CPP agrees milestone refinancing deal

CPP Group has agreed a new three year refinancing deal but warned that despite the funding it will continue to face “significant financial challenges”.

The York-based troubled credit card insurer said it has finalised new banking facilities of £13m over three years with its existing lenders and agreed to defer commission payments of around £23m to some of its business partners for up to four years.

CPP said that following the refinancing chief executive Paul Stobart and chief finance officer Shaun Parker would step down after an appropriate handover period as part of the group’s plans to reduce costs.

The group said that the refinancing deal and the commission deferral arrangement represented longer term financing totalling £36m and will be used for both working capital and to pay compensation to customers after it was fined £10.5m last November by the Financial Services Authority for mis-selling insurance products.

The company said in a statement to the stock market: “CPP will continue to face significant financial challenges, particularly until the redress programme is completed. However, the new financing arrangements represent a significant milestone and create a more stable platform to support the repositioning of the group.”

Chairman Charles Gregson, said: “Securing new financing arrangements supported by our business partners and existing lenders represents an important milestone for the group, providing the business with a much improved and more stable platform from which to move forward. There remains much work to do reflecting the on-going challenges and uncertainties of the group’s operating environment. We are pleased, nonetheless, with the progress that we are making towards finalising the approach to the redress exercise for those customers who may have been affected by the historical issues in the UK business.”

Mr Gregson paid tribute to the departing Mr Stobart and Mr Parker.

“During a period of intense challenge they have led the team and built a stronger, customer-led organisation, whilst reshaping our strategy and enhancing governance and controls. Their achievements have undoubtedly changed CPP very much for the better and stabilised the business for the next phase of its development. I wish them both every success for the future.”