Deadline looms for CPP to refinance £80m credit line

The York-based company, which was hit with a £10.5m fine in November for “widespread” mis-selling of products between 2005 and 2011, 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 refinancing deal. The fine from the Financial Services Authority related to a six-year period when it sold about 4.4 million policies through major high street lenders to cover mobile phones, wallets and credit cards, while another 18.7 million were renewed.

CPP, which has more than 1,400 staff globally, including 900 in the UK, will pay compensation of about £14.5m to customers and has warned the total bill is likely to be at least £33.4m. CPP has long been searching for alternative financing, including asset sales and a possible injection of funds from its founder and controlling shareholder Hamish Ogston.

CPP had drawn down about £43m of its credit facility by June last year.

A newspaper report at the weekend said the company has failed to strike a deal with its lenders and is looking for new backers. RBS and Mr Ogston declined to comment.

But the Yorkshire Post reported yesterday that a CPP spokesman said: “We are continuing to have constructive discussions with banks and lenders and are looking at all the options.”

A source close to CPP said that speculation that the firm could be on the brink of going into administration was “off the mark”.

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. Its shares floated at 235p but were changing hands for 4.75p yesterday. Late last year the company was approached by Affinion Group about a possible takeover, but its US rival walked away after a few weeks.

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

In March last year, he told the Yorkshire Post he had explored the possibility of injecting money into the company. Mr Ogston is one of Yorkshire’s biggest philanthropists and gave £2m to York Minster in 2008. In 2011, he received a CBE for services to business and the community of York.

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.

The statement confirmed that “to date no financing solution has been achieved”.