14th Nov 2014 08:10
LONDON (Alliance News) - CPPGroup PLC, the beleaguered company that has been weighting up its financing options after getting caught up in a costly mis-selling scandal with major high street banks, Friday said it has received "indications of interest" from investors to subscribe for GBP9.0 million of new equity, but also said it could be sold under a formal sale process that is currently at a preliminary stage.
In a statement, CPP said it thinks a "satisfactory" agreement can be reached with its creditors in the case that it raises new equity.
However, CPP said that investors have indicated that they would only be willing to pay in the region of 3.0 pence per new share if they are to provide the funds, a considerable discount to the company's 10.75 pence closing share price on Thursday.
According to CPP, the final price and quantum of the placing is to be determined by the board following discussions with potential investors.
The group will finalise negotiations with its creditors in the coming weeks.
Although CPP said that "significant" progress has been made in order to restructure some of its liabilities and secure new equity funding, it warned that there can be no certainty of agreement with its creditors or that any equity raise will be completed.
It called both of those steps "essential" to the future development of the business.
CPP said it has not ruled out a sale of the group, though it cautioned that there can be "no certainty" that any offers will be made under a formal sale process, that any sale will be concluded or as to the terms on which any offer might be made.
CPP said an offer period has now begun under takeover rules.
"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," Brent Escott, who became chief executive of the group in September 2013, said in a statement.
If equity is raised, CPP would move to the London Stock Exchange Group PLC's junior market, AIM.
According to the UK's Financial Conduct Authority, CPP's insurance products were widely mis-sold by CPP, resulting in a GBP10.5 million fine in November 2012. Customers were given misleading and unclear information about the policies so that they bought cover that either was not needed, or to cover risks that had been greatly exaggerated. As well as CPP selling directly to customers, high street banks and credit card issuers introduced millions of customers to CPP.
Since then, CPP has worked with the FCA to pay compensation in relation to mis-sold products.
By Samuel Agini; [email protected]; @samuelagini
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