CPP tells shareholders to back £20m funding plans or company will cease trading
THE board of CPP Group has told shareholders to back its plans to raise £20m equity funding or the company will close.
The York-based insurer was badly affected by the mis-selling saga and was fined £10.5m by the Financial Conduct Authority in 2012 and paid out £65.8m in compensation to customers.
Chief executive Brent Escott, who joined CPP 15 months ago, has been leading on a restructure, designed to stabilise the business and lay the platform for long-term security.
It has now secured £20m of equity funding, restructured the group’s liabilities and refinanced its debts. CPP will also leave the main stock market and join AIM.
The proposals will be voted on at a general meeting on January 13, with CPP’s board making the choice a stark one and stressing it is “very important that shareholders vote in favour of the resolutions.”
In a statement, the company said: “If the group is unable to proceed with the proposals, it is likely that the board would conclude that the company and certain other members of the group would need to cease trading in order to maximise returns to creditors and shareholders.”
The £20m funding, which will be £17.9m after expenses, will come from the placing of nearly 667m shares at 3p per share. This was the price that had been indicated in a previous announcement on November 14, which saw the share price fall from 11.05p to 6.20p in a day. Since then the price has slipped further to 4.82p.
Upon completion of the placing, funds managed by Phoenix Asset Management Partners will hold about 40% of the enlarged share capital.
Mr Escott said: “Our intention to raise £20.0m of new equity, refinance and restructure our balance sheet represents a pivotal step as we strengthen the group and invest in our future.
“There are a number of stages on our journey to rebuild the group and we are realistic about our challenges and those which remain. Significant progress has been made in the last year to stabilise and add value to the group and with the support of new and existing shareholders, we are moving forward on our journey to create sustainable long-term value for stakeholders.”
CPP has also found a replacement for outgoing non-executive chairman Duncan McIntyre. Eric Anstee has been appointed as non-executive director and will take over as chairman following January’s general meeting.
