CPP fires gun on formal sale process
CPP Group has started a formal sale process and hailed the progress of negotiations to restructure creditors and secure new equity funding for the credit card insurance provider.
The York business said there was a reasonable prospect that a satisfactory agreement can be reached with the group's creditors as a result of it raising new equity capital.
Indications of interest to subscribe for £9m of new equity have been received and CPP expects to finalise negotiations with its creditors in the coming weeks.
Any equity raised, however, would be at a significant discount to the prevailing share price of 10.75p as at the close of business on 13 November 2014, 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 intention of the CPP board is that the group should transfer from the official list of the London Stock Exchange to AIM.
The board 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 stressed that there could be no certainty that any transaction will be concluded.
"Since I became CEO of CPP in September 2013 we have worked to provide the business with a more stable footing," said chief executive Brent Escott.
"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."
In a trading update, CPP said it was focused on its immediate priorities to reshape the business and strengthen its capital position and restructure the balance sheet.
It added that uncertainty remains due to liquidity, the execution and delivery of the group's longer term plans and trading performance.
As a result, the outlook was said to continue to reflect the significant challenges and risks ahead and performance for the remainder of 2014 will remain constrained.