cullum in 1997 and rose to prominence over the next decade, buying up small regional brokers in a debt-fuelled spending spree.
However, the company was forced to put itself up for sale last year after falling profits and mounting debts left it on the verge of breaching its banking covenants. Its debt stood at £831 million at the end of September.
Bondholders controlling 67 per cent of its senior debt, believed to be hedge funds and private equity firms, now hope to take control of the group, which employs about 5,000 people.
"We are pleased to submit a formal offer to acquire the group which provides for a substantially deleveraged capital structure and a new money facility to put the group on a stable, long-term footing," a spokesman acting on behalf of the bondholders said.
"Our offer enables Towergate to fully benefit from further growth opportunities while establishing the stability required to maintain the support of its customers, suppliers and employees. We view Towergate’s employees as critical to its future success and we look forward to working with them to strengthen Towergate’s position as a market-leading UK insurance provider."
The bondholders are being advised by investment bank Moelis, which also advised the Co-op creditors who took control of the Co-op Bank in a debt-for-equity swap last year.
Towergate has a coupon payment due in early February and remains in talks with lenders, including Lloyds Banking Group. In a statement, it said it was "actively engaging with creditor groups and other interested third parties as we consider the appropriate way forward."Reuse content