Lifemark rescue window extended to secure mystery backer

Administrators of Lifemark, the troubled Keydata backer, have secured a three month stay of execution for the fund amid intense negotiations with a mystery backer.

An unnamed front-runner has emerged to help in the long-term financial restructuring of the dangerously-illiquid fund and talks are underway to agree terms, according to people familiar with the situation.

KPMG's provisional administration of the Luxembourg-based fund, which has a face value of about £1.3bn, had been due to end today. It will now run until 15 May.

However sources close to the situation say the Luxembourg court granted the extension "reluctantly", and only after intense representations put forward by KPMG's Eric Collard.

Both previous times the Luxembourg court has extended Lifemark's administration period by six months. This time it has cut that down to just three.

Collard has been trying to resolve Lifemark's liquidity problems since 18 November 2009. He will stay on in this role until the May deadline.

Lifemark's coffers have been buoyed recently by payouts from several mortalities among the elderly US citizens who originally owned the fund's assets, traded life policies.

This includes $8.5m received last week, in addition to $10m last month and $5m which is still awaiting deposit into the fund.

A US court case involving a traded life policy formerly owned by the Kramer family and sold to Lifemark has also been ruled in the fund's favour, which should add a further $10m.

However, today is also the repayment date for a £1.5m loan from Norwich & Peterborough (N&P) and $7.5m from US hedge fund CarVal, lent to Lifemark in October.

Lifemark must find about $11.5m to repay the loans with interest, though N&P has yet to confirm if it has actually called in its part of the financing.

To avoid defaulting on the remaining life polices which make up the assets of the fund, Lifemark must also pay premiums of about $4.5m a month.

Bondholders have not received income since February 2010 after policies faliled to mature as frequently as expected. Lifemark's settlement portfolio has a face value of about £1.3bn.

Stewart Ford, the former Keydata director whose firm's collapse in 2009 has contributed to Lifemark's liquidity problems, and drove the FSCS interim levy to £326m, has denied responsibility for the fund's problems.