Refinancing talks for CPP
THE founder of credit card insurer CPP, Hamish Ogston, has conditionally agreed to participate in a refinance of the struggling company as it also announced today it has been offered £26.1m for its North American division.
York-based CPP said it is in talks with its lenders Barclays, Royal Bank of Scotland and Santander UK along with Mr Ogston and others about the group’s financing requirements.
Mr Ogston has said he would conditionally be willing to participate with the lenders in a refinancing, which include the disposal of CPP’s North American division to AMT Warranty Corp for net proceeds of not less than £20m.
CPP’s North American business was set up in 2003 through the acquisition of the enhancement services division of Metris Inc., a medium-sized US-based credit card issuer.
CPP North America reported pre-tax profits of £6.8m for the year ended December 31 2011 and £5.2m for the six months ended June 30 2012.
At June 30 2012, CPP North America had gross assets of £23.4m.
It is proposed that £16.5m of the disposal proceeds will be used to prepay part of the amended facility while the remaining proceeds and £25m in funds available under the amended facility will be used as additional working capital.
Mr Ogston also requires an undertaking to accept his offer for the entire issued and to be issued share capital of CPP that he does not already own. Mr Ogston, who is currently interested in about 57% of the company, then plans to cancel CPP’s listing.
Chief executive Paul Stobart said: “The board has given extensive consideration to a broad range of strategic and financing options and believes the proposed disposal of CPP North America to be in the best interests of CPP and its stakeholders. Together, the proposed disposal and amended facility are expected to assist in stabilising the business and allow the board to engage in further discussions with our lenders and the group’s major shareholder with a view to securing the future viability of the group.
“Whilst our performance continues to be affected by the on-going challenges of our operating environment, we are well advanced in implementing an extensive business transformation programme. These significant organisational changes, combined with the on-going demand we see for our products, are expected to provide the group with a platform to move the business forward.”
