Lifemark provisional administrator KPMG Luxemburg has been offered a loan facility of up to £91m, arranged by Keydata founder Stewart Ford, in an effort to take it out of administration.
This week’s Money Marketing reveals that KPMG’s Eric Collard was approached with the facility last week. It is being proposed by a US bank which Money Marketing understands is prepared to offer up to 50 per cent of the value of the Lifemark life settlement portfolio.
Assuming the loan is in place by the end of September, Ford (pictured) predicts an initial payment of £18m to bondholders, principally the FSCS, after the loan is completed and an eventual 100 per cent of return of capital invested, with funds being returned quarterly over a five-year period. This would see the FSCS recoup industry money paid in compensation. A Lifemark FSCS levy cost the industry £326m, with advisers paying £93m.
The lender’s preliminary due diligence values the Lifemark portfolio at over £182m. Ford suggests the actual value of the portfolio, taking into account maturities, is around £670m. The loan amount will be determined by the lender’s final valuation of the portfolio and the completion of its due diligence.
Earlier this year, the FSCS and Investment Management Association looked to offer an £18m loan to meet premium payments for 2011 and talks are understood to be ongoing. Keydata products were underpinned by the Lifemark policies and are designed to generate a return based on life insurance payouts. Lifemark is facing a liquidity issue after a lack of mortalities earlier this year.
Ford says the loan facility, if accepted by Collard, will cover the outstanding premiums and servicing costs at risk and allow Lifemark to come out of administration, with a new management team in place approved by the Luxemburg regulator and the FSCS. Lifemark entered administration in November 2009.
Ford says: “My role will be limited to arranging and introducing the offer of a new loan facility to Lifemark. I do not propose to have any further involvement in the funding or management ofLifemark.”