CPP founder offers £1.7m for firm valued at £396m in 2010

HAMISH Ogston, the founder and majority shareholder in troubled credit card insurer CPP Group, has offered to buy the company for just £1.7m.

Hamish Ogston

When it floated in March 2010, CPP had a market capitalisation of £396m.

The York-based company, which was hit with a fine in November for “widespread” mis-selling of products, has until Sunday to refinance an expiring £80m credit line with its lenders Royal Bank of Scotland, Barclays and Santander. It risks falling into administration, threatening more than 1,400 jobs, if it cannot agree a deal.

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CPP was handed a joint record £10.5m fine by the Financial Services Authority last year.

The watchdog ruled CPP “failed to treat its customers fairly” between 2005 and March 2011. Following the ruling, CPP lost a number of its biggest customers. Its share price has fallen dramatically in recent months.

Yesterday it was revealed that Mr Ogston had offered to buy CPP for an indicative 1p per share, or £1.7m.

Mr Ogston’s proposed offer represents a 67 per cent discount to CPP Group’s Tuesday closing price of 3.08p.

By contrast, the stock closed at 259.75p on its first day of trading in March 2010.

The company, which helps customers with credit and debit card protection and personal identification protection, said Mr Ogston must make a firm intention to make an offer by April 24.

In a statement, the company said: “It should be noted that the approach is at an early stage and there can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming. The board will make further announcements as appropriate in due course.”

In a statement to investors issued on March 20, CPP said it was “actively pursuing a range of financing options” with a view to putting funding in place, before the maturity of the group’s debt facilities on March 31. Yesterday, a spokesman stressed that these talks were continuing.

Earlier this week, a source close to CPP said that speculation that the firm could be on the brink of going into administration was “off the mark”.

Mr Ogston made about £120m from CPP’s flotation in 2010 and still holds around 57 per cent of the shares.

Mr Ogston is one of Yorkshire’s biggest philanthropists and gave £2m to York Minster in 2008. In 2011, he became a CBE for services to business and the community of York.

The company has lost clients including Barclaycard and Everything Everywhere, and earlier this month CPP said Santander will not be renewing its contract for packaged accounts.

Last week the company said there was “significant uncertainty” around the value of its shares. Late last year the company was approached by Affinion Group about a possible takeover, but its US rival walked away after a few weeks. In March last year, Mr Ogston told the Yorkshire Post he had explored the possibility of injecting money into the company.

At CPP’s annual meeting last year, Mr Ogston spoke about how he had been affected by CPP’s troubles.

Asked how the events of the last 12 months had affected him, Mr Ogston said at the time: “I’m not happy that millions of pounds that I pledged to charities and good works I’ve had to delay or suspend. It makes me look a bit of a chump. There’s a huge loss of value in my shares over the last year and a half and I’m no longer in the position I thought I was in terms of being able to help others.

“I’m just hoping we can get this sorted and put it behind us and have business meetings talking about positive things and growth of the business again.”

Last year, Mr Ogston said that investing more of his money in CPP was an option, but he was hopeful that the group’s three lenders would continue to provide support.

FSA probe cast cloud over company

In March 2010, CPP was a stock market darling, following a flotation that raised £150m.

The York-based group, which was founded 33 years ago by entrepreneur Hamish Ogston, issued shares priced at 235p, giving a market capitalisation of £396m.

Mr Ogston made nearly £120m from the float, with CPP raising another £30m to pay down debt.

However, its troubles began in earnest in March 2011, when CPP revealed that the FSA was investigating “alleged failings” in its sales calls for its credit card and identity theft products.

In May 2011, Eric Woolley, pictured, the company’s then chief executive, told the Yorkshire Post he expected a swift resolution to the FSA probe, adding: “I would expect it to be in weeks, it might even be in days, but not months.”

However, the FSA investigation continued to cast a cloud over CPP for another 18 months.

In November 2012 CPP was handed a record £10.5m fine by the City watchdog for mis-selling credit card and identity theft insurance.

The FSA said CPP “failed to treat its customers fairly” between 2005 and March 2011, 
and warned its fine would have been £15m if CPP had not settled early.

The watchdog found CPP sold customers insurance for credit cards when they were already covered by their banks. It also overstated the risks and consequences of identity theft.

Following the imposition of the FSA fine, the company started to lose customers.

In February it was dealt a blow by Royal Bank of Scotland, which said it would not renew its contract to provide UK mobile phone insurance.

The contract loss, while anticipated, piled more pressure on the York-based group ahead of a March 31 deadline on renewing its £80m revolving credit facility with Barclays, RBS and Santander.