CPPGroup Plc New Financing Arrangements and Management Changes (6122K)
31 July 2013 - 11:03PM
UK Regulatory
TIDMCPP
RNS Number : 6122K
CPPGroup Plc
31 July 2013
New Financing Arrangements and Management Changes
31 JULY 2013
New Financing Arrangements
CPPGroup Plc ("CPP" or the "Group") today announces that it has
agreed new banking facilities to refinance the Group for a period
of three years with its existing lenders (the "New Facility") and
an agreement with certain of its Business Partners to defer payment
of commission that would otherwise become due over the twelve
months up to 30 June 2014 for a period of up to four years (the
"Commission Deferral Agreement"). The New Facility and Commission
Deferral Agreement (the "New Financing Arrangements") together
represent longer term financing for the Group to the value of GBP36
million and will be used to pay redress to customers where
appropriate through the proposed Scheme of Arrangement and provide
working capital for the Group's three year business plan.
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.
New Facility
The total amount available under the New Facility will be GBP13
million and amounts borrowed under the New Facility will accrue
interest at a rate per annum equal to LIBOR plus a margin of 4 per
cent. The New Facility will fall due for repayment on 31 July
2016.
Deferred Commissions
The total amount of commission to be deferred is expected to be
approximately GBP23 million by 30 June 2014 to the relevant
Business Partners with repayment due on 31 July 2017 (the
"Repayment Date"). Interest will accrue quarterly on the deferred
commission at a rate per annum equal to 3.5 per cent. and will be
paid out on the Repayment Date.
Additional information to the New Financing Arrangements is
outlined below.
Management Changes
As indicated on 16 May 2013, in line with the Group's
requirement to reduce costs substantially and following completion
of the refinancing Paul Stobart, CEO, and Shaun Parker, CFO have
given notice under their contracts of service to step down from
their respective roles once an appropriate handover period is
completed. The Group is at an advanced stage to appoint successors
to lead the Group forward and further announcements will be made in
due course.
Charles Gregson, Chairman, commented:
"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.
"Following the successful completion of longer term financing,
Paul Stobart and Shaun Parker have given notice that they will be
leaving the business once an orderly handover is complete. On
behalf of the Board and the Company I would like to thank Paul and
Shaun for their valued leadership and contribution. 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."
Enquiries:
CPPGroup Plc
Paul Stobart, Chief Executive Officer
Shaun Parker, Chief Financial Officer
Tel: +44 (0) 1904 544 372
Helen Spivey, Head of Corporate and Investor Communications
Tel: +44 (0) 1904 544 387
Financial Adviser
Greenhill & Co. International LLP
Anthony Parsons
Hugo Grimston
Tel: +44 (0) 20 7198 7400
Media
Tulchan Communications
Martin Robinson
David Allchurch
Tel: +44 (0) 20 7353 4200
Additional information relating to the New Financing
Arrangements
New Facility
The New Facility contains covenants and events of default
including an event of default where customer redress response rates
leading to a successful claim under the proposed Scheme of
Arrangement exceed 25 per cent. In assessing the likely impact of
the redress exercise under the Scheme, the Group has, with its
advisers, considered a number of assumptions, including the form
and structure of redress and likely response rates. Based on
consideration of these and certain other assumptions and factors,
the Board currently believes that there is a reasonable prospect
that the rate of responses leading to successful claims will be
less than 25 per cent. of the aggregate overall population of
potential claimants under the Scheme. However, there can be no
certainty in relation to the rate of responses leading to a
successful claim under the Scheme and it is possible that the rate
of such responses may be materially higher or lower than currently
anticipated. In addition to these covenants, the Group has granted
security in favour of the lenders under the New Facility on
substantially similar terms to the security granted under the
Group's existing bank facility.
Commission Deferral Agreement
In compliance with the terms of the voluntary variation of
regulatory permission agreed with the Financial Conduct Authority
by the Group's regulated UK insurance intermediary business, Card
Protection Plan Limited ("CPPL") on 15 November 2012, the deferred
commissions under the Commission Deferral Agreement will be
retained within CPPL. The sum will be used to fund customer redress
payments, the operational costs of the proposed Solvent Scheme of
Arrangement and to provide working capital for CPPL. This agreement
provides the Business Partners which are party to it with security
over CPPL in substantially similar form and terms to the security
granted under the New Facility.
Notes to Editors
CPPGroup Plc (CPP) is an International Assistance business
operating in the UK and overseas with more than 200 Business
Partners worldwide. Via its Business Partners, CPP provides Life
Assistance products to consumers, which includes annually renewed
and packaged products that provide assistance and insurance across
a wide range of market sectors designed to make everyday life
easier to manage.
For more information on CPP visit www.cppgroupplc.com
Forward-looking statements
This statement contains certain forward-looking statements.
These statements are made by the directors in good faith based on
the information available to them up to the time of approval of the
statement but such statements should be treated with caution due to
the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information.
Subject to the requirements of the UK Listing Authority's
Disclosure and Transparency Rules and Listing Rules, CPPGroup Plc
undertakes no obligation to update these forward-looking statements
and it will not publicly release any revisions it may make to these
forward-looking statements that may result from events or
circumstances arising after the date of this statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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