CPP sells off its American unit as lenders give breathing space

 
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TROUBLED credit card insurance provider CPP has won itself a six-month reprieve from its lenders by selling its American arm for £26.1m.

The US business, which generated 13.2 per cent of group revenue in 2011, has been bought by AMT Warranty, part of Nasdaq-listed AmTrust.

The firm also revealed yesterday that Barclays, RBS and Santander are ready to extend its banking facility until the end of September as it engages in takeover talks with founder and majority shareholder Hamish Ogston.

CPP said it will use £16.5m of the sale proceeds to pay down its debt facility, which will shrink to £25m.

In spite of the measures taken, CPP said it is “likely to continue to face significant financial challenges in the short to medium term” and trading remains difficult.

The firm has been struggling since the Financial Services Authority imposed a £10.5m fine for mis-selling insurance and asked the firm to compensate customers.

Ogston has been given a Takeover Panel deadline of 24 April to make a firm offer for the group, though CPP said in a statement yesterday it is likely to need an extension.

He has said his offer is set to be just 1p per share.

CPP’s stock fell 45.2 per cent to 4.00p yesterday after the news of its US disposal.