Insurer Pearl offers better bonds deal
PEARL, the life insurance group that is planning a stock market flotation sometime next year, has resurrected discussions with the disgruntled holders of £500m of its bonds.
Earlier this year, Pearl, then led by serial entrepreneur Hugh Osmond, suspended interest payments on the bonds, sparking protests from the holders, including representatives from Rathbone, F&C, Axa and Fidelity. Pearl has since been refinanced, with Osmond losing much of his influence at the group.
At a recent meeting between the company and a bondholder grouping, the management proposed a possible buyout of the bonds at between 40-65p in the pound – much higher than the 12.5p first offered by the company.
Pearl is now chaired by Ron Sandler, the chair of Northern Rock and a City veteran who is hoping to lead the group’s flotation.
Several proposals were aired, including the possibility of some bondholders exchanging the bonds they own for new instruments.
As a consequence of this, some bondholders have asked if they can carry out due diligence on the insurance company.
One bondholder told City A.M: “I think we may have the green shoots of progress but it is the substance of what comes next that counts.
“I think we may just have got recognition that you can not ride roughshod over such an important asset class if you are aiming to be a respectable company. This issue is just not going to go away.”
The bondholders have pointed out to Pearl that when it tries a stock market flotation next year it will be appealing to an investor class not dissimilar to the institutions that hold the bonds at the centre of the dispute.
Pearl, which declined to comment, is being advised by UBS and Clifford Chance on the issue.