TOWERGATE has uncertainties around operational cash flow and liquidity for the first quarter of next year, its bondholder report has detailed.
The document for the nine months ended 30 September 2014, noted that the insurance broker’s trading performance, the impact of investment in change projects and costs due to regulatory investigations, led to a net cash outflow before financing of £59m for the period, reports sister publication Insurance Age. This was up on the £40m outflow in the same period of last year.
The document revealed that the group held £42m of unrestricted cash on 30 September 2014 (as compared to £12m as at 30 September 2013) but had “fully drawn” the £85m Revolving Credit Facility.
The statement continued: “Consequently, there are uncertainties around operational cash flow and liquidity in Q1 2015, which the group is seeking to address through disposals of small non-core businesses and other identified management actions.”
Towergate said that as well as these actions it was also entering discussions around the renegotiation of the financial covenant under its Revolving Credit Facility.
“Whilst the group is currently in compliance with this financial covenant, based on latest forecasts and the fact that the covenant level contractually tightens through to maturity of the facility, the group may be unable to satisfy its financial covenant going forward and is therefore seeking to agree renegotiated terms,” detailed the report.