It is understood that CarVal has advanced £3.5m to the company as part of a proposed scheme of arrangement to be presented to Lifemark’s trustee SMP Trustees over the next six weeks.
CarVal is thought to have proposed a £40m loan to Lifemark to pay premiums and return original capital to investors over a 14-year timeframe depending on the performance of Lifemark assets.
If an appropriate long term solution cannot be found or underlying policies lapse the fund will go into “controlled” liquidation.
Last week, advisers warned Keydata administrator PricewaterhouseCoopers must outline details of Lifemark’s proposed restructuring, as the underlying life settlement policies could become worthless if policies lapse due to the firm’s inability to meet premium payments.
Around 23,000 Keydata clients invested £349m in Lifemark through plans including the secure income bond 4, secure income plan and the defined income plan. Lifemark has halted income payments to investors to preserve liquidity and maintain the value of the policies.
Vintage Financial director Geoff Hartnell says the CarVal performance related solution is “disappointing” and that other solutions need to be considered. “This will be difficult as PwC and Lifemark need to focus on the solution at hand, after all CarVal are the only company to date to put their money where their mouth is,” he says.
The scheme of arrangement will be put to vote and if it is not accepted by a sufficient majority of bondholders then Lifemark will need to seek further short term funding while it secures an alternative solution.
PwC and Lifemark provisional liquidator KPMG partner Eric Collard refused to comment on the deal.
CarVal and SMP Trustees were unavailable to comment.