Lender behind Lifemark loan deal pulls funding

The US lender behind a $150m loan facility to take Lifemark out of administration has withdrawn its funding offer ahead of a bondholder meeting to vote on the loan next week.

Money Marketing revealed in August that Keydata founder Stewart Ford (pictured) had arranged the loan to cover outstanding premiums at risk due to Lifemark’s current liquidity crisis, and allow Lifemark to come out of administration.

Ford also said the loan would enable Lifemark bondholders to be repaid. The Financial Services Compensation Scheme is a principal bondholder of Lifemark bonds as it took over investors’ rights when it paid out compensation to Lifemark investors.

If bondholders were to be repaid the FSCS would recoup the industry money it has paid in compensation over Lifemark. The Lifemark FSCS levy cost the industry £326m, with advisers paying £93m.

The FSCS and bondholders were due to vote next week on whether the loan should be accepted, or whether Lifemark should be put into a controlled liquidation.

Lifemark provisional administrator KPMG Luxemburg called the bondholder meeting last month via a notice on the Luxemburg Stock Exchange.

The notice named the US lender as CSG Investments, a subsidiary of Beal Bank, with the management of the loan process passed by Ford to a company called Seaport.

CSG has withdrawn the funding as a result of its name being made public in connection with the loan, although Money Marketing understands this was a legal requirement in presenting the offer to bondholders.

Money Marketing also understands that CSG believed that the FSCS was the sole Lifemark bondholder, which is not the case. 

The meeting is expected to go ahead next week, but bondholders will only be asked to vote on the liquidation proposal. As part of Lifemark’s liquidation, the FSCS has agreed to provide a $10m loan to stem the current liquidity issues. Money Marketing understands that in previous negotiations the $10m was set as a minimum loan amount which could be increased further if liquidity continues to be a problem.

Ford is calling for the meeting to be adjourned on the basis that CSG has not been given enough time by KPMG Luxemburg to carry out due diligence on Lifemark’s assets.

Eric Collard of KPMG Luxemburg and the FSCS declined to comment.