ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, August 29, 1996 TAG: 9608290032
SECTION: BUSINESS PAGE: B6 EDITION: METRO
DATELINE: LONDON
SOURCE: ASSOCIATED PRESS
ONCE WORD CAME THAT Lloyd's bailout plan would go through, a throng of backers agreed to the settlement .
Lloyd's of London on Wednesday reported a last-minute rush of acceptances for its $4.8 billion survival plan, but as a noon deadline passed the famed insurance market could not immediately say how many investors had agreed to the settlement.
Lloyd's needs a substantial majority of the 34,000 investors to agree to the reconstruction plan, and by Tuesday it said 82 percent had accepted.
More investors signed up after Lloyd's victory Tuesday in a U.S. appeals court that removed a legal challenge that could have killed the plan.
``Within half an hour of the judgment, the fax lines started to churn stuff out,'' spokesman Nick Doak said. ``A lot of people had been sitting on their hands.''
Lloyd's said investors, known as ``names,'' who missed the deadline could still agree to the plan, although it would not say how much of a grace period they would get. This was mainly intended for U.S. investors, who could have been confused by all the maneuvering in federal courts over the past week, but others could sign on late as well, Doak said.
Lloyd's is offering 3.1 billion pounds, or $4.8 billion at current exchange rates, to absorb some of the investors' massive losses. But if the names accept, they will have to give up the right to sue the market. And many will have to pay thousands more to get off the hook at Lloyd's.
The survival of Lloyd's was thrown into doubt as a result of $12.4 billion in losses in the five years ending in 1992 amid a string of asbestos and pollution claims, as well as hurricanes and other natural disasters.
This was devastating for names, who agree to unlimited liability ``down to the last cufflink'' to back insurance policies at the market famous for covering everything from the Titanic to jumbo jets and rock stars.
Lloyd's has until the end of the month to show British regulators it is solvent, and the plan is crucial.
But Lloyd's cannot yet say whether it had enough names on board - a matter that the Council of Lloyd's will discuss in a meeting today.
There is no magical number of acceptances, because Lloyd's needs to end litigation with a substantial number of names as well as generate an additional $558 million in fresh cash.
Lloyd's wants to put all its old claims from the disastrous years into a new group, Equitas, which will allow investors who accept the deal to get out for good.
Lloyd's withstood a potential catastrophe Tuesday, when a three-judge panel of the 4th U.S. Circuit Court of Appeals threw out a ruling from a federal judge in Virginia that would have allowed U.S. names to stay out until the end of October.
Those American names say Lloyd's violated U.S. securities laws in presenting the plan to American investors. U.S. District Judge Robert E. Payne in Richmond, Va., agreed the U.S. names should be allowed to sue and that Lloyd's should give them a better explanation of their losses.
LENGTH: Medium: 62 linesby CNB