The long-established local business has a range of activities in its portfolio, including real estate, serviced offices, insurance, financial and data services.
But last month it warned backers that it was finding trading conditions tough and said that pressure to meet the interest payments on three bonds raised in the past five years could risk taking the group into insolvency.
Last night it met bondholders, seeking agreement to defer and accrue its obligations to pay interest for 18 months. The proposal was backed by 96% of bondholders. The bonds are unsecured obligations of the company and bondholders had been warned that they would rank as unsecured creditors of the company in the event of any insolvency.
The group said last night that it would now implement a strategic divestment plan ‘to establish a stable platform for the business to progress over the medium to long term’. It will also continue a restructuring plan drawn up with consultants from Interpath, which is likely to involve selling some of its assets and setting up a new governance framework.
Charles McHugh, Joanna Leese and Nick Heys will form the executive board of Polygon Group, with Ed Daubeney and Simon Livesey continuing as non-executive directors.
‘Today’s announcement marks a significant step forward for PGL as we enter a new chapter with a clear objective of returning capital to creditors,’ said Mr McHugh, now the chairman of the group.
‘We thank all our key stakeholders for their overwhelming support in recent weeks. It is business as usual as we implement the plan.’
Polygon has raised three bonds of about £5m. each in the past three years. It pays interest to bondholders every six months.
In return for agreeing to delay repayment, investors will receive an extra 1% on each payment.
In statements published in advance of the meetings, Polygon admitted that it was facing a liquidity issue, given a reduced value of its assets and lower-than-expected returns on investments. It blamed both macro-economic issues and trading conditions in the islands.
But its board said that it retained confidence that its property portfolio would cover future liabilities and that it had options to improve the company’s finances and liquidity in the medium term.
However, it feared that having to raise cash to meet the bond repayments could force it to sell assets for less than their worth.
It has been involved in restructuring talks with solvency advisers, which it described as ‘self-administration’, and directors are also putting extra cash into the business.
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