Insurer Hastings taps junk bonds to fund payout

 
Michael Bow
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HASTINGS Insurance workers are on the verge of a bumper payout after management tapped booming junk bond markets and sold a stake to Goldman Sachs to fund a multi-million pound payday.

Senior management at the company, led by insurance entrepreneur Neil Utley, and a large proportion of its 1,500 staff will share a payout of about £450m between them later this month.

Utley, who owns 30 per cent, will be entitled to about £135m of the distribution. It follows an aggressive re-engineering of the group’s financial structure in which it will sell 50 per cent of the firm to Goldman for £150m and borrow £415m to fund the payout. A spokeswoman for Hastings declined to comment on the figures.

Utley originally bought out the company alongside chief executive Edward Fitzmaurice five years ago for £23.5m. The Financial Conduct Authority is set to grant Goldman’s Merchant Banking Division permission to take a 50 per cent stake in the business next week.

Hastings’ high yield bonds, rated sub-investment grade at B- by ratings agency Standard & Poor’s (S&P), have been issued to raise the £415m.

S&P were critical of the new financial structure in its rating.

“We view the group’s financial flexibility as weak due to the significant amount of debt contained in its capital structure,” its analysts said.