Thu, 20 Nov 2014 | BUSINESS SALE
Insurance broker Towergate is seriously considering selling up amidst spiralling debts and an overstretched credit facility.
Forecasts show it is presently on course to soon breach its banking covenants, and is in talks with Lloyds and its other banks to extend a £85 million credit arrangement.
Evercore and Rothschild have been brought in to manage “early stage” deal interest for the business as a whole, other ideas include identifying non-core aspects of the business to be jettisoned.
It recorded losses of £112.7 million for the nine months to the end of September compared to £19.1 million the previous year.
Since its beginnings in 1997 Towergate has grown via buying 175 smaller insurers. The strategy has, however, also led to the growth of its debts; £831 million as of the close of September.
Several names of potential buyers have been doing the rounds in the City of London’s rumour mill, with Australian insurer QBE named, alongside Marsh, Willis and Aon. Towergate’s founder Peter Cullum could set up a management buy out for the 43 per cent that private equity investor Advent holds, it has been suggested.
A bond trader told the Times: “It looks like a hard sell to me. This business really needs a full debt restructuring.”
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