Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Banks

Carney: UK is ‘investment banker for Europe’

The governor of the Bank of England has repeated his calls for a “smooth and orderly” UK exit from the EU, saying that a transition out of the bloc will happen, it was just a case of “when and how”. Responding to the BoE’s latest bank stress tests, where lenders overall emerged with more resilient […]

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Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Categorized | Insurance

Battle intensifies for control of Towergate


Posted on January 30, 2015

Directors of the heavily-indebted insurance broker Towergate are holding crunch talks as they weigh up rival restructuring proposals that will determine the fate of one of Britain’s biggest private companies.

The board, led by Alastair Lyons, is expected to reach a decision this weekend on the fate of Kent-based Towergate, which employs about 5,000 people at more than 120 offices.

People familiar with the situation indicated the board might favour a bid from a group of secured creditors. However, no decision had been taken as of Friday night.

    At least two other parties have tabled rival last-minute proposals. A group of unsecured bondholders — led by KKR, the Bain Capital affiliate Sankaty Advisors, and alternative investment manager Highbridge — has offered to inject £200m into Towergate as part of their plan, according to people with knowledge of the situation.

    Meanwhile, Marsh & McLennan, the US-listed broker that has been eyeing Towergate for several weeks, has made a cash offer of more than £600m. The final bid from Marsh, which declined to comment, was first reported by the Insurance Insider trade publication on Friday evening.

    A series of buyout houses, hedge funds and other investors are scrambling to minimise losses from Towergate, one of the UK’s largest insurance brokers.

    It has run into financial difficulties after a debt-laden acquisition spree and a big drop in profits. Debt holders are collectively owed about £1bn.

    Secured creditors that hold about two-thirds of the company’s £715m worth of senior debt have proposed buying the equity for £1 in return for reducing the amount they are owed in a “prepackaged” administration — in effect the pre-negotiated sale of an insolvent business.

    People with knowledge of the process highlighted that the plan from the secured creditors, being advised by Moelis, would leave the company with less debt leverage.

    However, the unsecured bond holders — whose bonds are trading at 13p in the pound — would face heavy losses under the plan.

    Under their rival plan, Towergate would avoid administration. Instead, the unsecured creditors — being advised by Houlihan Lokey — would convert their debt into equity, and plough cash into the business.

    Towergate’s equity backer, the buyout group Advent, would be wiped out under both proposals.

    A bill on Towergate’s debt pile is due on Monday to secured creditors. Another payment, to the unsecured creditors, is due two weeks later. Together they are estimated to total about £30m.

    Towergate hired Evercore and Rothschild in November to advise on its future. They warned it might not survive as a going concern if a restructuring could not be agreed.