Norwich City's hopes that Peter Cullum might be the man to ride to their financial salvation took another blow today after The Guardian newspaper reported that his insurance firm, Towergate, had breached their banking covenants.
The billionaire Towergate owner had, in fairness, already suggested that 2009 was going to prove a tough year for his Kent-based insurance empire – making a repeat of his ?20 million take-it-or-leave-it offer for the cash-strapped Canaries an ever more distant prospect.
“We are all under the cosh. And we can only guess what 2009 will hold,” he told The Eastern Daily Press over Christmas, words that will have an added poignancy tonight if The Guardian's report is accurate.
“Towergate, an insurance group backed by HBOS and Lloyds, has breached covenants and is struggling to repay its debts,” was the line of note for Canary supporters, buried in the midst of a piece detailing the latest financial crisis to be engulfing merged banking giant HBOS-Lloyds.
The piece claims that Lloyds is fast discovering that in taking on HBOS' raft of outstanding loans it has merely exposed itself to more precarious positions – Towergate's reported ?580 million facility among them.
The Eastern Daily Press, however, claimed that Delia Smith and the powers that be had 'looked a gift horse in the mouth' when they failed to agree a deal with the Towergate founder 18 months ago, as Cullum – ranked No40 in the last Sunday Times Rich List – first came a-calling. He was lurking again this summer.
Whether any 'deal' was ever, really on the table was one question; it was, of course, originally described as simply a sum to be put into Glenn Roder's transfer kitty – albeit with control of the club and, presumeably therefore, the Smiths' majority shareholding falling into Cullum's hands by way of return.
It was never, ever going to be a simple as it sounded. But it is not too often that a man with a reported wealth of ?1.7 billion stumbles into view; he certainly always made for good headlines.
'Without Cullum on board, the Canaries – “dare we say it…” – face “the threat of financial meltdown”', the paper's comment column decided. Others wondered whether, when all was said and done, Norwich had had a lucky escape.
Whether Towergate themselves now face the threat of 'financial meltdown' is another matter. There is always a deal to be done – it just depends on whose terms.
Cullum's right-hand man Andy Homer has long been insisting that it is all business as usual as reports first surfaced of Towergate's need to renegotiate the terms of its debt repayments.
In a statement to The Insurance Times last autumn, Homer insisted 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 2008 was out.
“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 that autumn statement to The Insurance Times.
“This is a process we regularly undertake and we expect a successful conclusion will soon be reached.” he added.
“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.”
Whether that improvement has, indeed, materialised is just one of a host of questions that remain unanswered tonight; the only real certainty being that Towergate remain – like the rest of the financial and banking sector – 'under the cosh'.
The fear would be that the so-called 'deal maker's deal-maker' went a deal too far as he aggressively expanded through the course of the early Noughties – racking up bigger and bigger debts as he went; a further ?100 million facility was arranged through the now discredited Royal Bank of Scotland as recently as last summer.
According to the last set of published accounts for Towergate – to the year ending December 31, 2007 – Cullum's many-headed insurance giant reported a turnover of ?268.9 million 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.
Minus any deal with Cullum and with the Turners, Andrew and Sharon, bowing out over the summer and leaving a ?1.5 million shortfall in their wake, the Canaries have been forced to cut their cloth accordingly this season as Delia returns to the TV kitchen and her fellow director, Michael Foulger, dips into the family's Banham Poultry empire in an urgent bid to keep the Norfolk club's finances vaguely stable.
The sale of the club's EventGuard operation to an off-shoot of Norfolk County Council kept the cash coming last month, but it is clear that City will be in little or no position to decline any formal offer from a Fulham of this world for the services of, say, Sammy Clingan this summer.
That said, it remains a very moot point as to whether the likes of Southampton, Charlton and Watford will manage to make it to the end of the season with their finances intact – wherein may yet lie Norwich's best hope of survival this season.
Administration automatically triggers a ten-point deduction – a factor that could yet decide this season's fraught fight against the drop.