Peter Cullum's interest in Norwich City Football Club may find itself parked on a back-burner somewhere after the billionaire's No1 baby – The Towergate Partnership – today reported a �15 million loss for 2007.
Cullum, 57, has been widely touted this summer as the Canaries knight in shining white armour; the man whose reputed �1.7 billion personal fortune was about to ease Delia Smith and her husband Michael Wynn Jones out of power and herald a new, minted era for the cash-strapped Norfolk club.
Earlier this summer, however, and both the Financial Times and the industry bible, The Insurance Times, reported that Towergate were in discussions with their lenders looking to “renegotiate its banking covenants”, according to the FT.
In a statement to The Insurance Times issued earlier this month, Toweregate's chief executive Andy Homer insisted that there was nothing untoward behind this move; that it was just part and parcel of Towergate's aggressive acquisition policy that has seen Cullum – 'the deal maker's deal-maker…' according to industry insiders – make over 140 acquisitions in the insurance broker and independent financial advisor market.
The time, Homer suggested, was now ripe for further buy-outs; that they still had another �40 million up their sleeve for new acquisitions before the year was out.
All of which has enabled Towergate to power to the top of the United Kingdom's table of private insurance firms with a reported value of over �3 billion – in turn giving Cullum, it's founder and principal shareholder, a personal fortune in the region of �1.7 billion and a place in the Britain's Top 40 Rich List.
However, today's figures for the year ending December 31, 2007, will make for interesting reading – particularly in the Carrow Road boardroom following his famed “�20 million” offer of last autumn.
According to the firm's annual report, Cullum's many-headed insurance giant reported a turnover of �268.9 million for the year ended 31 December 2007, up 12% on the previous year producing a group operating profit of �38 million.
However, according to the Insurance Times, “interest payments and finance costs” of over �59 million ensured that the company actually returned a �14.7 million loss after tax. A year earlier and Towergate had reported a �4 million profit for 2006.
The FT's story of earlier this year had Towergate enjoying a “�580 million facility led by HBOS and Lloyds TSB” which, according to the FT's sources, was in place “to help it expand by acquisition”.
A further �100 million 'facility' was agreed with the Royal Bank of Scotland and Lloyds TSB in July to enable Towergate to continue its buying spree in the “independent financial adviser” arena.
Following the meltdown of the global banking system RBS is, of course, now 60 per cent owned by HM Government – ie you, me and every other UK tax-payer – whilst we also now 'enjoy' a 40 per cent stake in the merged HBOS-LloydsTSB outfit.
If those Towergate figures are correct then, in theory, we all now 'own' 40 per cent of that �580 million provision and 60 per cent of RBS' share of that �100 million loan. Which on the back of a fag packet, suggests that the UK tax-payer has, potentially, a �270 million stake in Towergate's fortunes.
If 2007 had been something of a bumpy ride for Towergate's profits – and, in particular, those �59 million-worth of 'interest and finance costs' – 2008's annual report this time next year should make for an enthralling read.
Homer's recent remarks in the Insurance Times, however, suggested it was all business as usual as he and Cullum looked towards an orderly succession and to be backing out of the business “within the next three years” to enable a new generation of thrusting young insurance things to make their mark on the world.
“I can confirm that we are in advanced negotiations with our lenders regarding fine tuning our banking facilities in line with our latest plans,” Homer said in a statement to the Insurance Times.
“This is a process we regularly undertake and we expect a successful conclusion will soon be reached.
“Towergate and our banking partners see this as a market of great opportunity, since we see less competition for acquisitions because of the state of the debt and banking market and, in addition, we believe an improvement in the rating cycle is imminent.
“It is expected that we will announce our largest acquisition of 2008 shortly, still leaving us with a war chest of over �40 million to deploy before the year end if we so choose.”
You could, probably, get a Championship football club of Norwich's ilk for �40 million; Charlton's recent failed buy-out by was, reportedly, at a �50 million mark.
Certainly, Homer suggested that he and Cullum were looking for an exit as they “begin to crumble”.
“What we are trying to build is an edifice that outlasts me and Peter [Cullum] because we are beginning to crumble. But the people we have got, Clive [Nathan], Amanda [Blanc], Grant Ellis and the Open GI team are a bunch of young guys,” he told his friendly inquisitor at a recent forum hosted by the Insurance Times.
“The talent we have will keep this organisation going, providing we can make sure we can get through the next couple of years and that the succession happens smoothly.”
One idea firmly on the table is to see Towergate floated on the stock exchange; that it goes from a private concern to a public one; out of Cullum's hands and into that of the stock market.
“Peter is 60 in two years' time, he will be the single major investor pre-IPO [Initial Public Offering] in Towergate, but like me he does not want to have the cut and thrust of every day trading for more than the next two or three years.”