CPP starts formal sale process

The York-based company said today it believes there is a reasonable prospect that a satisfactory agreement can be reached with its creditors as a result of it raising new equity capital.

CPP has received indications of interest to subscribe for £9m of new equity and said the board anticipates that it will finalise negotiations with its creditors in the coming weeks.

It added that any equity raised would be at a significant discount to yesterday’s closing share price of 10.75p, with expressions of interest suggesting a price in the region of 3p per share.

A restructure of group liabilities and new equity funding were described as essential to the future development of the business.

If new equity is raised, the group is likely to transfer from the official list of the London Stock Exchange to AIM.

The comapny added that it continues to pursue all options, which includes a potential sale of the group under a formal sale process.

Parties interested in participating in a formal sale process will be required to enter into a non-disclosure agreement with the group on reasonable terms satisfactory to the CPP board before being permitted to participate in the process.

The formal sale process was said to be at a preliminary stage and CPP insisted that there could be no certainty that any transaction will be concluded.

CPP was fined £10.5m by the Financial Conduct Authority in 2012 for mis-selling insurance products and is paying out £65.8m in compensation to customers.

Chief executive Brent Escott said: “Since I became CEO of CPP in September 2013 we have worked to provide the business with a more stable footing,”

“Most significantly, we worked with the FCA, banks and card providers to agree and complete a successful consumer redress scheme for those customers affected by the group’s historical issues in the UK.

“The end of the scheme represented a very significant milestone for the business. Alongside this, the group has significantly lowered its cost base, improved processes and made progress in embedding new and enhanced systems. CPP today is providing a much improved service to our 5.2 million customers worldwide.

“As we move forward, today we have announced important steps towards securing new equity funding and progress in negotiations with the group’s creditors. We continue to evaluate all options to restructure the group’s balance sheet and strengthen the group’s capital position to support the successful future development of the business. The board is focused on ensuring the best possible outcome for all of CPP’s stakeholders and further announcements will be made in due course.”