Towergate insurance broker in Maidstone receives £1 takover bid from bondholders which will write off £715m of debt

Troubled insurance broker Towergate is considering a £1 takeover bid from its bondholders which will pay off £715 million of the company’s debt.

The firm, founded by entrepreneur Peter Cullum in 1997, was put up for sale last year after announcing falling profits and a debt burden close to £1 billion.

The broker sold off its aircraft cover arm Hayward Aviation for £27m last month but still faces large interest payments after years of expansion by acquiring smaller insurance businesses.

Towergate's headquarters in Maidstone
Towergate's headquarters in Maidstone

It reported a pre-tax loss of £112.7m in the nine months to the end of September last year, blamed on “lower operating earnings, business investment costs and impairment charges”.

The bondholders, who control about two-thirds of the Maidstone-based company, hope to take over the firm, which employs about 5,000 people.

They have been advised by investment bankers Moelis & Company, who were involved in the Co-operative Bank’s restructure.

In a statement, the bonholders said: “We are pleased to submit a formal offer to acquire the Towergate Group which provides for a substantially deleveraged capital structure and a new money facility to put the Towergate Group on a stable, long-term footing.

Towergate's headquarters in Maidstone
Towergate's headquarters in Maidstone

“Our offer enables the Towergate Group to fully benefit from further growth opportunities while establishing the stability required to maintain the support of Towergate’s customers, suppliers and employees.

“We view Towergate’s employees as critical to Towergate’s future success and we look forward to working with them to strengthen Towergate’s position as a market-leading UK insurance provider.”

A Towergate spokesperson said: “As previously announced, Towergate is actively engaging with creditor groups and other interested third parties as we consider the appropriate way forward for the group.

“Towergate has had sight of outline terms from the ad hoc senior secured committee since last week, and we have now received a detailed proposal from them, which we welcome alongside other proposals.”

Towergate founder Peter Cullum no longer has a stake in the business
Towergate founder Peter Cullum no longer has a stake in the business

Towergate is also said to have been approached by £164 billion US private equity firm Apollo about a takeover.

Founder and non-executive deputy chairman Peter Cullum is also thought to have proposed a management buyout of the firm.

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