Keydata Crisis: N&P and US hedge fund bail out Lifemark fund

Norwich and Peterborough (N&P) building society and US hedge fund CarVal Investors have lent the troubled Lifemark investment fund £1.5 million to prevent it falling into liquidation.

In a statement posted on the London Stock Exchange last night, N&P said the four-month loan would ease the pressure on the £350 million Luxembourg-based company which invests in US life settlement policies - life insurance plans sold by individuals with severe health problems.

Up to 25,000 investors faced losing their money if Lifemark did not have the time to restructure itself and resolve its liquidity problems. Bonds issued by the company also back investment plans issued by Keydata, the Reading-based group that plunged into administration last year. Citywire revealed the talks between N&P and CarVal last Friday.

The loan is designed to prevent further sales from Lifemark's US trade life policies portfolio, which would have eroded the value of assets to the firm's creditors, including investors.  

The Lifemark trustee has agreed to allow certain amendments to be made to the trust deeds in respect of Lifemark's bonds with the ultimate aim of protecting the interests of the bondholders. Under these amended arrangements, the loans will be secured on the portfolio which also forms the security for the Lifemark bonds. In all circumstances, the Lifemark loan will rank ahead of bondholders.  

The new loan facility follows $17.2 million loan provided by Billericay Trading Limited, the Gibraltar-registered trust of the family of Stewart Ford, the former chief executive of Keydata.

N&P also said it remains in talks with a number of parties who were hit by the collapse of Keydata through Lifemark.

It said: 'The Lifemark loan is one of a number of dimensions to the Keydata situation. N&P continues to discuss that situation actively with a number of relevant parties (including members of the regulatory community) with a view to seeking a resolution to the current position faced by its Keydata investors, the majority of whom bought Keydata plans which were backed by Lifemark bonds.'