Zurich has increased its loan facility to Openwork from £18m to £30m and offered the network’s advisers 30 per cent of preference shares in a restructuring of the firm’s funding.
Shareholders met at Birmingham Airport yesterday and 95 per cent voted for a restructure of the business which will see Openwork advisers given 30 per cent of preferential shares. Before the restructure Zurich held 100 per cent of preferential shares.
A new £30m credit facility replaces the current £18m facility as part of the restructure.
Zurich will remain a 25 per cent shareholder in the network.
Shareholders will be unable to sell their stake unless there are two consecutive years of pre-tax profits, including second year pre-tax profits of at least £5m, and the purchaser pays in excess of £75m.
The company says the restructuring will mean it can fund its RDR strategy, which includes offering a restricted and independent advice proposition and secure greater value for all shareholders. In September, the firm acquired IFA 2plan Wealth Management.
Openwork made a pre-tax loss of £5.5m for 2010.
Openwork chief executive Martin Davies (pictured) says: “In order to get through RDR we need to provide support for advisers. We believe this will require quite a bit of investment and that’s why this has been done. I think a lot of firms have underestimated the degree of change that is needed.”
Zurich global life chief executive Kevin Hogan says: “It will ensure that Openwork has a firm foundation to execute its agreed strategy as it transitions to the post-RDR landscape, growing value for its shareholders and building on existing distribution opportunities.”
The firm hope that the deal will be completed by the end of March.