CPP group founder gives up takeover bid
29 June 2013
Credit card insurer CPP Group revealed yesterday that its founder Hamish Ogston and majority shareholder, after ending takeover talks had stepped down from the board.
According to the York-based company, which earlier this year lost two big contracts with RBS and Santander UK, Ogston had offered an indicative 1p per share, or £1.7 million, to buy the company.
At the time it was floated in March 2010, CPP had a market capitalisation of £396 million. The company, with a workforce 725 strong, had had to struggle after it was hit with a fine in November 2012 for ''widespread'' mis-selling of products.
The insurer gave no reason for Ogston's withdrawal of his bid. Ogston still holds 57 per cent of the shares of the company he founded in 1980. The company sells products including wallet, mobile phone and card protection through banks and building societies.
In a statement, CPP said yesterday: ''Further to the announcement of May 31 regarding a possible offer for CPP Group, the board has been engaged in discussions with CPP's existing lenders, Mr Ogston and others concerning the financing requirements of the group.
''In parallel with discussions with Mr Ogston, the group has also been seeking alternative financing solutions including with certain business partners.
''Mr Ogston has now informed the board of his decision to cease all work in relation to his possible offer for CPP and his potential involvement in a refinancing of the group, and that he will not be making an offer for CPP. Mr Ogston has also given notice of his resignation as a director of CPP with immediate effect.''
CPP was fined £10.5 million and ordered to compensate affected customers – with the bill expected to top £50 million.
The scandal cost the firm two crucial contracts with RBS and Santander banks and its bank financing was then withdrawn.
With a reported £40 million-worth of debt on the books it sold its US business in April for £26.1 million which gave the firm some time with its creditors. The current arrangement is to expire at the end of September, and the departure of Ogston could bring more bad news for the company.
The troubles led the group to record a pre-tax loss of £19.9 million last year, as against a £11.9 million profit in 2011. A restructuring involving the loss of 120 jobs followed which led to the chief executive, finance director and UK managing director leaving the company.
Yesterday, according to CPP, it had been seeking alternative financing solutions while involved in discussions with Ogston. It said: ''The group remains engaged in constructive discussions with its existing lenders and certain business partners with a view to putting in place a long-term funding plan for CPP.