British broker enters takeover deal with creditors
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(Reuters) — British insurance broker Towergate Insurance on Monday said it had sold itself to its senior secured creditors, as part of a deal to slash its £1.04 billion ($1.57 billion) debt pile by nearly two-thirds.
The senior bondholders include TPG, Lloyds Banking Group P.L.C., Pimco and Och-Ziff Capital Management Group Ltd., a source familiar with the matter told Reuters.
TPG declined to comment, while Pimco, Och-Ziff and Lloyds could not be immediately reached.
Towergate said its senior secured creditors would convert their existing claims into £375 million ($564.9 million) of new senior secured notes, £150 million ($226.0 million) of subordinated PIK notes and 100% of the ordinary shares of the new holding company.
Following the deal, net senior debt would be reduced by more than 60%, Towergate said, adding that its new consolidated net senior debt burden of about £370 million ($557.4 million) would include £75 million ($113.0 million) of new super-senior notes.
Speculation around a potential restructuring began in November, when Towergate revealed that it had fully drawn its revolving credit facility, casting doubts on whether it could continue as a going concern.
The company then invited the holders of its senior unsecured bonds to pitch for control of it in early December.
Several market sources told Thomson Reuters IFR at the time that distressed debt investors such as KKR and Highbridge Capital had been buying Towergate's unsecured bonds at deep discounts, leading to speculation that they may make a bid for control of the company.
Towergate said the deal would not affect the operations of any of its units. It added that it would resume its search for a new CEO to replace Mark Hodges, who resigned in October, and that Alastair Lyons would continue as interim executive chairman.
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