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N&P IFAs to join £13m Lifemark rescue deal
31 August 2010
A consortium of IFAs and investors in Lifemark, including Norwich & Peterborough (N&P), have united to try to save the troubled fund, amid criticism Keydata founder Stewart Ford is making "impossible" promises to investors. Sources close to the situation have dismissed claims by Ford that investors' missed coupon payments will be backdated, and that the plan is "a Ford consortium" orchestrated by the former Keydata director. Lifemark ran bonds backing Keydata plans owned by 23,000 customers who invested £350m. More than 3,100 investors put money in Keydata products following consultations with N&P IFAs. Ford's representatives are up-playing his role in a rescue deal for Lifemark, but the source says: "There can be no alliance with Ford and the source of rescue funds could not be linked to him. He can not be present on the board of directors." Any such deal would need to be authorised by the bondholders, and they would "never" accept such close involvement from Ford, he says. In a statement issued by Ford's representative yesterday, the deal is referred to as "the Ford consortium's rescue package". KPMG's Eric Collard, Lifemark's administrator, confirmed a consortium was being discussed but condemned "untrue" claims by Ford that Lifemark investors would have their missed income payments backdated. Ford's statement says: "Priority [is] to be given to the resumption of income payments to Lifemark investors as soon as possible, including back payments of any missed income payments." But Collard says the past interest payments are "gone and lost". "There is no way they can guarantee past interest payments. I can see no way missed payments can be caught up. If this was possible, why are we not doing this now?" The syndicate of undisclosed advisers would need to prove they have pooled resources of around $20m (£13m) to stave off liquidation ahead of the policies underlying the fund maturing. Collard also questioned Ford's assertion that the "essence" of the consortium deal is to provide "financial support" to the Lifemark portfolio for the next three years. "To ensure it becomes self-financing and capable of paying out as originally promised to investors", it says. Collard says the Lifemark fund should have been self-funding from the start, without the need of extra financial support. The statement says financial help "would not have been necessary had the fund being able to continue to issue new bonds". But Collard says: "A fund's own assets are supposed to generate revenue to pay the premiums on the fund. So far this has not been possible. No one can say for sure this is because the portfolio is bad but in the past the fact is it it has not been self-funding." On Friday, Lifemark received a £2.9m cash injection from the sale of four policies owned by Lifemark but contractually linked to an outstanding loan by Billericay Trading, a company associated with Ford. The money provides a brief reprieve of around six weeks. Collard says a deal with the consortium would need to be arranged quickly. There are no details as yet regarding the financial make-up of a rescue package but it is likely to replicate one previously proposed and since withdrawn by US hedge fund CarVal, but at lower rates of interest. Published by IFAOnline
