CarVal, the US hedge fund, will charge cash-starved Keydata-backer Lifemark 14.5% above LIBOR for its ‘rescue' loan.
The rate, which is double the average yield on European high yield bonds, suggests CarVal believes Lifemark is a very high-risk investment.
CarVal has not disclosed the size of the short-term credit facility it will make available to Lifemark, though sources close to the situation say it is between $7.5m and $10m (£4.75m - £6.3m).
Norwich & Peterborough Building Society (N&P), which has 3,100 customers invested in Lifemark through Keydata products, has also committed £1.5m to the facility at an undisclosed interest rate "commensurate with the risk profile of the loan".
The terms of the N&P and CarVal deal state Lifemark's debt to them is senior to that of bondholders, meaning interest on the loan must be paid before monthly income payments to Lifemark investors.
In August, Lifemark's administrator, KPMG's Eric Collard, turned down an offer from CarVal of a $60m (£38m) long-term loan because the hedge fund was reportedly demanding interest rates of more than 20%.
Collard says: "If we had gone to the market we would have had to sell policies at such a discount we would have had to sell half the portfolio, and that is a liquidation scenario."
The current short-term loan is a precursor to N&P and CarVal providing Lifemark with a longer-term credit facility, the details of which are still being hammered out, he says.
Lifemark needs in the region of $4.5m (£2.8m) a month to pay the premiums of the traded life-settlement polices which make up its assets.
Maturing polices pay into the fund but a lack of mortalities among the original US policyholders has starved Lifemark of the cash it needs to sustain its costs, and pay UK investors a monthly income.
On its website, CarVal says it "uncovers the true intrinsic value of an investment, seeing opportunities where others see only risk".
No-one from the firm could be reached for comment.
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