Osmond set to play second fiddle as Pearl puts final touches to Liberty deal

THE former Pizza Express entrepreneur Hugh Osmond will have a greatly reduced influence in a restructured Pearl insurance group as part of plans announced yesterday.

The Cayman Islands-registed Liberty International is injecting up to £510m into Pearl in a deal that will transform the group’s balance sheet while leaving Jonathan Moss as its chief executive.

Osmond’s shareholding will be reduced from 50 per cent to 15 per cent and his control over the strategic management of the group will reflect this.

The plan is for Osmond to become non-executive vice chairman of the new group, with a new heavyweight director recruited from the outside to be chairman.

“Basically, Hugh’s not in control of this group any more,” said one person close to the deal.

Liberty says its shareholders will vote on whether to accept the proposal, which will see it own 60 per cent of the new Pearl group, in the second half of July.

Osmond recently flew to the US to try to persuade Liberty shareholders of the merits of the plan.

As part of the deal, Pearl shareholders will be investing £75m in new Liberty International shares.

Following completion, the group intends to seek a primary listing on the London Stock Exchange as soon as is practicable.

SIMON MACKENZIE-SMITH
MERRILL LYNCH
WHEN relations between Pearl’s lending banks and its major shareholders reached a low point a few weeks ago, Hugh Osmond called in Merrill Lynch to advise him on how to get the group out of a hole.

At the time the banks, who are owed £3bn by Pearl, were playing hard-ball and appeared hellbent on a strategy that would have led them to taking effective control of the group.

Merrill, for whom Simon Mackenzie-Smith and restrucuturing expert Stephen Wellington played leading roles, managed to bang heads together and persuade the banks to accept the introduction of a new shareholder as part of a less dramatic but hopefully much more stable restructuring deal.

“I’m not sure Merrill did that much technical stuff really,” said one person close to the talks, “but there was definitely a need for an honest broker at one point in the proceedings.”

Mackenzie-Smith’s involvement follows hot on the heels of his recent work on Punch’s fund-raising. He also worked on Segro’s recent £500m rights issue, making him almost as ubiquitous in City deals as JP Morgan Cazenove’s Ian Hannam.

Fox Pitt Kelton acted as corporate broker and Citi advised Liberty International.