Founder walks away from CPP takeover talks and quits board

CPP's Group HQ in York.
CPP's Group HQ in York.
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CREDIT card insurer CPP Group yesterday revealed that Hamish Ogston, its founder and majority shareholder, had ended takeover talks and stepped down from the board.

York-based CPP, which lost two big contracts with RBS and Santander UK earlier this year, said in March that Mr Ogston had offered an indicative 1p per share, or £1.7m, to buy the company.

When it floated in March 2010, CPP had a market capitalisation of £396m. The company, which employs around 725 staff, has struggled after being hit with a fine in November 2012 for “widespread” mis-selling of products.

The insurer did not say why Mr Ogston withdrew his bid. Mr Ogston still owns 57 per cent of the shares in the business, which he founded in 1980. The company sells products such as wallet, mobile phone and card protection through banks and building societies.

In a statement, CPP said yesterday: “Further to the announcement of May 31 regarding a possible offer for CPP Group, the board has been engaged in discussions with CPP’s existing lenders, Mr Ogston and others concerning the financing requirements of the group.

“In parallel with discussions with Mr Ogston, the group has also been seeking alternative financing solutions including with certain business partners.

“Mr Ogston has now informed the board of his decision to cease all work in relation to his possible offer for CPP and his potential involvement in a refinancing of the group, and that he will not be making an offer for CPP. Mr Ogston has also given notice of his resignation as a director of CPP with immediate effect.”

The statement said that CPP remained engaged in “constructive discussions” with its existing lenders and certain business partners” with a view to putting in place a long-term funding plan for CPP. The Yorkshire Post understands that the potential “business partners” include big financial institutions.

The statement added: “The group has in place existing banking facilities which expire on September 30, 2013, and the board will make further announcements when appropriate.”

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.

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

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.

Asked how the events of the last 12 months had affected him, Mr Ogston said at the time: “I’m not happy 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 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 the group’s three lenders would continue to provide support. In March 2010, CPP was a stock market darling, following a flotation that raised £150m.

The group issued shares priced at 235p. Mr Ogston made nearly £120m from the float, with CPP raising another £30m to pay down debt.

In April, it was revealed CPP Group had plunged to a £20m annual loss. Sales from continuing operations fell 10 per cent to £270m in 2012 as fewer customers signed up or renewed policies.

Exceptional costs of about £44m wiped out earnings, and compared with pre-tax profits of £21.6m a year earlier. Earlier this month, CPP revealed Brent Escott, formerly of outsourcing group Capita, will join the business as interim deputy chief executive.

The appointment forms part of CPP’s restructuring plans, announced last month, which saw Paul Stobart, CEO, and Shaun Parker, CFO, announce their intention to step down from their respective roles following a transition period.