REG - R&Q Insurance Hldgs - Update on proposed sale of Accredited

R&Q Insurance HoldingsAnnouncement

24/04/2024 17:45

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RNS Number : 9255L  R&Q Insurance Holdings Ltd  24 April 2024

R&Q Insurance Holdings Ltd

Update on proposed sale of Accredited

24 April 2024

As announced on 20 October 2023, R&Q Insurance Holdings Ltd (AIM: RQIH)
("R&Q" or "the Company") has entered into a conditional agreement with
funds advised by Onex Corporation to sell 100% of the equity interest in
Randall & Quilter America Holding Inc., the holding company of the
Company's program management business, Accredited.  R&Q today provides an
update on the proposed Sale.  Capitalised terms used in this announcement
have the meanings given to them in the circular sent to shareholders on 14
December 2023 (the "Circular").

Update on lender approval

R&Q is pleased to announce that it has today entered into a lock-up
agreement (the "Lock-Up Agreement") with the syndicate members of the Main
Banking Facility, the syndicate members of the FALLOC, the provider of the
SAFER LC, the holders of the Senior Notes, the provider of the Cayman LC
Facility and the Bermuda LC Facility and the majority of the holders of the
Subordinated Notes (the "Locked-Up Parties").

Pursuant to the terms of the Lock-Up Agreement, the Company and the Locked-Up
Parties have agreed:

-     the indicative terms for a restructuring of certain of the financial
indebtedness of the R&Q Group (the "Restructuring");

-     the terms on which the Locked-Up Parties will, to the extent
necessary, consent to the Sale;

-     the use of the proceeds of the Sale; and

-     pending completion of the Restructuring and Sale, not to take
certain enforcement action under the terms of R&Q's existing financial
instruments to which the Locked-Up Parties are party.

The Board of R&Q believes that the terms of the Lock-Up Agreement provide
R&Q with a stable platform on which the Restructuring can be implemented.
Following the signing of the Lock-Up Agreement, the parties will now move to
the negotiation of the necessary implementation documentation. Completion of
the Restructuring is subject to the successful finalisation and execution of
such documentation. The Lock-up Agreement contains customary undertakings with
respect to the Restructuring and termination events. One of the termination
events is if the Available Net Cash Proceeds available to pay down the Main
Banking Facility falls below a certain threshold. If the threshold is ever
crossed, there is a ten business day period during which the Lock-Up Agreement
will remain in place and the syndicate members of the Main Banking Facility
can decide whether or not to extend such period.

There is no further update at this time in relation to the status of the Tier
2 US$20 million floating rate subordinated notes issued by R&Q Re
(Bermuda) Limited. Accordingly, as announced on 22 December 2023, the Bermuda
Subordinated Notes remain outstanding on their terms and R&Q Re (Bermuda)
will continue to pay interest on such notes as it becomes payable. The holders
of the Bermuda Subordinated Notes are not a party to the Lock-Up Agreement.

R&Q will remain in close dialogue with its lending banks, providers of
credit and other financing providers as it seeks to finalise the documentation
necessary to implement the Restructuring and enable the Sale to take place.

Update on regulatory approvals

R&Q has been in detailed discussions with those regulators whose consent
is required to enable the Sale and associated matters to proceed. The
necessary approvals have been received from the Malta Financial Services
Authority, the Arizona Department of Insurance and the Florida Office of
Insurance Regulation and merger clearance from the EU Commission. R&Q
hopes the remaining required approvals will be received shortly.

Update on use of proceeds

As noted above, since the Company's announcement of the Sale on 20 October
2023, the Company has engaged in an intensive period of discussion with its
lenders and regulators with a view to the approval and implementation of the
Sale. This period has resulted in the Company incurring significant additional
unexpected costs and expenses (either on its own behalf or on behalf of or due
to the requirements of other stakeholders). In addition, as announced on 22
December 2023, the Company has been constrained since that time in relation to
its ability to consummate external legacy transactions.

As a result of these factors, as well as a degree of general stress to the
Company's businesses during this period, Available Net Cash Proceeds on
closing are now expected to be between approximately $65 million and $110
million (previously $170 million and $210 million). Following closing of the
Sale, the Board still intends to use the Available Net Cash Proceeds to
facilitate a de-leveraging of R&Q while retaining liquidity and working
capital for R&Q's ongoing commitments.

Concluding remarks

The Board continues to work expeditiously towards completion of the Sale and
reiterates its belief that a prompt and successful conclusion to the Sale
represents the best outcome for all stakeholders. R&Q remains in
communication with Onex regarding progress of the Sale and Onex continues to
work with R&Q to support and advance towards completion of the Sale.
R&Q currently expects closing of the Sale to occur in Q2 2024.

In the meantime, the Board believes the legacy plan outlined in the circular
published on 14 December 2023 remains achievable, although acknowledges that
it may now take longer to fully implement the plan than previously outlined,
due in particular to some of the challenges outlined above. The Board of
R&Q continues to evaluate any and all options to realise value from its
legacy insurance business for the benefit of all its stakeholders, including
its shareholders, whether that be through the ongoing trading of that business
or through alternative strategic options.

As implementation of the Sale remains conditional on certain matters
(including those explained in the Circular), Shareholders' are reminded of the
contents of the Risk Factors set out in the Circular.

Further announcements will be made, as appropriate, in due course.

-Ends-

 Enquiries to:

R&Q Insurance Holdings Ltd

 Tel: +44 (0)20 7780 5850

 Jeff Hayman

 William Spiegel

 Tom Solomon

 Fenchurch Advisory Partners LLP (Financial
 Adviser)                              Tel: +44
 (0)20 7382 2222

 Kunal Gandhi

 Brendan Perkins

 John Sipp

 Richard Locke

 Tihomir Kerkenezov

 Barclays Bank PLC (Financial Adviser and Joint
 Broker)                          Tel: +44 (0)20 7632
 2322

 Gary Antenberg

 Richard Bassingthwaighte

 Anusuya Nayar Gupta

 Grant Bickwit

 Howden Tiger (Financial Adviser)

                    Tel : +44 (0)20 7398 4888

 Rob
 Bredahl

 Leo
 Beckham

 Deutsche Numis (Nominated Adviser and Joint
 Broker)                           Tel : +44 (0)20
 7260 1000

 Charles
 Farquhar

 Giles
 Rolls

 Ankura Consulting (Europe) (Debt Financial
 Adviser)                              Tel : +44
 (0)20 7469 1111

 Alistair
 Dick

 FTI
 Consulting
     Tel: +44 (0)20 3727 1051

 Tom
 Blackwell

 

The information contained within this announcement was deemed by the Company
to constitute inside information as stipulated under the UK Market Abuse
Regulation. With the publication of this announcement, this information is now
considered to be in the public domain.

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