Senior creditor rescue deal to save Towergate
TROUBLED insurance broking group Towergate yesterday announced that it had reached agreement with its senior secured creditors to recapitalise the group and carry out a financial restructuring.
The deal will see £75m of new investment injected into the company, and also sees Towergate’s net debt reduced by more than 60 per cent. According to the broker’s chairman Alastair Lyons, this will “just about halve” the firm’s interest bill. He added that the £75m would be used to continue with Towergate’s strategic development plan, aimed at modernising and simplifying the business. The group, which has become known over recent years for its huge appetite to acquire, will hold off on making purchases throughout 2015. Lyons said: “We are taking 2015 to complete this programme of change.”
Towergate also revealed that it had been approached by a strategic bidder who “made a proposal which valued the company significantly within the senior secured debt on a net basis”. Lyons neither confirmed nor denied that this strategic bidder was rival broker Marsh.
The company has also resumed its search for a new chief executive to replace Mark Hodges, who stood down last October. Lyons said that the firm is looking to appoint an external candidate, and added that it “would have been inappropriate” to recruit a new leader while the future of the company was in question.
Lyon’s commented on the timing of the appointment: “This ends a long period of uncertainty for Towergate and lays the foundations for a strong future. This action by our lenders, who now take over the ownership of the group, makes clear their confidence in Towergate. 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.”