R&Q considering provisional liquidation

Bermuda-based R&Q Holdings is considering entering provisional liquidation as it struggles to complete the sale of its Accredited subsidiary. 

R&Q, which first announced the $465 million sale of its programme management business to Canadian private equity investor Onex in last October, said it is now considering an alternative route to close the sale which could leave lenders and shareholders empty-handed. 

R&Q's share price plunged 81% to £ 1.51 on the news.  

At the same time, the company said it still hopes to complete the sale on the original terms, but it has run into difficulties closing the sale and has been unable to complete several legacy insurance deals after the Bermuda Monetary Authority told it to put them on hold pending a review. It was also told to pause the redemption of $20 million worth of notes. 

R&Q, headed by chief executive officer William Spiegel, announced in October that it was selling its programme management subsidiary Accredited to private-equity investment company Onex Corp. for $465 million and that it expected to receive $300 million in net proceeds from the sale. It then intended to continue its legacy insurance business. 

R&Q was forced to strike a stand-still deal with creditors in late April.

Rescue efforts have brought “significant additional unexpected costs and expenses” while binding R&Q's hands on its rump legacy business to render a “material impact on the Company's stability as a business and as a going concern”, it said. 

Would-be buyer Onex has now filed an alternative proposal should the original deal fall through on account of the difficulties. That plan would involve provisional liquidation of the parent company in Bermuda and completion of the sale via that process. Remaining R&Q assets would also likely be sold off.

“In such circumstances there would be very little, if any, chance of any value accruing to the Company's shareholders,” R&Q management warned. "If the sale does not proceed on its original terms and the available net cash proceeds are not available to facilitate a financial de-leveraging of R&Q, R&Q will not be able to repay its debt facilities as they become due, and R&Q would therefore be unable to continue as a going concern."

It added: "In the event that the Company were to enter provisional liquidation, R&Q would request that trading in the Company's ordinary shares on AIM be suspended immediately. Notwithstanding any suspension of trading in the Company's ordinary shares, the Company would continue to make notifications as and when there are matters requiring disclosure in accordance with the Company's obligations under the AIM Rules for Companies and/or the UK Market Abuse Regulation."

“The Board is currently exploring and evaluating all options that may be available to the Company, including alternative transactions (including the Alternative Proposal) and potential sources of liquidity, whilst continuing to work to complete the original sale,” management said.

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