N&P confirms return of £1.5m Lifemark loan

Norwich & Peterborough (N&P) has confirmed troubled Keydata-backer Lifemark is in a position to repay in full the £1.5m borrowed from the building society in October.

The emergency loan facility, which helped stave off a firesale of Lifemark's assets, was for a limited period and expired today. 

N&P is embroiled in a compensation row with over 400 investors who claim they lost money because its IFAs mis-sold them Keydata products.

It has not said how soon the money will be returned. However it is rumoured to have made £80,000 from the four month loan after charging Lifemark interest of nearly 15%. 

During the same period, US hedge fund CarVal, which loaned Lifemark $7.5m and also demanded nearly 15% interest, will have racked up a massive $400,000 in interest.

The costs of the loans must be paid out of the fund's reserves with  Lifemark unable to make payouts to investors since February 2010.

In a statement N&P says: "We understand from KPMG, one of whose partners is provisional administrator of Lifemark, that the remaining outstanding amounts under the loan are expected to be repaid in full.

"We're in discussions with KPMG about the details of this. In the meantime we are keeping it under close review."

KPMG has secured a three month stay of execution for Lifemark 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.

Lifemark borrowed the money from N&P and CarVal last October to avoid selling off some of the traded life-settlement polices that make up the underlying assets of the fund, which is facing severe liquidity problems.

But a series of recent maturities, including $8.5m received last week, in addition to $10m last month and $5m which is still awaiting deposit into the fund, mean it is now in a position to repay N&P.