Q and A: Co-op restructure plan

Q What’s the background?

A The Co-op Group floated a plan to fill a £1.5bn black hole by stumping up £1bn and getting the other £500m from bondholders. The bondholders, primarily US distressed debt funds, disagreed with idea. The US funds formed a consortium called the LT2 Group to press their interests. They wanted their bonds converted to shares.

Q What will the outcome be ?

A The Co-op will inject £400m into the bank and walk away with 30 per cent. The rest will be given to bondholders, with a large share falling to the LT2 funds. However, given plans to classify bondholders into four categories with different rights, the plan could still prove controversial to lower ranked bond investors.