CPP, the troubled card protection group, has sold its US business for £26.1m and agreed a further extension of its banking facilities until September.
These moves will provide breathing space for the company to talk to its lenders about refinancing on longer term basis, and discuss with its majority shareholder Hamish Macgrefor Ogston about his proposed bid for the business.
Ogston, who owns 575%, plans a 1p a share offer depending on certain conditions, including new three year credit arrangements with its banks. Last year a proposed offer from US group Affinion was withdrawn.
CPP is selling the US business to AMT Warranty, subject to shareholder approval. The board said the disposal and the new banking extension were "the only viable means of enabling the group to move forward." But it added:
Notwithstanding these measures, the group is likely to continue to face significant financial challenges in the short to medium term.
It has to pay a fine to the Financial Conduct Authority relating to historic regulatory failures, including mis-selling, and also has to finance redress to customers involved. It has raised its provision for penalties, fees and redress from £33.4m to £51.7m, but this may not be the final figure.
The company said it had seen lower trading in the first three months of the year since it is unable now to sell its full range of products, and it is considering cutting its cost base.
It will also lose the sales and profits generated from the US business if it successfully sold.
CPP shares are currently down 3.55p at 3.75p.
