Towergate mulls bondholder takeover

Towergate mulls bondholder takeover

Towergate could solve its indebtedness problems through a £1 takeover bid by a consortium of hedge funds and private equity bondholders controlling around two thirds of the troubled broker’s debt.

The insurance broker could be freed of £715m of debt – legacy of overstretch from too many takeovers of its own – if it approves the takeover bid.

UK-based Towergate admitted to being on the cusp of breaching its debt covenants in the latter stages of 2014.

The firm bought some time by the £27m sale of its aviation insurance broking division in December.

“We are pleased to submit a formal offer to acquire the group which provides for a substantially deleveraged capital structure and a new money facility to put the group on a stable, long-term footing,” said a spokesman for the bondholders.

"Our offer enables Towergate to fully benefit from further growth opportunities while establishing the stability required to maintain the support of its customers, suppliers and employees. 

“We view Towergate’s employees as critical to its future success and we look forward to working with them to strengthen Towergate’s position as a market-leading UK insurance provider,” added the statement. 

The bondholders are being advised by investment bank Moelis on the would-be deal.

Towergate hired Evercore and Rothschild in November 2014 to advise on how a restructuring could be affected to extricate the firm – which employs 5,000 staff – from its financial difficulties.

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