Norwich & Peterborough Building Society (N&PBS) and US hedge fund CarVal Investors have agreed a loan to save troubled Keydata backer Lifemark from liquidation.
N&PBS will make available up to £1.5m. It has not said at what interest, only that the rate will be "commensurate with the risk profile of the loan".
Unless prepaid or demanded earlier, the Lifemark loan will be available until 15 February 2011 or if earlier, upon completion of a successful restructuring of Lifemark.
CarVal has not disclosed how much it is contributing to the financing, but N&PBS says it is the "junior partner" in the deal.
To see the fund through to February without a sell off of its assets Carval's contribution will need to be about £10m.
Lifemark needs about $5m (£3.2m) a month to pay the premiums on the traded US life-settlement policies which are the assets of the fund.
KPMG's Eric Collard, administrator of Lifemark, has agreed the loan will be secured over the fund's portfolio, which also forms the security for the Lifemark bonds. In all circumstances, the Lifemark loan will rank ahead of bondholders.
Without emergency funding further sales from Lifemark's portfolio of life policies would have been required by Thursday, thereby eroding the value of the assets available to Lifemark's creditors, including the holders of its Luxembourg-listed bonds.
However, N&PBS says the Lifemark loan is "one of a number of dimensions to the Keydata situation".
In a statement, the building society says the loan is to provide Lifemark with liquidity to meet operating expenses whilst it "formulates and proposes a restructuring and recovery plan to its creditors, including its bondholders".
N&PBS says it is still in talks with a number of relevant parties - "including members of the regulatory community" - to "resolve" the situation for Keydata investors, the majority of whom bought plans backed by Lifemark bonds.
But Gareth Fatchett, partner at law firm Regulatory Legal, which is acting for 300 unhappy N&P customers who invested in Keydata, says the bridging loan is "an elastoplast not a permanent fix".
"Why would you want to spin the dice again with an investment which is now even riskier ?"
The stock exchange note also states Lifemark has benefited and "will continue to benefit" from a loan of $17.2m from Billericay Trading, the Gibraltar-registered trust of former Lifemark director Stewart Ford's family.
The FSA has been informed of the Lifemark loan and notes the attempt by N&P and CarVal to try to improve Lifemark's liquidity position.
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected