A group of creditors, led by Highbridge Capital Management, has increased the size of its cash offer for Towergate Insurance, in a bid to take control of the struggling UK-based insurer.
Highbridge is one of the firm's unsecured senior creditors and the new offer is a bid to replace another restructuring proposal which would wipe out the unsecured senior creditors.
New York-headquartered Highbridge, along with Sankaty Advisors and KKR, are pledging more cash to secure bondholder agreement so they will end up holding equity as well as debt against the company, alongside debt held by the senior secured bondholders, PDI understands.
The unsecured group has pledged £300 million (€397.8 million; $455.5 million) in return for an equity stake of 80 percent, the Financial Times reported.
The cash injection, increased from an initial offer of at least £200 million, would see the US funds take control of Towergate for an equity value of around £360 million, The Insurance Insider reported. Highbridge, an affiliate of JP Morgan Asset Management, will provide £240 million, with the remainder supplied by KKR and Sankaty.
Talks between senior secured creditors and senior unsecured creditors intensified this week when the former seized control of Towergate and published a restructuring proposal with the backing of the board and around 70 percent of the senior secured creditors. The plan will see £1 billion in debt reduced by around 60 percent.
Terms have been agreed between the secured and unsecured creditors and the Towergate board was due to meet today, the FT reported.
All parties declined to comment.
The deal will wipe out stakes held by private equity firm Advent, estimated to be around £200 million, and Towergate’s founder, Peter Cullum.
