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US firm CarVal sets up funding deal for Lifemark

US hedge fund CarVal has provided Lifemark with short-term funding to help sustain the company and preserve the value of policies held by thousands of Keydata investors, Money Marketing understands.

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.

Advisers expressed concern in last week’s Money Marketing that if funding was not forthcoming the life settlement pol-ices underlying Lifemark may lapse, resulting in huge losses on the £349m invested through Keydata.

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.

The scheme of arrangement will be put to the 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.

If an appropriate long-term solution cannot be found or underlying policies lapse, the fund will go into controlled liquidation.

Around 23,000 Keydata clients invested in Lifemark which has halted income payments to preserve liquidity and maintain the value of the policies.

Keydata administrator PricewaterhouseCoopers and Lifemark provisional liquidator KPMG refused to comment.

CarVal was unavailable to comment.

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