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£18m City lifeline for Inter-Alliance

National IFA Inter-Alliance is receiving an £18m cash injection from the City to avoid the company being put into administration.

The cash boost comes as the firm warned its losses could hit £21.7m for 2001. It said it would have run out of cash by April if the extra money had not been found.

The deal, brokered by new chief executive and chairman Keith Carby, sees Inter-Alliance offering a further 26 million shares to its existing shareholders, which include Gartmore, CGNU, Merrill Lynch and Scottish Mutual.

Carby will strengthen his hold on Inter-Alliance as a result of the bailout deal, which entitles him to 5 per cent of the firm&#39s share capital at 55p a share.

Shares in Inter-Alliance, which has more than 1,000 RIs, rose by over 15 per cent to over 90p after the deal was announ-ced but are still way down on the 52-week high of 316p.

Carby says there is no deal on multi-ties with its institutional investors and the extra cash reflects investors&#39 confidence in the prospects for the IFA sector.

Inter-Alliance blamed the cost of the integration of 516 Lincoln and 132 Prudential sales staff and the year-long litigation with Lincoln for the huge projected losses.

It says the new money will be spent on investing in its brand and improving the IFA infrastructure but some is required to maintain cashflow.

Around 25 per cent of back-office administration jobs are likely to go at Inter-Alliance&#39s head office as part of a streamlining package that could see the IFA offloading its overseas operations.

Carby says: “I could have sold the company to three different institutions but we will not get into issues that deflect us from the job. We will be in profit well within two years. What is the point of running a business if it is not making a profit?”

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