Gone a bit Pearl shaped

3 June 2009 By George Hay Follow @gfhay

The serial entrepreneur looks to have reached a deal with his banks and secured £500m of new capital. The fallout from his heavily geared, topofthemarket deal to buy Resolution could have been much worse. But Osmond still has to see his own near50% stake heavily cut down.

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Pearl Group is likely to strike a deal to cut its £3bn debt load and receive a £500m capital injection from a Caymen Islands investment group, Liberty Acquisition Holdings.

The life assurer, run by entrepreneur Hugh Osmond, is thought to have reached a provisional agreement with its 17bank consortium whereby the banks will write down the value of their loans by £400m. The lenders will receive £75m in convertible bonds and equity together representing up to 10% of the company.

Liberty, which is funded by hedge fund investors that still have to formally approve the deal, will receive a 60% stake. Osmond's Sun Capital and TDR, the private equity group, will see their stakes cut from almost 50% to 15%.

About £2.2bn of Pearl's £3bn debt pile, which has all been borrowed from the banks, was taken on to buy Resolution. The balance was borrowed to buy Pearl in 2005.

Pearl bought Resolution in November 2007 for 120% embedded value. However, the EV multiple is more like 100% if subsequent disposals of Resolution's life business to Royal London are take into account.

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