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Eurolife sells 50m life book to Reliance Mutual

Eurolife Assurance Group has made a start in its bid to raise assets to fund its restructuring proposals with the sale of its 50m life book – Eurolife Assurance Company – to Reliance Mutual.

A total of 2,300 investors in the Eurolife secured bond vote by March 11 on whether to accept the restructure plan which would see them offered repayment of 60 to 86 per cent of the original issue price, to be funded by the disposal of assets and subsidiaries of Eurolife. The sale to Reliance is due to complete on June 29.

The firm has said if the plan is not accepted, the company will be placed into insolvency and bondholders will rank with other unsecured creditors. Eurolife’s last accounts show assets of 16.4m, with 20.6m owed to creditors, with 17m of this owed to bondholders. If these figures remain broadly unch-anged, administration could give a payment higher than the 60 per cent offer.

Managing director David Wooton says: “This has been dragging on, largely between the lawyers. We wrote to all our bondholders on Friday. This sale has been the major thing we needed to do to make a payment this year and it means we are now on track to achieve the proposals we have made to bondholders. It is something we planned to complete last year but the fact that the sale did not go through was one of the reasons for our problems in January.”

Hargreaves Lansdown investment manager Ben Yearsley says: “By selling the business, it is difficult to say if they will have raised enough cash. It shows you have to read the small print very carefully with these products. Bondholders are being offered a Hobson’s choice.”

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